Oct 7, 2022

The Bahamian people will now have to pay the bill for the significant blunder at BPL by the Davis Administration with respect to the fuel hedging that was put in place by the previous FNM Administration. Based on the announcement by the PLP Government and the press statement released by BPL today, consumers in the Bahamas will now see an increase in electricity bills from the hedge price of 10.5cents per kWh to a high of 27.6 cents per kWh as projected. Based on these figures, this represents an increase of 163% over the 10.5 cents per kWh that was enjoyed by all business and residential consumes over the past two and one-half years.

It is well known that the Fuel Hedge Program that was put in place by the previous FNM Administration was part of a wider strategy that was developed for BPL to bring efficiency, reliability, and cost stability to Bahamian consumers. The reality is this hedging strategy worked and saved the Bahamian people tens of millions of dollars in electricity costs. When the Fuel Hedging Program was initially executed in June of 2020, BPL completed a hedge transaction with the assistance of the Ministry of Finance and the InterAmerican Development Bank (IDB) that covered an initial three-year period where percentages of BPL’s projected annual fuel consumption were hedged in accordance with its established hedging strategy and policy that were put in place and approved by the FNM Cabinet. Over the course of June 2020 thru to July 2021, other hedge transactions were executed to ensure that additional projected BPL fuel consumption was hedged so that the Bahamian consumers could continue to enjoy low stable prices for electricity. There was a hedge transaction that we scheduled for the end of Q3 of 2021, but due to the change in administrations in September 16th this transaction was left to the new Davis Administration to execute.

Given where we are today, it is my belief that this hedge transaction nor any other additional hedge transactions were executed by the Davis Administration; the question is why? PM Davis must come clean to the Bahamian people with regards to if additional hedging transactions were executed. What is most interesting from today’s BPL press release, is that the cost of the fuel component of the BPL bill is scheduled to increase when everyone knows that the cost of oil on the global markets has been decreasing from a high of over $127 per barrel in March or this year to around $90 today.

Additionally, BPL has now placed the fuel pass thru to consumers in different consumption categories at different costs, which is counter to provisions of the Electricity Act, where the fuel pass thru must be passed along to consumers at the same rate. The question is what does URCA have to say about this? URCA has been unusually quiet regarding BPL over the past 12 months and the question is why? They are supposed to protect the consumer, and now that the Davis Administration has proposed a 163% increase in fuel costs to consumers over the next 12 months, URCA needs to weigh in on this matter as well.

It is clear that PM Davis has abandoned the strategy and the many initiatives that were working at BPL prior to September 2021, however he has yet to bring a coherent energy strategy to the Bahamian people. Our economy is still recovering from the pandemic, consumers are experiencing the pressures of inflation, and yet PL Davis seeks to burden businesses and households with electricity cost increases that are historic. The new day that the PLP promised is turning out to be a morning after nightmare, and PM Davis must do better and come clean to the Bahamian people. #### END ####

The Hon Michael C Pintard

Leader of His Majesty’s Loyal Opposition Leader of the Free National Movement

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