Power Generation And Distribution Split ‘The Way To Go’

By NATARIO McKENZIE  - Tribune Business Reporter,

THE Government’s plan to establish to separate entities for distribution and power generation was yesterday described as “the way to go”, a local renewable energy provider saying that “now is the time” for the Government to move toward its renewable energy power generation targets.

Prime Minister Perry Christie recently said the Government would be seeking a partner or partners to help turn around the country’s energy sector, as it seeks to have 30 per cent of The Bahamas’ energy needs come from renewable sources.

The Government is also seeking to have 10 per cent of the sector’s power come from residential energy self generation “in the short term”, Prime Minister Christie said. Guilden Gilbert, vice-president of Alternative Power Sources (Bahamas) told Tribune Business: “I think that is the way the market needs to go. I fully support privatisation. Splitting the corporation into two entities for distribution and generation, I think that makes sense. The key to any broad power generation is the distribution of power. You can produce power a number of ways but it is the distribution of that power that is key. I think any private sector power network probably would favour that arrangement any way,” said Mr Gilbert.

Prime Minister Christie revealed that the Government intends to create two new BEC entities into which the relevant assets, liabilities and operations of the Bahamas Electricity Corporation will be transferred.

The first company, a new transmission and distribution company (“NewCo”) will be wholly owned by BEC and will be responsible for the operation, maintenance, repair and expansion of NewCo’s electricity transmission. The company will also be responsible for distribution systems, billing, collection, customer services and other relevant services across the Bahamas. The second company will be a new generation services company. “This company will be responsible for the operation, maintenance, repair, financing of BEC’s current electricity generation facilities and certain other assets located across the Bahamas, as well the development of new power generation plant. It will enter into a Power Purchase Agreement with Newco,” Prime Minister Christie said.

Through a request for proposal (RFP) process the Government will seek to identify “financially and operationally credible parties or consortiums”.

“It is our intent to enter into management agreements with the successful party, or parties, to operate the two new companies, and in the case of the new generation company, a management agreement and/or a Joint Venture Agreement. Our new partners will be expected to assist the Government in transitioning the relevant assets, liabilities, operations and personnel from BEC to the new companies, and to assist the Government in driving performance improvement and upgrading the various systems to the highest standards,” Mr Christie said. Mr Christie said that the Government remains “absolutely committed” to introducing renewable energy into the generation mix for The Bahamas as well as the advancement of a residential energy self generation programme to be implemented by mid-2014, with a goal of meeting up to 10 per cent of the country’s power needs over time. The Government is also seeking to have 30 per cent of the country’s energy sector’s power generation come from renewable energy sources by 2030.

“I think that now is the time for them to move forward with that. I think that now is the time to start moving forward especially in the areas where producing power is fairly expensive for BEC. The Family Islands tend to provide that challenge,” said Mr Gilbert. He noted that APS had submitted a proposal which was ultimately rescinded, which called for 15 2 mega systems for 15 Family Islands. It would come at no cost direct to the country, with APS to be paid as a provider of power on a per mega watt or per kilowatt hour rate. “We have seen some uptick in interest with persons moving forward with renewables. We have a few installations underway now and we do have the financial arrangement in place to make it easier for the average home owner to put a system in.”