GB Power ‘clawing way back’ in 25% profit rise

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Turning to the utility’s improved profitability in 2022, Mr McGregor told Tribune Business: “We’re clawing our way back slowly. We’re still below shareholder expectations but are getting there. We’re continuing to hold the line on operating costs, and a lot of Dorian costs are behind us. Load is continuing to recover.

“We saw good growth in the industrial sector on Grand Bahama. It’s difficult to pin down, but we welcomed the new Pharmachem factory facility coming online and the load picked up a little bit. The commercial load is picking up a bit, the residential load is flat. We were within a few hundred customers of our pre-Dorian customer base last year, whereas before we’d been a couple thousand short, so customers are gradually returning. They’re back, which is great news.

“Our plant is now back in full operation, so reliability is relatively good. We’re on a good recovery track I believe. The economy is, I wouldn’t say rebounding, but is clawing its way back.”

Mr McGregor also voiced optimism that GB Power’s monthly fuel charge will go no higher than 13-13.5 cents per kilowatt hour this year even if oil prices spike back to the levels of $110-$120 per barrel, which occurred when Russia invaded Ukraine one year ago.

Some 80 percent of GB

Power’s fuel needs for 2023 are hedged, with the price or cost locked-in already, meaning that the 20 percent balance has to be purchased on the open market at prevailing spot prices. “We’ve held our fuel charge stable for six years. We committed to five, but delivered on six at 10 cents per KWh,” Mr McGregor said. “We’ve got some great hedging structures in place until 2026.”

Utilities do not typically hedge all their fuel needs in advance in case of sudden movements in global oil prices that could leave them exposed to a financial loss. Mr McGregor said GB Power’s hedged fuel volumes for 2023 were acquired at a price of around $51 per barrel, compared to the $77.44 and $83.89 per barrel prevailing last night on the West Texas Intermediate and Brent Crude indices, respectively. He added that GB Power’s projections show its fuel charge will “vary between 10 cents and 13 cents over the course of the year”. Recalling that the last monthly fuel charges were in the 11.8-11.9 cents per KWh range, Mr McGregor said: “It’s [global oil prices] kind of steady at the minute. We’re not anticipating a big change, even if the price of oil goes up to $110 to $120 a barrel.

“The maximum pass through would be in the 13 cents range, maybe 13.5 cents at maximum. The industrial companies in particular appreciate this because of the long-term planning for their business; they know their fuel costs.... Over the next couple of weeks, we will be announcing some independent power producer (IPP) solar projects which will help to keep the lid on our electricity costs.

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here, so you can imagine the chaos that this is causing. The online portal has been down since last September, October. I know for a fact it was down because I needed something and couldn’t use it.

“You have transactions that can’t get done, and who’s in the hole on that?

The lawyer or the client.

It’s detrimental, especially to commercial attorneys in time sensitive transactions. There are penalties for them not being done in accordance with the time, and clients are negotiating while not taking that into consideration.” costs of providing electricity service to customers plus an appropriate return on rate base.

Besides slowing down transactions, one legal practitioner said it also impacts “reliability”. They explained that the online portal at the Registrar General’s Department had proven especially useful as a last-minute check to ensure there were no competing ownership claims, or liens, placed on a subject property after the title search was completed.

“It really needs urgent attention,” the attorney said. “We were beating down the door last summer, individual law firms contacting the Registrar and complaining directly.” With no explanation as to the cause for the online portal’s shutdown, some openly speculated yesterday that it may have been hackedas happened on a previous occasion at the Registrar General’s Departmentalthough there is no proof that has occurred now.

“We will double down on the roll-out of solar, build our own project, work with IPPs and get off that oil so that solar becomes a financial hedge. We’re locking in solar at a good rate for 20 years, and will get off that oil and save the country some foreign exchange payments.”

GB Power’s new rate structure, approved by the Grand Bahama Port Authority (GBPA) as its regulator in 2022, allows for the utility’s annual revenues to increase by $3.5..

The new rates include a regulatory ROE (return on equity) of 12.84 per cent,” Emera’s annual results said.

“GB Power is regulated by the GBPA. Rates are set to recover prudently incurred

“Effective November 1, 2022, GB Power’s fuel pass through charge was increased due to an increase in global oil prices impacting the unhedged fuel cost. In 2023, the fuel pass through charge will be adjusted monthly, in-line with actual fuel costs.

“With $338m of assets and approximately 19,000 customers, GB Power owns 98 Mega Watts (MW) of oil-fired generation, approximately 90 kilometres of transmission facilities and 670 kilometres of distribution facilities. GB Power’s approved regulatory return on rate base for 2023 is 8.32 per cent (2022 –8.23 per cent).”