The decision to make the Utilities Regulation and Competition Authority (URCA) the independent regulator of the electricity sector has been welcomed by URCA Chief Executive Officer Kathleen Riviere-Smith. The move is part of the reform of the sector and is enshrined in new legislation tabled by the Christie administration last week, namely the Electricity Bill 2015 and two attendant pieces of legislation on the roles of URCA and the new rate reduction bond issuer.
The URCA CEO communicated with Guardian Business yesterday about the development.
"URCA becoming the independent regulator for the electricity sector is a significant development for The Bahamas," Riviere-Smith said. "As the electricity sector will now be regulated by an independent regulator, there will be a paradigm shift in how the sector operates."
"URCA is honored for the opportunity to regulate this very important sector with the goal of making positive impacts on the sector and for all stakeholders," she added.
Meanwhile, the government plans to create yet another single purpose vehicle (SPV), this one a non-profit company entitled Bahamas Rate Reduction Bond Limited; it is intended to be for the sole purpose of issuing rate reduction bonds under the Electricity Rate Reduction Bond Act.
Section 5 of the Electricity Rate Reduction Bond Bill 2015 makes legislative provision for the company, which will exist only to issue rate reduction bonds under the act, and which will have no share capital.
Section 5 (3) says, "The proceeds of rate reduction bonds issued by the issuer shall be applied solely in payment and satisfaction of the rate reduction bond financing liabilities."
The bill also provides that except for actual services rendered, "no part of the revenues or assets of the issuer shall inure to the benefit of or be distributable to its directors, officers or any other private persons."
And the articles of association will provide that, upon dissolution, the remaining property of Bahamas Rate Reduction Bond Ltd. will be distrubuted to the Bahamas Electricity Corporation (BEC) "applied wholly to reduce the tariff rates of BPL (Bahamas Power and Light Company Ltd.) to its customers".
The Electricity Bill 2015 tabled in the House of Assembly last week provides for the separation of regulatory and operations functions by the restructuring of BEC by transferring its commercial operating functions and assets to a wholly owned subsidiary company.
According to Deputy Prime Minister Philip Davis, who introduced the legislation as part of the effort to reform BEC, BPL is that new 100 percent owned operating subsidiary. BPL will operate under private sector management by a service provider; PowerSecure has been selected by the government, and has submitted a draft business plan for how it plans to move ahead with the company.
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