In the lead-up to the opening of Baha Mar, less than 50 percent of the new power generation capacity which a 2012 Bahamas Electricity Board report called on to be installed "on an expedited basis" has been put in place, Guardian Business can confirm.
Executive Chairman of the Bahamas Electricity Corporation Leslie Miller told Guardian Business on Friday that he "was not aware" of a prior board's specific plans to have additional generators installed to ensure sufficient power was available to meet the country's increasing "medium term" electricity demand leading up to the opening of the resort.
Miller said that of three separate new generation units with a total generating capacity of 54 megawatts (MW) just one - a gas turbine with 26.5 MW of generation capacity - has since been put in place. The turbine was contracted in early 2012 by the previous board, whose memo highlighted the age and costliness of maintaining existing generation equipment and expectations of additional demand coming on stream. Guardian Business investigations have revealed that the three units were called for by the board to be installed between 2012 and 2015.
While asserting that additional generation capacity is needed, Miller, who became chairman in June 2012, said access to financing and expectations that the government would move ahead with bringing private entities in to take over BEC's generation and transmission and distribution were among the factors which led to BEC not moving ahead with installing further generation capacity.
The 2012 board memo suggested that the new equipment would come at a cost of around $64 million.
The proposed equipment was to have included a combined cycle unit, comprised of a 24 MW gas turbine, a heat recovery steam generator (boiler) and a 12 MW steam turbine at the Blue Hills Power Station and a 18 MW slow speed diesel engine at the Clifton Pier Power Station. The memo suggested these be acquired "on an expedited basis in order to meet the summer peak of 2013/2014". Guardian Business understands the content of this memo was ultimately approved for implementation.
Miller told Guardian Business that the proposed 24 MW turbine, which he described as a 26.5 MW turbine, was installed in November 2013. The board memo had anticipated the equipment coming on-stream in time to meet the "peak" demand of summer 2013.
However, it appears that the equipment was installed as a "simple cycle" turbine rather than a "combined cycle" generator, which is much more efficient at generating power and can lower the quantity of fuel required for a given electrical output.
Negotiations for the 12 MW steam turbine and 18 MW slow speed diesel engine were continuing at the time Miller took over, this newspaper understands, but ultimately no other orders were placed for the generation equipment recommended by the previous board and nor did any other installations take place. Consequently, as Miller himself told The Tribune last week, sources suggest the current state of BEC's generation capacity leaves open the potential for a "big problem" when Baha Mar comes on stream in spring 2015, significantly increasing electrical demand on New Providence.
In his comments to The Tribune last week, Miller suggested that a $200 million power plant is needed to address the challenge of keeping up with power demand, while pointing out that it could take up to 18 months to put one in place.
In the board memo, it states that the plans outlined for BEC's new generation capacity, which was to have been installed over the past two years, are intended to address "increasing demand for electricity as a result of Baha Mar and other developmental projects."

Baha Mar
The chairman said that negotiations are currently underway by the present board to put on order equipment that would provide for an additional 15 MW of power at the corporation "to satisfy Baha Mar" at a cost of between $5 million-$6 million. However, if the previous board's analysis of the country's anticipated power needs continues to hold, even with the addition of this generation capacity, there would be a shortfall of at least 15 MW.
At one point in the interview, Miller told Guardian Business that BEC has "the [generation] capacity" it needs, with the ability to generate around 270 MW of power, and daily demand standing at around 228 MW.
However, he then noted that if "one generator goes down, you go below the capacity you can operate on, and that's why we've been having the problems we have. Because we don't have the 20 percent spare capacity."
Miller said he thinks the corporation should have more smaller generation units, which would not knock so much capacity off the system if they were to fail.
This latest information, with respect to the corporation's failure to move ahead with the 2012 generation plan, comes to light as BEC now suffers one of its worst periods of outages in recent years and in the wake of Miller's comments to The Tribune indicating the criticality of the position BEC finds itself in.
It also comes in the midst of a long-awaited decision by the government on how it intends to overhaul the corporation to address these challenges, having stepped in to take over some responsibility for these issues when it issued a request for proposal in August 2013 which is now around eight months behind schedule.

BEC decision
On Friday, Simon Townend, head of advisory for KPMG, which is overseeing the government's RFP process, said he was awaiting a final conclusion on the way forward for BEC and would make an announcement on the next steps once he received this.
"In all likelihood (the announcement) will be made early next week. As you would appreciate, we need to undertake the courtesy of speaking with the bidders before they read anything in the newspaper," said Townend.
Meanwhile, Miller is now being considered for reappointment as chairman of BEC, amid rancor between himself and the unions representing BEC workers as well as increased frustration among the public over the lack of reliability and the cost of power.
The board said in the memo that its 2012 plan would have resulted in lower operating costs, increased system reliability and the ability to pursue [a] corporate long-term generating plant installation program".
It points out that a 2008 report produced by international engineering consultancy Mott Mcdonald had laid out a needed expansion plan for BEC's generation capacity for the years 2012 to 2020. The plan called for the installation of six slow-speed 40 MW diesel generators and three 20 MW gas turbines. However, it adds that, due to the downturn in the global economy and the corporation's financial state, the planned commencement date for this investment program "was not realized".
The board adds: "In order to avoid the need to continually hire rental generation, BEC must increase its generation capacity."
Miller recently encouraged BEC customers to pay their bills, pointing to $185 million in accounts receivables as part of a serious cash flow challenge facing the corporation. Miller and his family-owned business were recently found to owe more than $200,000 to BEC.

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