REMARKS THE HON. KENRED DORSETT, M.P.

SOUTHERN SHORES

Mr. Speaker,

It is my privilege to support this Resolution for the refinancing of existing obligations to raise the sum of Two Hundred and Fifty Million Dollars ($250,000,000) in the currency of the United States of America by way of loans, debentures and bonds, from a consortium of domestic and international lenders led by CIBC First Caribbean International Bank. Funding is required by BEC to rehabilitate, expand and improve the existing plant. It is generally understood, Mr. Speaker, that The Bahamas faces a serious challenge as a result of the high cost of electricity, the resulting hardship to families and the negative impact on the countrys business competitiveness. Dramatically rising fuel costs have effectively reduced BECs budgets for maintenance of existing equipment, and all but eliminated funding reserves for planned future expansion for both growth and replacement of aging equipment and systems. This in turn, has forced extensive use of low efficiency, high cost gas turbines at the Blue Hills Facility and further purchases of additional gas turbines that in the short term are cheaper and quick to install, but in the long term, further exacerbates the problems and costs to the consumers because of fuel consumption.
2

As The Bahamas possesses no known quantifiable, easily-exploited energy reserves of fossil fuels and depends on imported sources to meet its energy needs, its energy security level is extremely low. The country, and its service-based economy, is particularly vulnerable to global economic forces that control the cost and availability of fossil fuels. Reducing the cost of electricity is a national challenge. The main contributor to the high cost of electricity is the cost of oil on the international market. Mr. Speaker, The Bahamas depends on imported petroleum products to satisfy over 99% of its consumer energy demand. The electricity demand growth has progressed at an annual rate of around 3% for the last few years. One estimate projects electricity growth at 8% over the next five years as a result of several new developments 1. The Bahamas is not alone in high electricity cost, as energy costs have risen by about 370 per cent in the Caribbean region in the last 4 years. There is however, Mr. Speaker, an opportunity to address the challenge of reducing the cost of energy to the Bahamian consumer and those doing business in The Bahamas, as the Ministry of the Environment and Housing
1 Reegle : The Renewable Energy and Energy Efficiency Partnership (REEEP)

is actively pursuing initiatives to lower the cost of electricity in The Bahamas. Mr. Speaker, The Ministry of the Environment and Housing is committed to reducing the countrys dependence on use of fossil fuels. We believe that using alternate, renewable energy sources; applying waste-to-energy

technologies; and promoting energy efficiency and conservation measures are all important in achieving this objective, and will help reduce the cost of electricity, as well as helping the country meet its commitments under international treaty to reduce its emissions of green house gases. The Ministry is considering proposals for solar energy plants, waste to energy plants, ocean thermal energy plants and wind and it embraces this opportunity for a private-public partnership in these initiatives. Mr. Speaker, for a number of years BEC has charged a base price of 11 cents per kwh for electricity with the cost of fuel added on - producing a final charge to residential consumers in the range of 40 cents per kwh. The anticipation is that, ultimately, with solar generated power, electricity could be provided in the range of 10 15 cents per kwh before distribution management and transmission costs are imputed.

Mr. Speaker, Legal reform is critical for this process to take place. The Ministry of the Environment and Housing, together with the Ministry of Works and Urban Development is working assiduously with the Attorney Generals Office to remove the legal impediments of exclusive rights for the generation and sale of electricity, the prohibition of self-generation and interconnection to the grid. Cabinet is considering the appointment of an Energy Task Force with an aggressive mandate to review all matters related to the application of renewal energy technologies to assist BEC in satisfying the electricity needs of our heterogeneous populations from Grand Bahama to Inagua and from Bimini to San Salvador. A Report will be presented to Cabinet with recommendations for a National Renewable Energy Plan with a list of potential renewable energy projects for the pursuit of alternative energy sources of fuel, including liquefied natural gas (LNG) and compressed natural gas (CNG). This development model anticipates that BEC will enter into power purchase agreements with licensed third party providers, who would receive a guaranteed feed-in tariff for several years. Mr. Speaker,

The government has already received proposals from local and foreign interests, for electricity generation, including a take-over of or partial provision of the generating capacity by the private sector and the sale of electricity to BEC for on-sale to consumers, to outright purchase of BEC by private interests and the sale of electricity directly to consumers. Meanwhile, Mr. Speaker, the Ministry of the Environment & Housing is fine tuning the draft National Energy Policy for acceptance and execution. This policy provides guidance for future energy supply and usage, ensures that energy decisions are not made without appraisal or awareness of their impact on economic and social activities, and addresses short term to long term measures that will encourage the best use of energy resources and promote socio-economic development. Mr. Speaker, Recognizing that the tourism sector accounts for approximately 40% of electricity consumption, dialogue has commenced with the Minister of Tourism to create and advance a framework to increase energy efficiency in the tourism sector; and dialogue has also commenced with the Minister responsible for Trade & Industry to achieve the same goals and provide

much

needed

relief

to

Bahamian

businesses

to

enhance

their

competitiveness. Integrated planning will represent, therefore, a break from the current practice of ad hoc policy decisions, and will focus attention on the taking of consistent energy policy decisions after considering the full range of policy objectives and the set of policy instruments. Mr. Speaker, In fulfilling the Ministrys mandate to construct affordable middle and low cost homes, the Department of Housing can also promote energy efficiencies. In concert with the Ministry of Works and Urban Development through the building code, maximum energy consumption per square foot for new buildings can be set and an energy audit required for existing buildings. We are exploring the feasibility of installing solar water heaters in new homes, and further import tariff reductions on energy-efficient appliances. The Bahamas Mortgage Corporation has also been asked to assess the viability of financing the installation of solar water heaters and photovoltaic systems in new homes and homes already built by the Department of Housing and occupied by customers of BMC.

Mr. Speaker, while solar technology has increased and improved and the cost has decreased, the upfront capital costs of solar installation is likely to reduce solar deployment and the associated benefits to the Bahamas. That is why, this Minister is passionate about finding solutions, which will ensure that the deployment of the technologies we support are able to benefit those who have and can afford them, as well as those who cannot afford the upfront costs but need the technologies to survive and improve their way of life. So for Mary, a single mother of three, who lives in Millers Heights who finds it hard to put food on the table every week for her children because after she pays her mortgage and electricity there is little left; this government is working to find solutions for you. So for Greg, who is running a manufacturing business and has indicated that electricity costs account for a significant percentage of his operational costs, this government wants to make your business more competitive and profitable by reducing your electricity cost. Finally, to Ms. Gibson, the operator of a small Bahamian-family owned hotel in Eleuthera, I have heard your cries and I know how every 30 days you dread receiving your electricity bill. This government will give you the opportunity, in short order, to generate electricity through renewable technology to reduce your electricity bill and

allow you to sell or get credit through billing for the excess power you dont use that is fed into the grid. It is our goal to achieve a 30 per cent share of total power generation for renewable energy by 2030, with hotels and households cutting their energy demand by a third, using efficiency measures alone. In this way, the Ministry of the Environment and Housing is ready to partner with The Bahamas Electricity Corporation to reduce the load on its shoulders for providing affordable energy to power our development through the second decade of this millennium. Mr. Speaker, The importance of reducing the cost of electricity is demonstrated in the fact that the Office of the Prime Minister; the Ministry of the Environment and Housing; the Ministry of Works & Urban Development and the Ministry of Grand Bahama are all working together and advancing a coordinated approach to providing relief to our people. I look forward to seeing the results of the endeavors mentioned above and to achieving the realization of our overall objective of providing energy at an affordable rate to all persons in the Commonwealth of The Bahamas.

My Ministry believes that the Government must take the lead in advancing alternative energy and renewable technologies. In this regard, we are making recommendations that the Government move aggressively to improve the power supply situation and reduce reliance on oil-fired generation by installing solar panels on a large number of Government buildings, schools and parking lots. I am happy to say that the Minister of Education and the Minister of Youth Sports and Culture, who has responsibility for the Sports Centre support these initiatives. Indeed, there will be a lot more to be said by various members of this New Generation of political leaders on the issue of Power Generation in the weeks and months ahead. It is with pleasure therefore, Mr. Speaker, that I support this Resolution for a guarantee to allow BEC to upgrade in order to both continue to meet the immediate needs for energy in The Bahamas and to position itself for partnership with the emerging technologies of generation. renewable energy

10