Two weeks ago, two gentlemen from the Bahamas came to Halifax, looking for answers from Emera. Troy Garvey and Jonathan Glinton represent Operation Justice Bahamas, and they have their sights set on taking the home-grown power monster to court back on the island. Set sail for corporate misadventures as we embark upon...The Emera Connection.
One of Emera's most recent procurements is the Grand Bahamas Power Company, of which they maintain an 80% ownership, as of December 2010. The regulatory situation in Grand Bahama is unique, and lends itself well to corporate pirates that make Captain Morgan look more like Captain Kangaroo. However, to fully understand the sneaky details behind Emera's current plum deal, we'll need to take a step back in history.
In 1955, Virginian lumber man Wallace Groves, an original Wall Street bankster from the '20s, signed an agreement with the Government of Bahamas, known as the Hawksbill Creek Agreement (HCA). Originally intended to allow Groves access to timber on the north end of the island of Grand Bahama, HCA turned a 200km stretch of pristine Caribbean real estate into a “free-trade zone”. Groves logged, but he also built an industrial, free-trade, empire, established Freeport, the second-largest in the Bahamas, and created The Grand Bahamas Port Authority (GBPA).
Groves passed away in 1988, but the veritable kingdom he established in Grand Bahama lives on to this day through the GBPA. The GBPA continues to hold licencing responsibilities for industrial and commercial enterprises. It develops all manner of infrastructure, and runs the airport, the casinos, and tourist development projects. With a finger in every pie, the Port Authority is the corporation that governs outright; a frightening beast indeed. In the early 1990s, they sold interests in Grand Bahamas Power Company, which Emera acquired a controlling interest in, in 2010.
The nuts and bolts of the Grand Bahamas Power Company is that it has a generating capacity of 137.5 MW, and serves approximately 20,000 customers. The vast majority of the Power Company's generators run on low-grade oil, known as “bunker C”. For comparison's sake, the Lingan Power Plant in Cape Breton, Emera's “Old Nelly”, has a generating capacity of 600 MW.
The Power Company outfit isn't new, and brownouts and power outages on Grand Bahama weren't unknown before Emera went south. But according to Obie Wilchcombe, MP for West End and Bimini, power outages on Grand Bahama have never been this constant or lengthy.
Outages aside, the real zinger being thrown at Emera by Operation Justice Bahamas is related to the meteoric, and seemingly unaccountable, rise in power bills. Garvey, Glinton, and the pro-bono lawyer taking the case before Bahamian parliament, Osman Johnson, claim that bills have begun to rival mortgages. Dozens, if not hundreds, are now doing without power on Grand Bahama.
“Emera has come here, and it's actually like the Wild West out here.” says Johnson. “They are literally charging whatever they wish. We don't have any alternative, we are totally vulnerable to the company and their total lack of corporate social responsibility. They're fully aware of the fact that hundreds of homes on the island where we live are without power for months on end. You go to some areas where 3 or 4 houses out of 10 have no power. And you've got little babies of a few months old, whose mothers are telling me, “I can't feed my kids properly because I can't cook any food.””
Emera refutes the charges, claims that the allegations are overblown, and argues that the rise in power bills is directly related to the price of the oil they purchase. The price of oil is passed on to consumers in the form of a “fuel surcharge” on the power bill. This charge, which is about 24 cents per kilowatt hour, makes up about 2/3 of a typical bill. But Johnson doesn't believe this argument for a second.
“Emera has consistently stated that the fuel surcharge which they levy against customers in addition to usage is based upon the price of oil internationally.” says Johnson. “We have figures from 2008, which show that when the cost of oil was $145 a barrel, the surcharge was 14 cents (per kw). Today the cost of oil is under $90 a barrel, and they are charging nearly 24 cents (per kw) in surcharge. So a 2 year old could look at those figures and realize that there's a serious discrepancy.”
Troy Garvey agrees.
“Nobody has been able to explain it to us, even the CEO of Grand Bahama Power Company, Sarah MacDonald, who is representing Emera.” says Garvey. “They have yet to show us what the formula is for how they charge us this outrageous fuel surcharge. They say they go by how much they purchase it for, but during the summertime, oil (prices) were going down, while their fuel surcharge was going up. So we’re trying to understand where the math is in that? They just sit around the table, and I guess they pick communities, and say “How much are you going to charge this area for this month?”, and then they divide that by the number of houses in that area. That’s the only thing we can say as consumers.”
Which brings us to the question of how the bills are calculated, exactly. Much has been made of the Power Company's meter monitoring practices. Indeed, with allegations circulating that the Power Company had been over-billing larger clients to the tune of $5.5 million, the GBPA conducted an audit of the Power Company. The Port Authority's audit turned up only 5 cases of over-billing, but Johnson feels this is a case of the fox watching the chicken coop.
“We are absolutely certain that they are engaging in woefully discriminatory pricing practices, that they have illegal and fraudulent billing practices in place, whereby they grossly overcharge their customers without any type of tabulation as to where these bills have come from.” says Johnson. “The regulator, the so-called regulator, owns shares in the power company. So I don't know how much of a regulator he can be. So do local politicians, who are supposed to be the ones providing legislation and regulation of this sector. So what we have really, is Emera engaging in a free-for-all in Grand Bahama.”
The free-for-all certainly seems to be paying off financially for Emera. The company made $10.7 million off its Caribbean acquisitions last quarter (which also includes Barbados Light and Power Company, the earnings of which it murkily lumps together into one sum), as compared to $2.8 million in the same quarter last year. Emera CEO Chris Huskilson, who brought home a salary of over $3 million last year, appears to be at least vaguely aware of the problems on Grand Bahama, in that he mentioned during a conference call to stakeholders that they “can't be fixed overnight.”
Whether or not Huskilson ever ponders the notion that Emera itself might be the problem isn't known.
In any case, let it never be said that Emera doesn't know a good monopoly when they've got it. Rumours are now circulating around Grand Bahama that they are considering purchasing the GBPA, the licencing and monitoring monopoly. With the Port Authority in their pocket, there would literally be no one to answer to. Johnson notes that Emera is also looking to buy Bahamas Electrical Company (BEC), the country's as-yet nationalized energy provider.
“That is why we have a bit of a quandary here, because the current administration...they are trying to present this to the people as “Oh, we care about your concerns, we've talked to the company, and we're going to wait to hear what they're saying.” When in actual fact, it is this government that is currently negotiating with Emera to purchase BEC, and they are trying desperately to push it through before the next election, without any votes, without any referendum, and despite the fact that it is our government-owned national energy provider.”
These are all very serious allegations on the part of Johnson and Operation Justice Bahamas. But Johnson has drafted a formal complaint, which is supported by about 5,000 signatures on a petition, which is all supported by individual statements from affected customers, outlining their grievances.
On November 14th Johnson plans to bring the formal complaint to the Bahamian Prime Minister's office and the Bahamian Consumer Protection Commission. The Consumer Protection Commission is obliged to by law to conduct an investigation once the complaint is made, and Johnson is confident that he will be soon using the findings of the investigation as evidence to support a lawsuit against Emera.
The impending battle against Emera has garnered the support of opposition MPs, including MP Obie Wilchcombe.
“The difficulty that I think we face, if you understand the history of Freeport and Grand Bahama, is that it allows companies to operate in the Freeport area without regulations and without regulatory agencies.” says Wilchcombe. “The Port Authority, which are the owners of the Freeport area, for the most part are the regulators. But their regulations are not in stride with the regulations with, say, the Bahamas Electricity Corporation, which have been held in place by the government. So we've always had difficulties there. If Bahamians have been over-billed, and we believe it to be so, and if it can be proved, we're hoping that the corporate citizenship of the company would allow it to think about the behaviour and provide some free months of power, and in some cases reimburse the Bahamians. There's questions to be answered, and we need answers, but they've been very difficult to get.”
“Bahamians are understanding, if you cause them to understand, and show them some respect.” he says. “The truth is many Bahamians have lost power. They've lost their electricity supply because they just cannot meet the bills. And when you cannot meet the bills you appreciate what's going on. You're not going to able to feed your family. The children can't study in the nighttime because there's no electricity for homework. It disrupts the entire family and many Bahamians have had to suffer as a result.”
As for Troy Garvey and Jonathan Glinton, their visit to Nova Scotia was met by an unseasonal cold spell. On the other hand, the warm reception they received at the provincial legislature, where they were greeted with a standing ovation, and a proposal by Liberal energy critic Andrew Younger to audit NSPI's own billing practices, may have cut through the chill in the air.
“In Halifax we got the opportunity to meet with residents, business people, rich people, and the poor. And everybody is feeling the same thing that we’re feeling back home in the Bahamas.” says Garvey. “And that’s including the staff at the power company. Emera is now taking away the benefits of the staff. What we have garnered here from Nova Scotia (is that) we have found out that Emera only has one thing to do, and that is to receive moneys on the back of the poor people. They don’t care about the people. It is inhumane. They are driving people into poverty here, and they’re driving people into poverty in the Bahamas.”
Fact-finding mission to Grand Bahama, anyone?