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Lights Out

Businesspeople left feeling powerless in Grand Bahama

by Miles Howe

Steve Popple, former Managing Director of Fenestration and Glass, in a now-empty factory. [Photo: Miles Howe]
Steve Popple, former Managing Director of Fenestration and Glass, in a now-empty factory. [Photo: Miles Howe]

Freeport, Grand Bahama – Over-reliance on the tourist trade, and the fickleness in tastes that that entails, is not necessarily the recipe for a balanced and stable economy. Expanding the industrial base of Grand Bahama, and at the very least creating a favourable environment for large employers to flourish, is at the very heart of the Hawksbill Creek Agreement, the guiding document that the Grand Bahama Port Authority is mandated to uphold.

The following is a case study in three parts that suggests that the Port Authority is decidedly not following its mandate, in particular as it relates to its oversight of the Emera-owned Grand Bahama Power Company. Emera is the Nova Scotia-born and bred international power company that is also the parent company of Nova Scotia Power Inc., the monopoly service provider to almost all Nova Scotians.

There are radical inconsistencies going on, regardless of the rate per kilowatt hour” - Jeff Butler, CEO – Butler's Food World, Butler's Fine Foods.

Butler's Food World is one of the largest grocery stores on Grand Bahama. The operation employs 129 people. As with grocery stores the world over, there is no cause for radical spikes and dips in power usage. Refrigeration and air conditioning for the store are the major energy expenditures, and the demands they make for power are relatively constant.

Butler's bills from Grand Bahama Power Company suggest a very different story.

The bill for January, 2012, is for $21,152.79. February is for $23,476.57. March is for $20,541.23. April is for $24,408.74. May is for $19,799.93.

“If you have twelve compressors running for six years, your usage, regardless of the cost of fuel, will be the same,” says Butler. “So your kilowatt hours, per month, will vary less than one percent. Our [usage] is up thirty percent [since Emera purchased Grand Bahama Power Company]. That's impossible. There are radical inconsistencies going on, regardless of the rate per kilowatt hour.”

Not only this, but Butler claims that his electrical system is not even capable of generating the amount of electricity for which he is being charged.

Butler's Food World operates on a Hil-Phoenix integrated electrical system. In 2011, Butler had the system tested by Emerson Climate Technologies (ECT). ECT estimated that Butler's system was only capable of using 105,221 Kwh per year. At an average cost of forty cents per kilowatt hour (about 300% higher than the price of electricity in neighbouring Florida, but around the average cost of electricity generated by the Emera-owned Grand Bahama Power Company), Butler's Food World's annual bill should be $42,088.54, or $3,507.38 per month.

Butler estimates that in a worse-case scenario this might be doubled, to an average of about $7,000 per month.

“Part of the battle here is not just the ridiculous surcharge added on to the nineteen cents [per kilowatt hour] approved by government, it's in the usage,” says Butler. “We did a test which was certified by a refrigeration expert – we shut down a five-ton compressor, a huge walk-in freezer, for three months. And our power bill went up, instead of down. Go figure.”

In June, owing Emera's GBPC over $200,000 Bahamian (on par with U.S. dollars), Butler switched over to a 30 Kw Cummins diesel generator. Even though diesel, as a source of fuel, is most likely significantly more expensive than whatever Emera's GBPC might be paying for “Bunker-C” crude oil (the fuel that drives its new 52 Megawatt power plant), Butler estimates that his power bills are cheaper by a third now that he's self-generating.

Emera's GBPC, however, is taking issue against Butler's generator, and has petitioned the Supreme Court of the Bahamas to have the generator shut off. Whether Grand Bahamians have a right to generate their own electricity, which other large-scale industrial players in Grand Bahama are currently doing as well, may well be at stake. Butler, with pockets deeper than the average Grand Bahamian, is currently engaged in an ongoing legal case with Emera's GBPC.

Emera spokesperson Sasha Irving noted, in a wide-sweeping statement issued on August 7th, 2012, “We don't see the need to respond to any of the allegations that Miles Howe may be making.”

Excessive, obscene, or unfair are not among the definitions of 'fit' and 'proper'" – Jack Grobowsky, president, Freeport Resort and Club.

Jack Grobowsky, Canadian expat and former accountant, believes that one of the key arguments against the GBPC's current rate of forty-plus cents per kilowatt hour, lies in the sometimes vaguely-worded Hawksbill Creek Agreement.

Point 7 of the Agreement notes that the Grand Bahama Port Authority has the responsibility to “construct and operate utilities within the Port Area in a good, proper and workman-like manner...and to operate these utilities in accordance with proper guidelines in a fit and proper manner.”

“The Hawksbill Creek Agreement was set up to develop Grand Bahama Island, and the establishment of utilities is a necessary function to attain that goal,” says Grobowsky. “Now...power rates cause businesses to close, and discourage new business.”

Grobowsky notes, as do many, many, many others in Grand Bahama, that Emera's GBPC is unwilling, and most likely unable, to provide a fit and proper break-down of precisely why the kilowatt hour rate now stands at forty-plus cents. Grobowsky defines this rate as “excessive, obscene and unfair”. Exact opposites, as it were, of fit and proper.

The forty-plus cents per kilowatt hour rate itself merits a certain analysis, in that it is broken down into a “fuel surcharge” portion, and an actual price per kilowatt hour portion. The fuel surcharge, as of May 2012, was twenty three cents per kilowatt hour. 

This fuel surcharge, if it is indeed a fuel surcharge, does not appear to correspond to any actual global fluctuations in fuel prices. Grobowsky and many others in Grand Bahama suspect that the fuel surcharge, which has climbed an astronomical 870% since the notion of a 2.75 cents per kilowatt hour fuel surcharge was first written into a 1978 development prospectus, is merely a means by which Emera's GBPC is aiming to quickly pay out shareholder dividends.

Grobowky's Freeport Resort and Club is currently operating at approximately 25% capacity, and Grobowsky notes that staff hours have been cut across the board.

Grobowsky, without the financial means to engage in litigation, believes that arbitration, which is allowed for in several occasions in the Hawksbill Creek Agreement, might be the “sleeping giant” by which Emera's GBPC is forced to operate in a “fit and proper” manner.

Emera spokesperson Sasha Irving noted, in a wide-sweeping statement issued on August 7th, 2012, “We don't see the need to respond to any of the allegations that Miles Howe may be making.”

We took them on their word. That was our biggest mistake.” - Steve Popple, former Managing Director of Fenestration and Glass.

Fenestration and Glass was an operation built from scratch on Grand Bahama. It never managed to reach maximum production, but as it was developing, the makers of hurricane windows had approximately 100 employees, and was running twenty-four hours a day, five days a week.

The relationship with Emera's GBPC, both in terms of the cost of power, and the quality of power they were provided with, was tenuous from the start. The process of extruding rubber, a necessary process in constructing hurricane windows, requires a constant flow of power. The GBPC was not even able to provide this.

“One of the big problems we had with extrusion was the fluctuations in power,” says Steve Popple, former Managing Director. “Our tolerances were extremely minute, and with constant fluctuations our machines kept dipping and spiking and running at different speeds. Which meant we would then throw away thousands of feet of scrap material and then have to start all over again.

“The other problem was then we would get these massive spikes and surges. And in one year alone we wrote off $300,000 worth of equipment...extremely sensitive equipment that goes along with all these modern machines. The first CEO [of Emera's GBPC], E.L Farrell, the first one that we came into contact with, told us not to worry about it [and] that they would totally reimburse us for all our damages. They didn't reimburse us one dollar.

“The second CEO...all he [did] was laugh at us across the table and threw me their terms and conditions and told me...'They're not responsible for anything.' That was the attitude [Emera] had with us from day one, and it just continued and continued.”

Power surges and destroyed material and equipment aside, Popple notes that even in the “ramping-up” period of Fenestration's operations, monthly power bills were coming in between the “$20,000-30,000 range”. Estimating that at full production monthly bills would be in excess of $70,000-80,000, Popple and his business partners decided to switch to diesel generators.

Apparently, Emera's GBPC wasn't happy.

“They sent us a letter saying cease and desist,” says Popple. “We told them that we wouldn't because they could not supply us a product that was merchantable – they were supplying something that didn't work. They backed off for two years and left us alone. And after we closed the business down, then they came back again saying they were going to sue us...We owe them $120,000 in unpaid bills. We are saying [we'll pay that] if [Emera's GBPC] agrees to pay us $300,000 in damaged equipment. We're still butting heads.

“I feel more sorry because I've got guys that I see now out on the street – and literally they are on the street – they used to work here and now they're walking the street. They will come up and ask me 'Could you spare me ten dollars?' I know people who have lost their homes who used to work here. Me and my partner Steve and the other shareholders in our company, we can move and go anywhere we like. And we've got other businesses. But the people working here...they're the people I feel sorry for, because they haven't got any options. It's all right for guys like me and you, who've got Canadian and British passports, and U.S, it's fairly easy for us. No one wants a guy who's got nothing to give but a Bahamian passport in another country, you know?”

Emera spokesperson Sasha Irving noted, in a wide-sweeping statement issued on August 7th, 2012, “We don't see the need to respond to any of the allegations that Miles Howe may be making.”


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Topics: Governance
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