Bahamas Power and Light (BPL) is  moving  ahead with its deal with Shell North America.

The two signed a memorandum of understanding last November for an integrated LNG gas-to power project that is expected to lead to not only lower energy bills, but provide a cleaner power generation.

It is a major move that BPL Chairman Dr. Donovan Moxey said is costing the government nothing.

Dr. Moxey, who still can’t say the exact cost of the plant,  only noted that there’s a huge capital expenditure involved.

“On average, when you look at generation, you’re looking about a million to a million and a half dollars per megawatt,” he said.  

“So if you put in a 30 megawatt generator, your cost is going to be between 30 and 45 million dollars to put that generator in, so that’s a huge capital expenditure that you have to put in place, and then on top of that you have operation maintenance costs, then of course you have the fuel costs associated with that,” he added.  

“So when you enter into a [power purchase agreement] relationship with an independent power producer, it’s their responsibility to make that investment.”

Now, BPL is obligated to pass fuel costs down to the customer.  However due to several fires and soaring fuel prices, the company realized that electricity bills would have to instead increase.

The chairman said the company is trying to soften that blow.

“What we at BPL decided on doing, is rather than immediately passing that cost on to the customers we capped it at 19.15 cents so if you look at your bill, you’ll see from October I think, even to last month, that’s been 19.15 cents,” he said. 

“However, the true actual cost of the fuel pass through was a little bit more than that, it was more around 22 cents and so what we ended up doing as BPL is that we elected to finance that cost so that we can cushion the blow for the Bahamian people,” he added.  

“Now, what URCA has informed us of, is that all of those costs need to be passed along and so we’ve put together basically a process where overtime as the  cost of electricity goes down,   we will look to slowly pass those costs that we ended up financing as BPL on to the customer.”

Dr. Moxey said the cost of fuel surcharge will not go above 19 cents. 

As it relates to cost reduction, he said there are measures to reduce the cost of electricity consumption. 

“What we’re trying to do is putting solutions in place that essentially has us using the least expensive fuel oil which is HFO, and also eventually as quickly as we possibly can, transitioning off of the rental units which use the more expensive fuel oil as well,” he said. 

“And so the thing that impacts cost to customers is really the fuel surcharge and to be quite honest with you, usage,” he added. 

“So one of the things we talked about today is embarking on an energy conservation awareness program where we can tell folks, listen the summer is coming make sure you have in your homes, the proper installation, make sure that you get high efficiency low cost light bulbs, put your water heater on a timer and do all of those things that actually reduces your electricity consumption.”

Dr. Moxey said it is anticipated that as the company completes its cost recovery, electricity bills should decrease. 

His comments came on the sidelines of the Rotary Club of Nassau’s weekly meeting.