‘Bill Opens Up Generation Sector To Competition’

December 16, 2015

The Electricity Bill being tabled today [Dec 16] in the House of Assembly facilitates the implementation of a new regulatory framework for the electricity sector, Minister of Economic Development Dr Grant Gibbons said, adding that the “Bill opens up the generation sector to competition.”

“This Bill facilitates the implementation of a new regulatory framework for the electricity sector, and transfers the reins of regulation from the Energy Commission to the Regulatory Authority, which will operate with independence, transparency and accountability, under the rules set out in the Regulatory Authority Act of 2011,” Dr Gibbons said.

“This new framework categorizes the electricity sector into three sub-sectors: transmission and distribution, generation, and self-supply.

“BELCO, the current incumbent utility, will hold two licenses, one for transmission and distribution, which will be the only license of its kind, and one for bulk, or large scale, generation, which will likely be one of several licenses of its kind.  Simply stated, the Bill opens up the generation sector to competition.”

The Minister’s full statement follows below:

Mr. Speaker, the Electricity Bill being tabled later today follows the tabling of the draft consultation Electricity Bill on July 17th.  In the six weeks following that, there were extensive consultations with the public and key sector participants.

This Bill facilitates the implementation of a new regulatory framework for the electricity sector, and transfers the reins of regulation from the Energy Commission to the Regulatory Authority, which will operate with independence, transparency and accountability, under the rules set out in the Regulatory Authority Act of 2011.

Mr. Speaker, this new framework categorizes the electricity sector into three sub-sectors: transmission and distribution, generation, and self-supply.  BELCo, the current incumbent utility, will hold two licenses, one for transmission and distribution, which will be the only license of its kind, and one for bulk, or large scale, generation, which will likely be one of several licenses of its kind.  Simply stated, the Bill opens up the generation sector to competition.

Furthermore, Mr. Speaker, the Electricity Bill defines a process which is on the leading edge of best practices, namely the Integrated Resource Plan, or ‘IRP’ process.  The IRP is a plan for the supply of electricity that considers the least-cost, most reliable, most sustainable sources of electricity, and then requires the Utility to procure those resources.  In other words, Bermuda will have a more diverse energy portfolio as we move into the future.

Using the IRP, electricity planning will no longer be the domain of the utility alone, but will be open to public input and ultimately ‘owned’ by the Regulatory Authority.  This process is leading edge, and used in parts of Canada, the United States, and Europe, and provides a transparent means by which policy is implemented.

Mr. Speaker, the innovations contained within this Bill are designed to achieve the policy goals set out in the National Electricity Policy tabled earlier this year.  The goals will seek to ensure that

  • Bermuda has an adequate, safe, sustainable and reliable supply of electricity;
  • The electricity sector operates with efficiency and conservation in mind;
  • The use of cleaner, ‘greener’ energy technologies is encouraged;
  • There is non-discriminatory access to the grid; and
  • End-users interests are protected, particularly with respect to prices and the quality of electricity service.

In achieving the best balance of these goals, there will be trade-offs, and this Bill provides a framework by which those trade-offs will be evaluated and resolved in the best interests of the public.

Mr. Speaker, tabling this Bill before the House rises for the Christmas break will also give honourable Members, sector participants, and the public a longer opportunity to carefully review the legislation prior to the full debate when the House returns in the New Year.

Mr. Speaker, In closing, I wish to extend my thanks to the Department of Energy and the broader team that made this possible, in particular the guidance received from the Attorney-General’s office, and our electricity policy experts, Castalia Advisors and Legislative Drafting Services.

Thank you Mr. Speaker.

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Comments (19)

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  1. Triangle Drifter says:

    BELCO owns the poles & wires. How does any new competition deliver into the grid? Do they share poles & lines somehow? How does BELCO arrive at a price for powerline sharing if that is the case?

    We sure don’t want to see another set of poles & wires roadside.

    Just wondering?

    • Engineer says:

      There is no need for extra powerlines. Another provider feeds into the existing grid and there is a rate provided to them from Belco for carrying their power over the Belco lines.

    • Guy Smiley says:

      We call it rent…
      Although the property the poles are on, Belco “must” rent from gov…

    • George says:

      “BELCO, the current incumbent utility, will hold two licenses, one for transmission and distribution, which will be the only license of its kind.”i.e. BELCO will be the sole owner/operator of the Grid!

    • Come Correct says:

      When are they going to get the lines under ground? Is it even feasible? Is it practical?

  2. craig looby says:

    The following was submitted on Aug. 25 2015 to the Ministry of Economic Development and the Energy Commission in reply to the draft energy policy legislation. It is designed to inform the people of Bermuda that other options for the future exist, the argument being that the Government is not being progressive enough on the renewable side in terms of regulation.

    By Craig Looby

    Bermuda could be an example to the world and the LNG (liquefied natural gas) plant proposal should be stopped. All the money they want to flush down the toilet to keep the existing centralised status quo can be used to turn the Island into an alternative energy haven. It is being predicted by financial experts in the United States that the fracking industry is going to implode next year. So natural gas from the US will not be as cheap as predicted; in fact, the industry may shut down. Belco will not be buying LNG from the US. Their plan is so poorly thought out!

    The existing draft is disappointing. Belco is being protected and the people who are looking to enter the industry at the utility-provider level are being left out of the process. The Bermudian public deserves and should be demanding better from this process that is supposed to be ending the Belco monopoly and establishing the path for Bermuda to be free of imported fuel.

    Those looking to enter the industry as utility providers should be at these closed-door meetings at the very least … and in keeping with the transparency pledge of the present government, there should be no “old boys network”, secret closed-door meetings at all. We who are seeking to enter the utility scale operations sector are being told that we need to provide a comprehensive understanding with data and information on our proposals. This supposedly will be considered as per the present direction of the draft energy policy, which is being based on a flawed perspective.

    The challenge is that if we are submitting by September xx, does this seriously mean our submission will have any impact on a decision-making process that is scheduled to meet in October/November? This deadline is too short of a window for such detailed presentations to be submitted. And Belco has not put forward any official data to the public, and it is unknown if it has submitted a formal proposal to the energy ministry.

    Since Belco’s plant is at the end of its life, everyone in the space of utility scale generation should be treated equally, since all proposals have to be vetted equally, as there has been only one model in operation in Bermuda’s history. And the level of red tape is not attractive to external capital investors, and will drive them away from Bermuda to other locations. This is an historical moment, when a crucial decision must be made by the Government and the people as to the future of energy production. In the view of many, not all options have been considered and the process should be slowed so all options are at the table.

    It is also clear that Belco does not have the vision to save the day. With the technology that exists today, Bermuda has the opportunity to end its need for fossil fuel. Don’t just think of Bermuda, look at the world today and consider national security.

    The price of importing fossil fuels will not lower the price of electricity, and converting to LNG will just be a huge expense paid for by the people. Bermuda is surrounded with an endless amount of energy. That being hydrogen, which is in water. There are many methods to extract H2 and UMI has experts in the field, on its deployment team to produce a simple scenario for an energy-independent Bermuda.

    The Bermuda Government established the Department of Energy to take the lead in meeting both the challenges of Bermuda’s own need for energy and our responsibility to set an example for the rest of the world.

    The Department of Energy’s strategic goals are to:

    1, Ensure a secure energy supply, in terms of both quantity and cost

    2, Reduce fossil fuel dependency

    3, Encourage greenhouse gas emissions, reductions related to energy

    The UMI Power Master Plan for Bermuda does the following:

    1, Provides a secure energy supply in 200 MW quantity and at a low cost to end users

    2, Ends fossil fuel dependency; Bermuda will make its own fuel

    3, Ends greenhouse gas emissions related to energy

    Using a mixture of utility scale renewable sources, UMI will provide 200 MW of base power. There is game-changing technology in deployment today and Bermuda will be at the cutting edge of power generation technology.

    This wind-farm portion of the renewable mix will be located 20-plus miles out to sea and barely visible from the Island. At least 12 MW would be dedicated to H2 production. Hydrogen will be used for two things:

    1, As an energy carrier or energy storage if it’s easier to understand

    2, As a fuel for vehicles and boats, and fuel-cell back-up power for homes and businesses. Hydrogen can also be made on demand by chemical reaction without electricity

    Bermuda can vastly reduce its need for imported fuel. As we know, wind and solar are spotted, so to balance the grid we would use highly efficient H2-fired turbines in a smaller substation scenario for storm protection. Our target price for electricity would be 26 cents per kWh. Prices would gradually come down even further as the investment is paid off.

    The target price for H2 as fuel would be at least one third less than what the cost is now for imported fuel and again would come down as the investment is paid off. Low power rates and transportation fuel prices such as these will present various opportunities to make Bermuda a more affordable place to live and to do business. This transition to a clean and renewable economy and energy-independent Bermuda would create new jobs and higher academics. Belco’s plan will not. In fact, its plan is antiquated and will offer no change to the enslavement of the people of Bermuda to big oil. Bermuda needs to make its voice heard, to stop the process of the imbalanced proposed electricity draft legislation from going through to become law, but to reform the development process of this legislation so it becomes a totally open process so everyone can know what is going on, every one can put forward their data, and a framework based on what’s best for the Island is achieved versus what’s best for an old monopoly that is trying to cling to life.

    This can be done by making this process fairer and more open. The regulatory authority should be online first and that office be involved in drafting the legislation because it’s the regulatory authority’s job to create a fair and balanced process.

    Bermuda, you have until Monday to add your voices to ours and stop this process so that better options that will help Bermuda are allowed in the process and calculations to formulate the energy policy, which will provide cheaper power.

    And to ensure the powers that be hear the voices of Bermudians on this matter, a series of public demonstrations should be organised and sustained to demand and secure a reformed process of developing Bermuda’s energy policies.

    UMI will be soon holding town hall meetings and making use of other media to inform and educate the Bermuda population on its $2 billion master development plan that shall include the introduction of other leading industries to operate on the Island, which in return will create many jobs in the short and long term.

    We would like to make direct contact with Belco shareholders to present a proposal.

    • Jus' Wonderin' says:

      And who’s going to pay for all your ideas Mr. Looby?

      • craig looby says:

        UMI has its own capital to pay for all its proposals..

      • craig looby says:

        UMI has its own capital to pay for its ideas…..BELCOS plan is to charge higher rates to the consumer to pay for their plan.

    • Spectator says:

      No credibility.

  3. Vote for Me says:

    @ Triangle Drifter
    The new regulations will set the price at which Belco buys electricity from other providers. Belco will be the only entity to distribute the electricity.

    There are similar connectivity guidelines for telecommunication providers to foster competition.

    • serengeti says:

      No, BELCO would not buy and sell the power. They would just distribute it.

  4. aceboy says:

    “. Bermuda is surrounded with an endless amount of energy. That being hydrogen, which is in water. There are many methods to extract H2 and UMI has experts in the field, …”

    Such as?
    If you’ve taken a high school level chemistry course, you’d know that it takes a large amount of energy to split water into hydrogen and oxygen.

  5. Pete says:

    Mr. LOOBY.
    As a consumer how all of these wondrous electricity plans will benefit me the consumer> All I see coming out of this is a tog-o-war between the power companies , investors, all who want to as usual get a big share of the pie.
    The consumer will suffer greatly, I look at the telephone, Internet companies , all saying they have just what you mention fairer , and better deals.
    But in reality we the consumers are being fleeced to the hilt with hidden clause contracts, shoddy services, and outrageous sliding charges.
    All I see down the road from the lot of you is the same pie in the sky B******T.
    In all electricity costs will be to the end user consumer no different than at present, and will be inflated with those hidden add on`s.
    There are only so many residential units on Island, a small land mass.
    In reality I cannot see any benefit of this proposal only mass confusion, and darkness.

    • craig looby says:

      with lower electricity bills…$0.30 to $0.35 cents Per kwh….BELCO has already told the population that you will be paying more for their LNG plan…they havent told the public exactly how much more.

  6. craig looby says:

    http://bernews.com/2015/11/umi-funding-matrix-will-assist-government/

    A funding program for a diverse infrastructure and development program called The UMI Bermuda Master Development Plan, Is being presented to Bermuda.

    UMI (Urban Maximum Industries Inc.) is providing an update for the public of the engagement process with the Government of Bermuda. UMI was able to secure a meeting with the Government of Bermuda ( Nov. 25, 2015 ) which we would like to thank both the Premier and Minster Gibbons (Economic Development).

    The salient points are that UMI is to pursue a vetting process as per the guidance received via the Bermuda Monetary Authority and the Bermuda Business Development Agency.

    We are seeking a December meeting with the Government of Bermuda, as we seek to deliver both foreign direct investment and new employment opportunity for Bermudians.

    Sincerely,

    Craig Looby
    UMI Inc. Founder and President

  7. There is a new source of energy already being imp!emented.. Called the cube.. It would mean…hey…get your own and go offline!….boogle it!

  8. Where did this regulatory commission come from…what is this?Not another govt . department…where is it…in the same building with pension SCHEME?

    Oh …now we need a regulatory body?….implementing an approach from where ?…to do what exactly?…