Column: Proposed $1M RA Budget Increase

[Opinion column written by OBA Senator Dwayne Robinson]

The cost of living in Bermuda remains a constant issue for Bermudians and the increase in fees and taxes imposed by the PLP have not made matters any easier.

Now we are seeing a proposed budget increase by an independent authority whose fees directly affect the cost of electricity, internet, and phone services.

Reflecting on the plight of my people caused me to look at the proposed $1m budget increase for the Regulatory Authority.

The RA is funded from regulatory fees collected from the electricity and electronic communication companies.

The RA is recommending to the Minister of Home Affairs an increase of the Electronic Communications Regulatory Authority fee of 0.15%, from 1.75% to 1.90% be approved for the fiscal year 2020-21. This sector currently generates 17.7 million dollars in revenue.

The proposed increases for the electricity sector are as follows:

• Electricity TD&R service provider – no proposed increase;

• Utility Scale Electricity Generation provider [greater than 25 MegaWatts of installed electricity generation capacity] – increase from of $5,500 from $1,000 to $6,500;

• Fossil Fuel Bulk Electricity Generation provider [greater than 0.5 MegaWatts but less than 25 MegaWatts of installed electricity generation capacity] – increase of $5,000, from $1,500 to $6,500;

• Waste-to-Energy Bulk Electricity Generation provider [greater than 0.5 MegaWatts but less than 25 MegaWatts of installed electricity generation capacity] and – increase of $500, from $1,500 to $2,000;

• Renewable Energy Bulk Electricity Generation provider [greater than 0.5 MegaWatts but less than 25 MegaWatts of installed electricity generation capacity] – increase of $500, from $1,500 to $2,000;

• Distributed Generation Standard Contract fee – $2 per kiloWatt of installed capacity; vii. Self-supply Generation License provider [greater than 0.5 MegaWatts of installed electricity generation capacity] – $6,500 per MegaWatt.

This may seem like Greek to many, but put simply: you will be paying more money. The cost will undoubtably be passed to the consumer in full or at least in part.

Bermudians are already fed up with their bills increasing, this will just add more of a burden.

I thought to myself, maybe this is the global standard, so I compared our RA to its Bahamian equivalent the Utilities Regulation & Competition Authority. Their statistics are displayed on their official website and I pulled some comparisons for the people of Bermuda to consider.

• Fiscal Year 2019-2020 we are set to pay $3,599.000 for RA staff, this is proposed to increase in the fiscal year 2020- 2021 to $4,490,000. The URCA had a staff cost of $2,244,809 in 2018 which came under their budget by $160,905.

• Fiscal Year 2019-2020 we are set to pay $1,428,500 for consulting services for the RA, this is proposed to increase to $1,545,000 in fiscal year 2020-2021. This money most likely goes overseas. There is no line item for consultancy in the URCA in 2018.

• The Revenue of the Bermuda Regulatory Authority in the fiscal year 2019-2020 is set to be $6,352.000, it is proposed to increase to $7,514,000 in the fiscal year 2020- 2021. The URCA’S revenue in 2018 was $5,959,067.

• The URCA of Bahamas also includes a Key Performance Indicator showcasing performance margins within their annual plans/reports. I could not find this within the RA’s report.

• The population the URCA regulates on behalf of is approximately 390,000 people and our RA regulates on behalf of approximately 60,000 people. Scale that along with the comparative costs.

Why are our costs so high? The Bahamas’s URCA is a larger scale authority with more companies paying into its fees but our Regulatory Authority beats them in revenue by $392,933, and we are nearly double their cost in staff.

I understand that our economies are different and there are other variables to consider regarding price but I used this comparison to hopefully get answers as to why, even with the current budget matching a country with five times our population, that the RA would still need an increase?

The budget increase is to pay for studies into things like the Integrated Resource Plan, basically Bermuda’s national energy plan, and it is a complex undertaking.

However surely we can utilize the resources currently available to complete this large undertaking. The Bermudian taxpayer cannot take on any more increases in cost of living.

If this budget increase is cleared by the Minister, it will send a clear signal to the population that reducing costs for Bermudians is not a priority for this Government.

Companies within the electronic communications sector such as Digicel and One Communications have business ties elsewhere, how long will they endure these tax increases before they find other jurisdictions more appealing.

If they decided to downsize to prioritize other jurisdictions, or pack up entirely, how many Bermudians would be unemployed? Bermudians have limited choices currently, this tax and spend mentality could produce a monopoly as customer bases stagnant, and cost of doing business rises.

I encourage the public to engage in the consultative period the Regulatory has offered, which ends October 31, and express your opinions.

- Dwayne Robinson

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