For the first time in the company’s history, Bahamas Power and Light Company Ltd. (BPL) has executed a fuel hedge transaction, which has the effect of setting the fuel charge for BPL customers at about 10.5 cents per kilowatt hour (c/kWh) for the next 18 months, subject to review after 12 months. Celebrating the moment as a landmark, BPL CEO Whitney Heastie pointed out that since fuel is a pass-through cost, there is no savings to the company: all savings go to the customers. He said, “Compared to recent history when rates were 19 cents and more in many months, the projected savings for the average customer will be about 30 percent through January 2022.”
“We would like to particularly thank the IDB for facilitating the transaction,” Heastie added. “They were able to give us access to the market, provide technical expertise and we were able to leverage their relationships.” In the last five years, the fuel charge hit a high of 27.7 c/kWh in October 2014, and low of 8.38 c/kWh in February 2016. The wildly fluctuating price of oil on the open market has made for wide swings and a high degree of uncertainty in the fuel charge BPL customers pay. Now that the company has inaugurated its hedging strategy, price stability and predictability become the order of the day.
BPL secured Cabinet approval for its hedging programme two weeks ago, and that agreement was tabled in the House of Assembly last week. The historical moment continued a streak of firsts for BPL, including the construction of the largest power plant in the company’s history at Station A, Clifton Pier Power Station, the installation of the first-ever aero-derivative gas turbine in the BPL generation fleet at the Blue Hills Power Station, the construction of the first renewable microgrid in BPL history on Ragged Island and other accomplishments over the year.