Energy Matters: ‘The times they are a-changin’ for BELCO

With the greatest respect to the late Hubert Smith, I would like to congratulate the Hon, E.T. (Bob) Richards for finally laying to rest the romanticized idea that Bermuda is Another World. 

And, if the activity and volume on the local blogs is anything to go by, he has certainly stirred up a proverbial hornets’ nest with his Budget day proclamation regarding the future of our century-old monopolistic power company, better known to us all as BELCO. 

It seems that Minister Richards has decided that the days of one private company having monopolistic control over the supply of energy to every private residence, small business, large business, hotel, school, sports and social club on our little island are rapidly drawing to a close. In the Minister’s own words: “One of the reasons that Bermuda’s recession has lasted five years is due to its loss of competitiveness.

“A significant part of our uncompetitiveness is high cost, a big component of which is the high cost of electricity.

 “The break-even point for our hotels and other enterprises is pushed significantly higher by the high cost of electricity, making them less competitive versus other jurisdictions where costs are lower and, therefore, more attractive to investors.”

What is interesting is that Minister Richards made reference in his speech to The Regulatory Authority which he said: “Would take steps to increase competition from alternative energy providers — and ensure fair and equitable access to the BELCO supply network for new power companies.” 

The reason I find this statement so interesting is because here, in Bermuda, we do not have a Regulatory Authority to oversee the behaviour of the utility, and that is one of the things that makes Bermuda Another World. 

Authority

You see, there are other small jurisdictions like Bermuda around the world that also have a single source (monopolistic) utility company but, unlike Bermuda, they all have a Regulatory Authority to ensure their utilities behave in a way that is to the benefit of the country as a whole, rather than just to the benefit of their shareholders. 

It seems Minister Richards is acknowledging that, in the immortal words of Hubert Smith, Bermuda IS another world BUT as Bob Dylan said The Times They are a Changin’. 

Minister Richards went on to say “Over the long history of BELCO’s tenure as the monopoly electricity provider, the company has more in common with Government in terms of accountability and innovation than it does with private enterprise that operates in a competitive environment — an environment in which if you don’t innovate, minimize your costs and provide the best value to your customers, your competition will bury you.

“For BELCO and Government, being buried is not an issue.” 

He added: “Ironically, while BELCO and the Bermuda Government have no local competition, their inefficiency is eroding Bermuda’s competitive position as a jurisdiction that provides value to customers in what is obviously a very competitive world.

“The time has come to address this issue in both institutions” 

I believe Minister Richard’s musical advice to both our incumbent utility and our institution of Government is quite clear and comes from the songbook of Bob Dylan:

“You better start swimmin’

Or you’ll sink like a stone

For the times they are a changin’.” 

Nick Duffy is the divisional manager for Bermuda Alternate Energy.  You can send comments and suggestions to [email protected]