Dear Sir,

I have been trying to organise a single coherent response to all the goings-on around our failed electricity system ever since the minister decided to put guardrails on the Belco-guided, RA-complicit IRP process.

As far as I can tell, it would take a half dozen full-length opinion pieces in The Royal Gazette to unpack where we are, why it is a total disaster, where we should be going, and whether we can possibly muster the expertise and courage to make the very profound changes necessary to stop the next 15 years from being as much of a disaster energy-wise as the past 15.

To those who are tempted to look upon our energy issues as just one piece of our economic puzzle, I would suggest a read of Energy and Civilisation by Vaclav Smil. As he points out, energy is the ocean that floats not only our economies but our social and cultural prospects as well. We need to take it more seriously.

In short form:

1, Congratulations to minister Alexa Lightbourne for having the courage to at least exercise some control over the IRP process. It must have been hard. The opposition from Belco/Algonquin and the bureaucracy and at the political level must have been hard to counter. Well done!

That said, this move alone will not accomplish much. The IRP process is simply not fit for purpose. As long as it relies on Belco/Algonquin to take the lead on change and as long as the RA functions, basically just to check the arithmetic rather than manage change, the entire process will never be able to achieve the energy ministry policy goals.

2, The other fatal flaw in the current scenario is the crippling fact that the RA has issued both the dominant bulk-generation (BG) licence and the TD&R (transmission, distribution and retail) licence to the same corporate entity. For Bermuda — and the RA specifically — to behave as though Belco/Algonquin will manage the TD&R business in a way that will systematically reduce the number of kWh it buys from Belco-BG is worse than a fantasy; it is a delusion and unfair to Belco as well. We cannot reasonably expect this behaviour, no matter what policies and IRP plans are in place.

3, Then we reach the “new bill”. This is a gambit by Belco/Algonquin — with the complicity of the RA — to give the impression of separating the generation and TD&R functions. It is only a smokescreen. It says nothing about separating the decision-making processes. In fact it makes it easier for the generation business’s interests to be served. By structuring the rates to make the generation costs look so low, the change will create the impression that the TDR operation cannot afford to invest in innovation.

The example bill sees TDR as 40 per cent of the total cost. By contrast, in Prince Edward Island (100 times our size with three times the population and 30 times the distance between customers), the TDR cost is billed as 20 per cent of the total cost. This, even though 80 per cent of their energy is from non-fossil fuel sources. Given our high fuel costs, our TDR costs should be a much lower proportion of our total bills.

The RA needs to publish a detailed analysis of exactly what costs it has chosen to allow Belco/Algonquin to include in the “Transmission” rates and the “Facilities Charge” calculus.

4, Finally, Stuart Kriendler and Kim Smith are correct. The “poison pills” in the new rates that treat solar systems as nuisances and saddle them with ridiculously unjustified costs on top of punitively low FITs are exactly intended to discourage solar and any other distributed assets. The RA’s complicity is evidenced in its FIT GD, where it states in plain English that it assigns a zero benefit to the community owing to carbon reduction. They have clearly lost the plot.

The list of things we have not done to reduce electricity costs in the past 15 years is embarrassingly long and our current rates are as much a shame on us as they are a national embarrassment. If we continue as we are, we will look back in another 15 years’ time and see the same failure and be paying $1 to $1.25 /kWh. This will be disastrous for all but the wealthiest among us.

The top of my list for the next five to seven years:

• A smarter grid with time-of-day and dynamic rates, full DER management and a comprehensive V2G pilot for the City of Hamilton and all its public and private parking areas

• A priority programme to build out distributed solar, with distributed and grid-located short and long-duration storage with suitable financial support and rate structures. This at scales from 5 to 50MW generation on private homes, businesses, commercial buildings, parking lots and any available spaces

• A pilot wave power generation project

None of this is impossible. Most of it is not hard.

Here is what we need if we are to stop the crippling advance in our electricity costs and reduce our carbon emissions:

1, By regulation or legislation, the monopoly TD&R licence holder must be separately owned and managed from any generation licence holder.

2, The IRP process should be restructured so that a separate entity generates the IRP in consultation with the Department/Ministry for Energy, the RA and the TD&R and generation stakeholders and users. Most importantly, the IRP process should be continuous and the planning should be dynamic. The time horizon of the IRP should be shortened to five to seven years. Policy for the longer term should be set separately from the short-term IRP and be more flexible.

3, Innovation should not be executed via the IRP process but by direct mandate. There is a fundamental incompatibility between the IRP process, the missions of the TD&R operator, the RA and the ministry, and the choice and execution of innovative approaches and projects. Also, innovation projects simply cannot be executed at speed unless there is an entity that is empowered to execute them on a project-oriented basis with accelerated time lines.

When the first EA was formulated, the RA and IRP processes were chosen as models that we hoped would help us to evolve and innovate. They have not and cannot.

We need to move on before energy costs make the island unlivable.

JAN CARD

Smith’s