A former head of the Regulatory Authority and former Belco chief operating officer has said Bermuda should consider moving away from the monopolistic model for the island’s main energy provider and perhaps look to restructuring ownership in the form of a community-owned co-operative.

Denton Williams, the chief executive of the BAC Group, was speaking during a panel discussion at the Government’s Cost of Living Summit this week.

In a discussion titled “Modernising Utilities, Addressing Energy Costs, Infrastructure Gaps and Innovation”, Mr Williams was joined by other energy experts — moderator Ryan Perinchief said they all had backgrounds with Bermuda’s sole grid energy supplier, Belco.

Mr Williams was formerly the chief operating officer of Belco and was vice-president of its parent group, then named the Ascendant Group.

Asked if the private, monopolistic model serves Bermuda’s interests or whether the island should find alternatives, Mr Williams responded: “Bermuda has a largely small-to-declining customer base with a high fixed cost.

“[The] model has private ownership, which is an investor-owned utility, and it has a cost of capital associated with that, which is typically 12 to 14 per cent.

“If you look at other models that are available, even in the most capitalist country in the world, the United States, they have co-operative models where the community serves itself, basically.

“You pool your own resources. Your ownership is not then focused on getting a return; it’s more focused on getting service that is required and Belco does a great job of that now.

“In Bermuda, we are blessed to have our own stock exchange. As a company owned by the community, we could issue bonds and with our low interest rates from banks, 3 to 4 per cent bonds are going to be much more attractive.

“So we could issue corporate bonds from Belco, people would have the surety that they are not going to run away with the money, and they are going to get paid a solid return on their investment but it’s nowhere near as expensive.”

Belco is owned by shareholders. Its parent company is the Liberty Group, formerly Ascendant, which is the regulated services group of the Algonquin Power & Utilities Corp.

Members of the audience at the summit were asked in a live poll whether they believed the Government should consider alternative ownership models for utilities such as public ownership of electricity generation and distribution.

About 77 per cent of the attendees voted yes and about 10 per cent were unsure.

Mr Williams revealed that energy sales have been in decline since 2011, saying the grid was designed 20 years ago for a population of 70,000.

The Registry General indicated that the population base was 63,648 in December 2021. However, the Bermuda Chamber of Commerce, using various data sets, estimated recently that the population could now be as low as 54,651.

Athanasius Smith, a project officer at Bermuda Waterworks, said that in order to have a healthy economy, a healthy utility was needed.

He said with a declining population and an exodus from the grid by certain segments, the sector was spinning into a “death spiral”.

Asked what he thought of the options around ownership, Mr Smith said: “I do think the cost of capital is a critical component, particularly when we think about some of the large-scale renewables that are being considered.”

He said offshore wind could cost in the region of $250 million to $400 million.

Mr Smith added: “If there’s a way to lower that cost of capital, or hopefully not increase that cost of capital … it is critical that we get that right.”

Mr Perinchief pressed the other panellists on the potential solutions.

Adrian Dill, the Director of the Department of Energy, suggested a public-private partnership scenario but made clear: “I am definitely not a proponent of government being in operations.”

“The one thing we do well is regulation and legislation, the one thing we don’t do well is running a business,” he said, adding that was not the job of the Government.

“I would say government could maybe be in a position to be an investor and also be a partner in legislation or regulatory challenges but it’s got to be of mutual benefit for both if something like that was explored.”

Mr Perinchief brought the conversation back to community ownership and Mr Williams clarified that he did not support any change to the operation but rather “the mandate”.

Richard Ambrosio, the chief executive of the RA, told The Royal Gazette after the summit: “Any formal proposal to alter the ownership of a licensed utility would be subject to rigorous review under the RA’s legislative framework.

“This assessment, which is guided by data and free of bias, includes an evaluation of change of control and concentration review.

“Such an application must clearly demonstrate long-term value to public interest of Bermuda, with particular consideration given to financial viability, economic and regulatory impact, and the continued reliability and stability of essential utility services.”

Geoff Steiner, the director of energy transition and business development at Belco, was asked how to ensure equity in access to renewable energy.

He said that the Integrated Resource Plan takes relevant data to make a calculated model for the future.

If wind or solar comes to fruition in time, he said, that would be an independent energy producer that has a power-purchase agreement.

“That means Belco buys the power from them and then distributes that; it’s a competitive process,” he said.

“That is the way to ensure that future renewable energy on the grid is financially viable and the best path for Bermuda.

“If you are trying to find a way for it to be competitive and low cost, that is what the IRP does and we are working with the RA on finalising that plan.”

The top trending question from the audience was why every household must be connected to Belco by law.

Mr Ambrosio responded: “The implications for those who remain is very important — it goes back to the idea of a death spiral.”