Belco’s multimillion-dollar North Power Station was not subject to an up-to-date competitive tendering process, sparking concerns from regulatory consultants about whether Bermuda got the best value for money.

The details came from Oxera, a British-based economics and finance consultancy used by the Regulatory Authority to assess the proposal by Belco before the $120 million project and $10 million battery energy storage system were approved.

The consultancy firm highlighted that Belco had carried out a tendering process in 2011 and chose the firm Burmeister & Wain Scandinavian Contractor, but the project did not proceed at that time.

However in 2017, as the project restarted, the utility asked the same firm for an updated price point without fresh bids from other power producers that may have offered a more competitive price.

Furthermore, the consultant said the cost appeared “very high relative to other capital cost benchmarks for diesel engines”.

It added that there were “inconsistencies between Belco’s description of the purported benefits of its proposal and report as regards to the quoted costs in 2017 relative to 2011”.

The concerns were revealed in a series of documents released to the The Royal Gazette through public access to information.

Oxera said in January of 2018 that the Integrated Resource Plan, a road map for Bermuda’s future energy mix, should have been mandated under the Electricity Act to include a renewed competitive tendering process.

It added that Belco had failed to provide sufficient information for the RA to undertake a thorough assessment of its proposal.

In 2019, a separate RA consultant, Ricardo Energy and Environment, also said that the update of costs was not done in the context of a competitive tendering process and, as such, “the preferred contractor’s price may not be the lowest available on the market at present”.

The next IRP process is now being conducted to determine the next phase of Bermuda’s energy supply.

Alexa Lightbourne, the Minister of Home Affairs, who was not a government minister at the time of the events, recently published a directive calling for the Regulatory Authority to consider different levels of billing for consumers based on their extent of reliance on the island’s electricity grid — and to shore up its consumer protection and education.

Wayne Caines, the president of Belco and its parent company Liberty, has insisted that the present IRP, as well as all infrastructure decisions to build the North Power Station, were made “with comprehensive information available at the time”.

The RA said in the lead up to approval for the NPS, its previous board had been operating “under the early framework” of the Electricity Act and had acted within its legislated mandate, which is to make a decision related to the “cost recovery of the development”.

Oxera said on January 3, 2018: “The RA had an opportunity to reshape Bermuda’s electricity sector, in particular by introducing greater competition.”

The consultancy added: “The proposal refers to quotes obtained during a tendering process carried out in 2011, which would seem to be out of date.

“Belco has requested that the authority provides its response by February 9, 2018. However, it is clear that the information so far disclosed by Belco is insufficient to undertake a thorough assessment of its proposal, which would be expected to include benchmarking Belco’s proposal against relevant comparators to ensure that it is cost-efficient, is consistent with government policy and customer requirements and the allocation of risk between Belco and its chosen contractors is appropriate.”

Oxera added: “By mid-February, Belco is due to submit its IRP and the Government is expected to publish the National Fuels Policy.

“Oxera also understands that there are at least three credible independent power producers’ proposals for new thermal and renewable generation capacity currently under consideration.

“These factors highlight the benefits of the authority undertaking a thorough assessment of Belco’s proposal in the context of the evolving policy landscape and the potential for greater competition in future.”

Mr Caines told the Gazette: “Despite initial operational challenges, Belco has optimised the North Power Station operations at its own expense without passing costs to customers.

“The current IRP and subsequent IRP proposal recognise the North Power Station baseload generation as essential for Bermuda's transition to renewable energy.

“All infrastructure decisions to build the North Power Station were made with comprehensive information available at the time, prioritising Bermuda's best interests while ensuring reliable electricity supply during Bermuda’s renewable energy transition.”

The company told the Gazettein 2023 that customers paid higher fuel costs for a cleaner fuel that Belco used to mitigate emissions problems arising from its decision to configure the station as it did — optimised for use of a fuel that never ended up being approved by the RA.

Belco also took the RA to court after it rejected a customer rate increase to recoup capital costs to retrofit the station to address the problem.

A spokesman for the RA told the Gazette: “The matters in question relate to decisions made nearly nine years ago by the RA’s previous board of commissioners, operating under the early framework of the Electricity Act 2016. The RA's board of commissioners acted within its legislated mandate.

“The RA's decision related to cost recovery of the development. The decision was based on the best available information at the time, including independent technical advice and engineering realities such as cost efficiency, system stability, and long-term maintenance needs.

“The RA acknowledges the use of independent consultants who provided expert input, helping to inform the board's regulatory considerations. The assessments provided were reviewed in the context of Bermuda's energy requirements and the legal remit of the RA, not as prescriptive mandates.

“Ultimately, the board exercised its independent judgment in fulfilling its statutory duty to ensure reliable service at a fair cost to end users.”

The release of certain documents was initially rejected. The Royal Gazette then successfully applied to the Information Commissioner’s Office to carry out an independent review which mandated the release of the documents.

The RA added: “Transparency and accountability remain central to the RA's operations. Today, the RA is an even more robust institution with strengthened oversight and our focus is on advancing Bermuda's energy future through innovation, protection and sustainability. While the historical decisions are part of the record, our commitment remains firmly rooted in serving the public interest through robust, data-driven regulation.

“The RA has fully complied with the public access to information process and provided all requested documents.”

The Gazette has approached the Ministry of Home Affairs for comment.