Dear Sir,

I cannot let Dennis Pimentel’s opinion (The Royal Gazette, November 23, 2018), regarding his company’s Integrated Resource Plan for Bermuda’s future electricity supply, go without a rebuttal.

Mr Pimentel’s defence of Belco’s plan for Bermuda’s energy future was an embarrassment to him and his company, and to the extent that it reflects the views of his board, to them as well. It should also serve as a clear indication to the firm’s shareholders that this is why the company’s shares were recently worth 30 per cent more to an outside purchaser than they were on the market.

Almost 20 years ago, experts from universities, utilities, energy companies, controls companies and even IBM came to Bermuda and advocated publicly in the clearest of language for a forward-looking energy future, which would focus on renewables, new technologies and demand-side integration and management all implemented over a smart grid.

This vision was not supported based on “greenness”, nor primarily because it reduced our carbon footprint. It was advocated because it was the best strategy to reduce the cost of our electricity, reduce the horrendous drain of ongoing fuel purchases on our economy, improve our energy security and ensure supply stability.

Since then, Belco has done very little to move or plan in this direction.

The amount of solar installed in Bermuda to date is impressive, not because it exists but rather because it has happened in spite of Belco. Imagine how much solar we would have in place if Belco had a programme of participating in the investment with its customers and if it had embraced net metering instead of the ridiculous “fuel replacement cost” model for the buyback rates for distributed systems.

Where are the tiered rates and “peak load limited” metering options that could be so effective in limiting peak loads and reducing the need for new engines?

Why is our distribution grid a relic from the dark ages? Essentially unchanged in function from the days when Belco had fewer than 100 customers.

These glaring mistakes in strategy dating back more than 20 years, and becoming even more egregious lately, must be laid at the feet of a board and senior management team whose vision of the role and future of the company was based purely on Belco’s monopoly position as a firm whose core mission was owning and operating large diesel generators and transmitting the electricity to customers.

The short-sightedness and narrowness of that vision for the community as a whole in the 21st century is unforgivable.

The way forward now is that Belco will get only part of its wish. Absent the ability and desire at Belco, the only choice will be that electricity must become a multi-polar industry in Bermuda. Belco will remain the owner and operator of large diesel generators, but they will be only one supplier among several. The wind farm operator will be another. One or more large-scale PV operators — jointly or individually — will be others. Other renewables operators may emerge. And there will be several thousands — not 450 as now — of distributed solar and storage suppliers. Finally, there will be a host of peer-to-peer producer-supplier groupings that will trade energy over the grid separately from the leading suppliers.

The demotion of Belco from its existing position as the sole operator to being simply a supplier among several will be costly to the shareholders. To make this project work, there will be no choice but to separate the distribution system management from the suppliers.

The grid simply cannot be expected to fulfil its function if it is managed by one of the main suppliers. If Belco does not step up and separate the generation business from the transmission and distribution business proactively, the Government will have no choice but to do it for them.

The best use of Mr Pimentel’s time would not be to further embarrass his firm by trying to sell a bad plan, but rather to plan and execute the break-up of Belco into two separate entities — “Genco” and “Gridco” — and separate the shareholding and assets, and create a new board for Gridco since it would seem that the present board and senior management are well suited to continue to run Genco.

The practical reality is then that Belco will have to spin off the T&D assets and business as Gridco.

Gridco could not be controlled by Ascendant, for obvious reasons, and it would fall to the Government, perhaps through the Regulatory Authority of Bermuda, to ensure that the shareholding and control in Gridco and Genco were structured so as to ensure complete policy independence and to avoid strategic collusion.

Given how “free-enterprise” and “laissez-faire” Bermuda has traditionally been, this is heavy stuff. The truth is, though, that the writing has been on the wall about this for 20-plus years and Belco/Ascendant has intentionally kept its head firmly stuck in the sand. That is how dominant companies fail.

This will be a big test for the Progressive Labour Party government. This is not as simple as negotiating with your labour partners to make things look good. The way this is done and how well it turns out will have a lot to do with how well Bermudians live in the next ten to 50 years and beyond.

Doing this will keep an enormous amount of money and expertise on-island, and this will be a big positive economic force. Not doing it will haunt them for a long time in a very visible way.

The top billing, though, is the evidence of the Bermuda Better Energy Plan. We need to do this because it will deliver cheaper, better electricity supply.

JAN CARD

Smith’s