Dear Sir,

About a month ago I was worried that we had “tripped” in our journey along our energy hiking trail and were just waiting for the pain of the fall (The Royal Gazette, September 13, 2025). Then I read Alexa Lightbourne’s constituent message as the Minister of Home Affairs in the edition of October 23 and, just perhaps, she will catch us yet.

She makes all the right points.

I believe that these are symptoms of a structural problem with the regulatory framework for energy as it exists at present. Hopefully, she will now re-examine the deeply flawed integrated resource plan, and the process that made it that way, and achieve the objectives she lists.

It is possible to move forward and reduce emissions, lower costs, secure access and protect stability all at the same time. Doing so would then rebuild trust.

The Regulatory Authority/IRP/Licence process was originally conceived 15 or 20 years ago. In those days, no similar jurisdiction had over 15 per cent renewables. Renewables were more expensive than alternatives unless they were subsidised. The world of electricity generation, and distribution and use, was dramatically different than it is today. We had a monopoly utility that was locally owned and good at big diesels. They pumped electrons into the grid in Pembroke, and we all used them wherever we were connected.

Things have changed — a lot!

Our regulatory regime needs to change, too. The minister responsible for energy needs to have a staff competent to plan Bermuda’s energy future. Relying on Belco/Algonquin to do that planning will result in us paying more, emitting more carbon and losing business as other jurisdictions’ energy prices fall and ours stubbornly rise. The RA must become the entity that creates and then directs the actual execution of those energy plans via an effective licensing and oversight process that recognises our unique situation.

The relationship between the RA and the licensee(s) can be cordial and even collegial, but it needs to be reshaped so that the RA is perceived not as a “functionary” body to be manipulated and manoeuvred around, but rather as an executive with autonomy to require action and make judgments and impose penalties.

There will be a certain adversarial tension in the relationships. This would require that the ministerial staff and the RA staff have expertise and access to expertise that will allow them to engage with all licensee on an equal footing. The existing arrangement of a “Chinese wall” between the RA and the ministry is dysfunctional.

This is not tourism – it is energy.

The operating principles are different and so, too, should the practical relationships be.This is not the case right now. The subservience of the RA to Belco/Algonquin is on full display in the sad memo of its senior manager for energy, who almost apologises for even letting it look like Belco might have been wrong about the engine specifications for the North Power Station (The Royal Gazette, August 18, 2025); a unilateral decision by Belco in defiance of the RA, which resulted in the “soot problem”.

The IRP process is executed by the RA drafting a “big picture” outline that represents what it sees as the fulfilling of the policy positions and options of the time looking forward. The transmission, distribution and retail licensee is then invited to create and submit a detailed plan that it believes fulfils the intent of the draft. That plan is then refined in co-operation with the RA, which publishes it as the definitive IRP.

That the licensee is the drafter of the detailed plan makes sense only if the licensee is accepted as having technical expertise at a much higher level than the RA — and can be trusted to design the brief set out by the RA draft. This might have been true back in the day, but that can no longer be anticipated; it has now become a structural weakness in the process.

The liquefied natural gas engines at the NPS prove that beyond question. The interests of the community are simply not congruent with those of the licensees. It is as likely as not that the financial interests of the licensees will be in opposition to the intent of the RA’s IRP outline. Leaving the detailing to the licensees in such a case makes no sense. Belco’s management has a fiduciary responsibility to operate both the generation and TD&R businesses for the financial benefit of its shareholders. When Wayne Caines tries to get the RA to approve LNG so we end up paying the $500 million infrastructure cost, he is obligated to do so. Expecting them to do otherwise is unfair to us all.

The process should be revised so that the RA drafts the outline and then proceeds to oversee the detailed plan preparation directly with stakeholder input and all of the licensees in purely consultative roles by invitation.

A second structural weakness is that the RA has allowed Belco to continue to be both the holder of the main generation licence and the monopoly transmission, distribution and retail licence. This makes a single company the entity that generates our energy and runs our grid. That same company actually writes our detailed IRP.

This creates a glaring conflict of interest.

The perfect example of this conflict is Belco’s lack of progress in implementing a smart grid. More than 20 years ago, the expert advice to the first public consultations on energy were unequivocal. The first and necessary step in implementing electricity supply systems in the future would be the requirement for what came to be known as smart-grid technologies. These are not just “smart” meters. Smart grids are full two-way communications protocols between the grid operator and the loads and other assets on the grid. These may be loads, generation resources or storage resources. The point is that the grid operator can control any of these within bounds agreed with their owners.

Implementation of this technology should have been a top priority 15 years ago. We are still waiting — and paying.

The added problem is many of the systems that would deliver savings to users, and to the grid customers overall, would actually reduce the amount of electricity the grid would need from the generation licensee. Expecting Belco as the TD&R licensee to pursue implementation of a true smart grid knowing that it would have a net-negative effect on its core generation business is perverse. Like requiring a taxi driver to pick up passengers and drop them at the nearest bus stop for free.

If Bermuda is to face its energy future with any chance of success, the RA must be empowered to require that Belco, as the main generation licensee, separates the TD&R business into a new entity — say, Gridco — that would be completely separate in terms of both management and control.

Gridco will then be unencumbered by the pressure to keep the generators spinning as much as possible to generate revenue for Belco. Gridco could then implement smart-grid technologies and features such as time-of-day rates, dynamic rates, demand control agreements, increased distributed solar augmented by distributed storage, dispatchable distributed generation — solar, and combined heat and power — peer-to-peer trading, microgrids and full, island-wide V2G. These could see total renewables generation increase to levels above our peak-hour usage — similar to California’s famous “duck-curve”. Then, by encouraging the use of V2G and repurposed EV batteries as grid-level storage assets, we could see displacing fossil generation from the evening peak as well.

Gridco would be also free to purchase power from any least-cost provider, whether that was a solar farm, a wind farm, a wave farm or a hotel with a CHP system that had capacity to spare — or Belco.

This whole suite of options are, of course, Mr Caines’s worst nightmare since every one holds the potential to reduce fossil-fuel burn.

This is a time of transition. The old Belco days — when the important thing was to keep the engines running well and have enough spinning reserve to maintain grid stability if something failed and keep the transformers cool and the poles up and send out the bills — are over.

If we want to keep our energy costs from becoming double or even triple what they are today — as Belco itself predicts — we will need a sophisticated, integrated smart-grid system that juggles solar, wind, wave, storage and dispatched distributed generation, and storage and demand reduction assets 24/7/365.

Belco, as it is structured and run, is not up to this task.

Our regulatory regime is not up to the task.

That, to quote the headline from Mr Caines’s recent op-ed, is the real “energy reality”.

Ms Lightbourne, to her credit, has perceived that things are not right with our electricity supply system. As usual, the first step to solving a problem is acknowledging the problem.

Thank you, Madam Minister.

JAN CARD

Smith’s