October 31, 2013

Dear Sir,

Belco is very concerned about the misleading statements and untruths in both today’s article “Solar-powered firms: ‘Belco is getting our excess power for free’” and the original article that ran on Monday “Businesses seek break from Belco on solar power”. Of particular concern is that Royal Gazette reporter Raymond Hainey did not provide Belco the extent of the comments made by Rod Ferguson in the initial article, did not use much of what was given to him in Belco’s statement in response to that article, and also did not give Belco an opportunity to respond to comments made by Tim Madeiros in today’s article.

Prior to Belco buying any power from any generator on the Island an approval must be received from the Energy Commission for the mechanism that will be used to determine what rate will be paid for it. Both Mr Ferguson and Mr. Madeiros are fully aware of this, as there have been numerous communications with them on this matter. Businesses and residents who install solar power systems onto their premises, and use the power solely for their own purposes, are not required to receive permission from Belco for the installation. Belco’s permission is only required when producers intend to send their excess power to Belco’s grid, in which case safety and fairness are important considerations.

A solar system which is not properly installed could cause “electrical backfeed” into Belco’s electric system, and under certain circumstances endanger the safety of Belco line workers and the public. Also, arriving at the proper level of compensation is important. An appropriate rate mechanism should ensure that the commercial customer with a solar installation is receiving fair compensation for the excess power they sell to the utility, but that the rate is not being subsidised by all other Belco customers. Without a proper, technically correct, thoughtful policy, both of these outcomes would be all too possible.

A commercial-scale solar generator interconnection policy was developed by Belco over a year ago with the assistance of internationally recognised solar and regulatory experts. It is important to note that Mr Madeiros’ business is solar power sales and installation. He is not a specialist in utility rate setting, or utility regulation.

The first draft of the commercial interconnect proposal was shared with the Department of Energy on October 25, 2012. On January 18, 2013, Belco received and welcomed feedback and comments from the Department of Energy and incorporated them into the draft agreement. Subsequently, on February 9, 2013, Belco also provided the proposal for review and comment to the Bermuda Sustainable Energy Association (BSEA) whose members include local renewable/solar energy installers and the Bermuda National Trust. When it was discovered that Mr Madeiros’ company, Alternative Energy Systems (Bermuda) Ltd. was not a member of the BSEA, the draft interconnection proposal was sent directly to Mr Madeiros himself on February 27, 2013 to obtain his input.

Unfortunately, neither the BSEA nor Mr Madeiros responded in any way to Belco’s requests for comments. In May 2013, the proposal was subsequently submitted to the Energy Commission where it remains.

The statement by Mr Madeiros that, “Promises made by Belco that an agreement would be in place before the first system cam online did not materialise,” is untrue. Belco never promised an agreement would be in place within any specific timeline. What Belco promised to do was to work on it, and Belco has spent considerable time and money doing so. Mr Madeiros’ further claim that he had been working for four years to thrash out a payment scheme for commercial solar power with Belco, but without result is also misleading. Belco management has met with Mr Madeiros on several occasions and listened to his viewpoints, but Mr Madeiros is not a utility rates or regulatory expert, and both he and Belco knew full well that any rate mechanism would need to be developed by utility rates/regulatory specialist and approved by the Energy Commission. Therefore, Belco was not in a position to make promises, or provide timelines for commercial interconnection arrangements.

The solar installers who built systems did so in the full prior knowledge that until such time as a commercial interconnection mechanism is in place and approved by the Energy Commission, the customer could not be compensated. Customers who connect to the grid can have power flowing both ways i.e. importing from Belco or exporting their excess to the grid. It would be expected that the installer would have explained to the customer that once they have interconnected with the grid, any excess would be imported into the grid regardless of what day of the week it is, i.e. a business being closed.

The facts speak for themselves. Belco has actually taken the lead in facilitating export of excess renewable energy to the grid. Back in November 2010, Belco introduced the residential solar net metering programme. Over a year ago, in consultation with industry specialists Belco developed a commercial interconnection proposal and Belco has also developed a draft interconnection policy for large, utility scale independent power producers. The process to prepare this so-called IPP interconnection agreement was similar to the one for the commercial interconnection.

It was drafted with the assistance of solar and regulatory industry experts and includes comments received from the Government’s Department of Energy. Belco stands ready to provide this draft to any potential developers of a large scale generating plant on this island. Belco is also an active member of the Department of Energy’s Bermuda Energy Working Group, a consultative initiative contributing to energy planning and policy development.

LINDA SMITH

Belco Senior VP, Corporate Relations