The choices facing Bermuda over how it should generate the electricity supply of the future are becoming increasingly complex, with the rapid changes taking place in the global energy sector.

That is the view of Walter Higgins, chief executive officer of Belco and its parent company Ascendant Group, who said the dramatic fall in oil prices in recent years and the fall in the cost of solar power infrastructure had created more options.

Belco is to submit an Integrated Resource Plan expressing its views on the future of the electricity sector to the Energy Commission by as early as next month.

In an interview, Mr Higgins also explained why he believed the increases in electricity rates that Belco has applied for — which would add about 7 per cent to the bill of a typical household and between 8 per cent and 20 per cent for commercial customers — were justified.

The Energy Commission’s response to that request is expected soon.

The submission has been delayed over the past year to take account of fuel market and technology changes, as well as the passing into law of the Electricity Act, which outlines government’s vision for the power sector.

Mr Higgins said the price of oil had declined dramatically in the few years since Belco started its IRP planning. The analysis initially favoured converting to liquefied natural gas as a principal fuel rather than the heavy oil and diesel that Belco’s ageing generators burn today.

“The first thing that’s happened is the decline in the price of oil,” Mr Higgins said. “There has been a slight recovery, but it’s still much lower than it was two or three years ago. That’s a factor that needs to be taken into account.”

An increase in the availability to Bermuda of LNG was another development. Mr Higgins said Kazakhstan and the Middle East had emerged as potential sources, and the US was preparing to export LNG in quantities suitable for small islands like Bermuda.

“We’ve gone from having few choices to many choices,” Mr Higgins said.

“It’s a dilemma. If price were the only consideration, then low oil prices suggest staying with oil, even it means replacing some of our engines.

“But if it’s about meeting policy objectives of using cleaner fuel and reducing carbon emissions, then you would look at natural gas.”

The fall in the cost of building a utility-scale solar farm — as the Government wants to see happen on land known as “The Finger” near LF Wade International Airport — had fallen about 80 per cent in the past five years and 50 per cent in the past two years, changing some of the arithmetic in the IRP, Mr Higgins added.

He said Belco’s proposals would be a basis for discussion that offered analysis of different options, but that the decision on which way to go was one for the country to make.

Ascendant announced profits of $14.5 million for 2015, up more than $7 million from the year before. Belco’s operating profit was $17.8 million, representing a return on the approximately $299.4 million of capital invested of 6 per cent, according to Ascendant’s chief financial officer, Mark Takahashi.

Last year marked a large improvement from 2013 and 2014, when Belco’s return was 1.8 per cent and 3.3 per cent respectively.

Mr Higgins said these returns were too low for Belco to be able to make the investments that were necessary in maintaining and upgrading the island’s electricity system. The company has invested some $300 million since 2000.

A return of around 10.5 per cent would be more appropriate and in line with what peer utilities in comparable jurisdictions were allowed to earn, he argued.