Electricity users will pay a bit extra to fund regulation of the industry under new legislation passed by MPs.

The fiscal year that starts on April 1 will the first in which the electricity sector is regulated by the Regulatory Authority, whose remit includes supervision of the telecommunications sector.

Grant Gibbons, the Minister of Economic Development, said in the House of Assembly that the RA’s budget for the first year of electricity regulation was $3.4 million, as well as $3.55 million for its ongoing telecoms sector work.

The bulk of the money for the new electricity regulation responsibility — about $2.8 million — will come from the new transmission, distribution and retail fee, which will be levied at 0.475 cents per kilowatt hour sold.

“This works out to an individual consumer impact of about $34 yearly for a middle-tier customer, and less than $10 per year for the lowest tier,” Dr Gibbons told MPs.

Belco will collect the money and pay it to the RA on a quarterly basis.

The RA’s work in the coming year will include issuing licences, undertaking market studies and moving forward the Integrated Resource Plan, the blueprint for the future of Bermuda’s electricity sector.

The new framework to be introduced under the Electricity (Regulatory Authority Fees) Regulations 2017 legislation will also include bulk generation fees. These will be paid by licensees in different subclasses. The top-flight, utility-scale licensees, are those with more than 25 megawatts of installed capacity and they will pay $1,000 per megawatt per annum. Belco, the only provider at this level, will pay an authorisation fee of $485 per megawatt per year — or around $80,000 per annum in total.

Bulk generators with capacity between half a megawatt and 25 megawatts will pay $800 per megawatt per annum.

“These fees will come into effect on April 1, 2017, but may only be collected after licences are issued by the RA, and this is anticipated to occur within the second quarter of the fiscal year 2017/18,” Dr Gibbons said.

The fees are expected to generate $2.88 million in revenue for the RA, meaning a projected budget shortfall of $500,000.

Dr Gibbons explained: “Out of prudence and consideration for the customer, the fees were set at the levels noted, and any shortfalls in 2017/18 can be covered through the RA’s loan facility which in turn can be addressed in the subsequent fiscal year.

“The reason for this potential shortfall is a result of the extensive work that must be undertaken in this first year of electricity regulation in order to properly establish the regulatory regime for the sector.”

On the telecommunications side, Dr Gibbons said holders of integrated communications operating licences will pay 4.25 per cent of “relevant turnover”, unchanged from 2016-17. The RA will retain 1.75 per cent of turnover, while the sending the remaining 2.5 per cent to the Government.

Dr Gibbons said ICOL holders were expected to bring in $196.5 million in relevant revenues for 2017-18.