Electricity costs are set to soar after the Fuel Adjustment Rate peaked above ten cents for the first time today.

Residents face a two percent increase in their bills for September after the Fuel Adjustment Charge reached 30 percent - up from 28 percent in August.

But alternative energy sources are now on their way, according to Belco.

The company has applied for planning permission to install a wind turbine and solar panels at a house in Warwick in an experiment into the feasibility of introducing renewable energy into homes on the Island.

Belco says in order to make Bermuda more sustainable, traditional energy must be combined with large and smaller renewable energy sources.

In terms of large sources, the Current to Current project, which aims to harness the power of the ocean, is still in the pipeline, with work on an underwater power generator scheduled for 2009.

Research into currents around the Island last year concluded there were too many eddys to generate power successfully. As a consistent current is needed, the Gulf Coast is now being looked at as a possible location. A cable on the seabed would run power to Bermuda.

Belco spokeswoman Linda Smith said: "Our agreement is in place with Current to Current to purchase power from them when it's available. The agreement is to purchase between ten and 20 mega watts in the initial stages."

She said: "We need to add 40 mega watts of new capacity by 2010 to meet increased demand and to replace older plant. We have been taking a look at how we will meet these needs and we envisage a combination of small scale renewable power for individual homes, and large scale renewable (ie. Current to Current). The capacity needs to be a combination of small scale, large scale and traditional plant."

Belco this week made advances towards renewable energy sources in the home with its planning application for a 'micro windmill' and solar/thermal panels at a company-owned property in Middle Road, Warwick. While wind turbines generate power, solar panels transfer heat and can be used to warm water.

Ms Smith said a Belco employee will volunteer to live at the cottage to assess their practicality and the costs involved. The company hopes to have its 'beta site' - experiment, in place by the end of the year and then take the public on tours to gauge their reaction.

"We are looking to showcase a 'beta site' at the end of year to provide examples of various kinds of small scale renewables. We aim to assess the value of them to the consumer," said Ms Smith.

"Until there is a large scale renewable (ie. Current to Current) we feel the community should be looking to incorporate some level of small scale energy in new construction and larger renovations. We want to work with the community to find a comfort level and so find ways to incorporate these new strategies to meet Bermuda's overall energy needs."

Ms Smith said: "At the moment Belco is paying between $89.17 and $109.85 per barrel and as a result, the Fuel Adjustment Charge is at its highest level ever of 10.2 cents per kilowatt hour, which currently accounts for approximately 30 percent of the total bill."

She added that this charge is used by utility companies around the world to adjust bills according to fluctuations in fuel prices, and that Belco does not profit from it. The charge is reviewed by the Price Control Commission. Since June 2005, it has almost doubled, from 5.3 cents per kilowatt hour.

Ms Smith urged residents to stamp out "phantom power" loses by unplugging their computers and electrical goods when not in use.

"Just make sure you're not paying for something you're not getting any benefit from, for example when your television is turned off but still plugged in," she said.

For more energy saving tips, visit the company's website at: www.belco.bm