Taxpayers have paid a portion of the Coco Reef Resort's electricity bill for the past seven years.

Previous Boards of the Bermuda College did not alter the base electricity bill rate to account for fuel adjustment charges for the past seven years despite it being a requirement of the original 2003 lease.

This amounted to an estimated tens of thousands of dollars being paid out of the public purse for electricity used by the hotel.

But Senator Walton Brown, who is now Chairman of the Board of Governors, said that would stop starting on May 1.

Under the agreement in 2003, the hotel was required to pay $11,000 a month for electricity because under the current system the hotel and college share the same Belco meter.

The annual $132,000 electricity payment was supposed to be altered each year to reflect annual fuel adjustment rates.

Since 2003 the fuel adjustment figure has varied from 5.3 cents per kilowatt-hour to as much as 20.5 cents per kilowatt-hour.

Yesterday, Sen. Brown said: "Coco Reef pays a monthly fee to Bermuda College based on a formula agreed in 2003, with an annual adjustment meant to be paid based on the annualised Belco change in the cost per kilowatt hour. Unfortunately, Bermuda College did not levy the Belco adjustment for the past seven years.

"Earlier this month, the Board concluded discussions with Coco Reef to adjust its payment based on this formula." Starting May 1 this new rate, which is still being calculated, would be charged."

Asked if he expected taxpayers to be annoyed at the disclosure he said: "I think people have the right to be angered when Government revenues aren't properly collected."

Sen. Brown took over as Chairman of the Board in 2008. At the time he said the College was in protracted negotiations with Coco Reef on a new lease — which saw the length rise from 50 to 120 years — and only once that was done were they able to concentrate on items such as the electricity payment.

He said the overall electricity issue stems from the fact that the two properties were designed as one unit and it was not foreseen that they would ever be separated. Coco Reef is on the former Stonington Beach property, which was originally created to provide Bermudians with training in hospitality.

"With respect to the electricity, the Coco Reef and Bermuda College are still intertwined, as originally constructed," he said. "We have examined the cost of separation and received quotes of approximately $750,000 to do so.

"Given the current economic climate we believe it is unwise to pursue this at this time. Our goal is to have this meter separation of the two properties achieved in tandem with the Coco Reef construction."

He added that the college would not be paying for the separation when Coco Reef owner John Jefferis begins construction on 66 leaseback units this year.

Regarding the seven years of missed payments, based on the fact that the price of fuel has been steadily rising over the last decade, Sen. Brown said it was "doubtful" the college would be able to recoup them, as it was the College that "dropped the ball".