Bermudians are being hit with some of the world's highest electricity prices - but power supplier Belco is warning residents to brace themselves for further increases.

Currently electricity costs 37 cents per kilowatt hour (kWh), including the fuel adjustment charge. That is higher than any of the countries named in the International Energy Agency's key world statistics report.

Denmark had the highest price of the 29 countries polled, charging 32 cents per kWh, the Netherlands was second charging 27 cents per kWh, and Italy came in third with 25 cents per kWh.

And while US news organisations are bemoaning the rising costs of electricity, Bermuda's neighbours are doing fairly well considering they were ranked 24th on the list, charging only 10 cents per kWh.

Belco spokeswoman Linda Smith said Bermuda's high prices are not a case of the company profiting at the public's expense.

"The price of oil has jumped over the past few months and there are no signs that it is going to stop climbing any time soon," she said. "Eighty-two percent of our plant is run on heavy fuel oil and we have just purchased a new shipment at $116 a barrel. That is up nearly three percent compared to the last shipment we purchased in April.

"The remainder of our plant is run on diesel and the price of that has jumped nearly 44 percent since we bought our last shipment in November. It is now $185 a barrel."

Because Bermuda does not have extensive storage facilities the company has no choice but to buy new fuel stocks on a rolling basis, Ms Smith said, and thus the company is wholly dependent on international prices.

"On isolated island grids such as ours you are seeing similar prices," she said. "There are similar prices across the Caribbean. In larger countries they have the option to buy from other energy sources. A plant in the Midwest (of the US) could purchase energy from a hydro plant in Canada if it is cheaper than what they can produce (because they are on the same grid). That means their customers won't be paying as much.

"But we don't have any other options on our grid."

All this means that residents can expect to see a jump in their fuel surcharge portion of the bill in the coming months. Since January the surcharge, which is decided monthly by an independent Price Control Commission within the Ministry of Finance, has crept up from 12.2 cents to 13 cents. But because oil prices have jumped since the last time Belco purchased its oil and diesel stock the surcharge will now have to increase.

This means that the fuel surcharge will account for nearly 40 percent of the bill.

Compare that to three years ago when The Royal Gazette reported that Belco was paying between $56 and $71 per barrel and, as a result, the fuel adjustment charge was 5.3 cents per kilowatt hour - the highest recorded level at the time!

But Ms Smith said there were things consumers could do to ease the burden, and she believes already many families are becoming more energy conscious.

"There is definitely conservation going on," she said. "Within the last five months an additional two percent of residential units have been added to our grid, through new housing developments, but we have seen a 5.5-percent reduction in energy consumption compared to the same period last year in residential units."

Ms Smith noted that the reduction could also be attributed to the average temperature for the last five months having been one degree lower than in the same period in 2007, which may have prevented people from switching on the air conditioning so often.

"I would definitely encourage our customers to be more conscious of their energy use to ensure that what they are spending is well spent in terms of how it is serving them," she said.

"Small things can add up such as switching to efficient bulbs, ensuring there are no cracks under the door to allow cool air to escape."

She added that the company was currently doing research into different energy sources such as wind or solar to help ease the burden on their grid and reliance on oil but said there were no quick fixes to the current high energy prices.

To find out the real cost of fuel turn to Page 15