Lightbourne welcomes Belco’s ‘unbundling’ of electricity rate
Bermuda’s households and business deserve to see what they each pay to generate and deliver electricity, the Minister of Home Affairs said.
Alexa Lightbourne made the statement as she supported recent electricity rate changes announced by Belco.
“The unbundling of rates is welcome — that clarity is long overdue,” Ms Lightbourne said.
She noted that in May last year, the ministry issued a directive to the Regulatory Authority, under the Regulatory Authority Act 2011, for fairer, more transparent cost allocation.
The authority was to consider differentiated tariff classes for customers relying on the grid fully, partially or minimally.
“One year later, action has finally arrived,” she said. “Transparency must not arrive with a higher bill attached.
“The ministry commissioned its own review, conducted by a reputable research body, of the impact of distributed generation on other customers.
“Its findings indicate that residential customers have carried a disproportionate share of the system’s fixed costs for years.”
She added: “A correction of a longstanding imbalance should return value to the customers who carried it.”
Belco said this week that rates would be “unbundled for greater transparency”. It added that usage and demand charges that were previously bundled to reflect the total cost to generate and deliver electricity would now be separated.
The utility said the changes were also guided by a fairer sharing of costs, where impact varies by customer class and usage.
For most residential customers who do not have distributed generators, primarily rooftop solar, the change means an increase of between $1.62 and $4.72 per month.
Wayne Caines, Belco president, commended comments by Alexa Lightbourne, the Minister of Home Affairs, on the rate change.
Mr Caines said: “Belco welcomes the minister's recognition that unbundling is a positive and overdue step, and her support for the principle that charges should reflect how each customer uses the grid.
“That is exactly what the new rate structure delivers, and we agree with the minister that fairness across the system must be the goal.
“To be clear, this restructuring is revenue neutral across the customer base. It was not designed to increase what customers pay overall.
“It redistributes existing costs more fairly according to how each customer uses the grid. It is a fairer sharing of costs, not an across-the-board increase.”
The utility encouraged Ms Lightbourne to take that one step further.
Mr Caines said: “An equitable energy future requires every part of the sector to carry its fair share, including solar PV providers, who currently operate outside the framework that governs Belco.
“Regulation would hold all providers to the same technical and safety standards that keep the grid stable, and to the same oversight and limits on earnings that Belco already operates under.
“Without it, the costs and risks of an unregulated segment fall back on to the grid and ultimately onto the customers who can least avoid them.
“If fairness and transparency are the standard, all solar providers should be regulated, to control costs, protect the grid and safeguard all customers.
“A level playing field is not optional, it is essential, and we would welcome this being addressed in the next Throne Speech.”
In response to the change, Cameron Smith, the managing director of Greenlight Energy said residents who invested in renewable energy would “feel the real weight” of the rate change.
Mr Smith said from August 1, the fixed monthly facilities charge for a home as well as a small business with solar, would see a steep fee charged “before a single kilowatt-hour is used”.
According to figures on Belco’s website, the increase — pegged between $52.48 to $148.83 — represented a total for all bands of electricity usage between 0 to 300 kilowatt/hours to those who use more than 1,501 kilowatt/hours for residential customers.
Mr Smith said: “Belco talks about a modest increase of a few dollars for everyone else.
“The people who invested in renewables carry the real weight, which tells you who this was written for.”
Mr Smith explained: “A large household pays that same $148.83 top-tier charge whether it has solar or not.
“So for Belco's biggest customers the fixed-charge penalty for going solar has just disappeared and the energy savings on top of it are enormous.”
In response to the solar provider’s concerns, Ms Lightbourne said: “Government policy is settled and consistent.
“Bermuda needs a growing renewable sector and a fair deal for the grid-reliant household that cannot install panels.
“Charges that reflect how each customer actually uses the grid serve that fairness.
“At the same time, solar customers have contended for years with a feed-in tariff held low by a flawed calculation at the outset.
“The public cannot be made to carry the cost of poor regulation, or of mistakes that yield higher prices on them. Fair charges and fair compensation must move together.”
Meanwhile, the RA said it “values” its ongoing engagement with the Ministry of Home Affairs.
The body said it would “continue to discharge its statutory responsibilities independently, transparently and without favour”.
The RA clarified that the rate change does not increase the total revenue recovered by Belco through retail tariffs.
“Rather, it changes how those costs are allocated so they more accurately reflect the cost of providing electricity service.”
It added: “The RA’s statutory responsibility is to balance fair pricing, transparency and the long-term sustainability of Bermuda's electricity system, not to optimise a single outcome at the expense of the wider public interest.
“The RA remains confident in the integrity of the decision-making process that led to the approved redesign.
“That confidence is grounded in evidence, independent technical expertise and the legislative framework established by the legislature.”
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