Power price cut may not mean higher bills down the line
A power price cut need not mean future rate increases for electricity supplier Belco, the energy watchdog has said.
The Regulatory Authority made the announcement after it reached an agreement with Belco for a small cut in power bills from June 1 to the end of the year.
But Belco announced on Monday that, although the revenue deferrals agreed with the RA would be “helpful in the short term, they will create rate pressure in the coming years”.
The reduction of about 1.6 per cent was in response to the economic hardship caused by the coronavirus pandemic.
A spokeswoman for the authority said the RA had to balance “the revenue allowance for Belco with the current circumstances of the Bermudian economy”.
She added: “A deferral does not necessarily translate to rate increases as other significant factors have to be considered as well.”
The spokeswoman said the deferrals were “a significant factor”.
But she added that additional items had been considered, including reduced allowed earnings, reduced capital expenditure and reduced operating expenses.
The spokeswoman said: “The RA has reviewed each of these items and the net results is the reduced tariff.”
Walter Roban, the Minister of Home Affairs, rate cut at the weekend and said it achieved the Government's pledge from the last Throne Speech to reduce electricity costs.
A ministry spokeswoman said: “While Belco has inferred that the reduction is short-term, only the RA can determine whether any reductions will be temporary or permanent.”
The authority’s decisions guided by the Electricity Act, which highlighted the need “to protect the interests of end users with respect to prices and affordability, and the adequacy, reliability and quality of electricity service”.
The RA’s methods for the calculation of tariffs have been outlined in a public report.