Residents warned of big rise in electricity bills
Residents are being warned to expect a hike in electricity bills, according to Belco.
Posts on X, formerly known as Twitter, and Facebook say that “with the approval of the Regulatory Authority, the Fuel Adjustment Rate will increase from the existing rate of 16.513 cents per kilowatt-hour sold for 1 July 2023 to September 30, 2023 to 24.517 cents per kilowatt-hour sold for all meter readings taken on or after October 1, 2023, until further notice”.
It is a rise of more than 48 per cent and in a statement yesterday Belco president Wayne Caines said: “It is not lost on us that this most recent FAR increase is significant.”
Opposition leader Jarion Richardson said the hike was “a punch to the gut” for people already struggling financially.
Adding more to the cost of living in Bermuda is a punch to the gut, that also adds to the ever-growing list of reasons for Bermudians to move overseas.
Unexpected, significant increases in key household expenses during these volatile economic times shouldn’t be introduced without lengthy explanation and justification, especially given the economic and social repercussions.
The average resident is already struggling to cover basic necessities, like groceries and housing. The same applies to the cost of doing business; it’s becoming intolerable.
Given the role of the Regulatory Authority in this, and its mandate “to promote the interests of the residents and consumers of Bermuda”, this fuel adjustment requires more than a press release. The people deserve a thorough explanation.
Granted, how to price electricity is a complex matter. Government policy should be equally complex and has a role to play as a direct tax goes towards the final cost of electricity.
The electricity bills were already choking many households. Pollution in the West Pembroke area is already intolerable and power supply is getting less and less reliable. This price increase is like rubbing salt into a wound.
Let’s stop making life harder in Bermuda.
The posts, first announcing the move and which were put up late on Friday afternoon, add: “Beginning with the next billing cycle, you'll likely see an increase in your energy bill. This increase is a result of rising fuel prices and a consequential adjustment made to the Fuel Adjustment Rate.”
The FAR reflects the total cost to deliver fuel to the Belco central plant and comprises two parts: the fuel adjustment and government taxes.
Bermuda Electric Light Company Limited advised that beginning on October 1, there will be an increase in the Fuel Adjustment Rate.
With the approval of the Bermuda Regulatory Authority, the FAR will increase from the existing rate of 16.513 cents per kilowatt hour (kWh) to 24.517 cents per kWh. The FAR is comprised of 20.09 cents per kWh FAR and 4.427 cents per kWh government tax on fuel.
This increase of 48.5 per cent relative to the third quarter of 2023 is primarily the result of the mix of fuel necessary to meet demand in light of current and projected engine availability for the quarter.
The FAR reflects the total cost to deliver fuel to the Belco central plant and is comprised of two parts — the fuel adjustment and Bermuda government taxes. The fuel adjustment is based on the total cost of purchasing fuel and includes shipping costs.
The second part of the FAR is comprised of two separate government taxes. At present the Government charges $31.79 per barrel of fuel in addition to a tax of $0.40 per barrel of fuel, which provides funding for the St George’s Unesco World Heritage site.
The FAR is calculated quarterly and rises and falls as the purchase price of Belco’s fuel rises and falls. The FAR is a cost recovery mechanism and both revenue and earnings are neutral as 100 per cent of the cost and any savings owing to a reduction in Belco fuel costs are passed on to customers.
Belco president Wayne Caines said: “It is not lost on us that this most recent FAR increase is significant.
“The cost of fuel is determined by the market, and the FAR is largely driven by the cost of that fuel used to generate electricity. The FAR is revenue neutral and Belco makes no extra earnings from this increase.
“The Regulatory Authority holds us accountable and ensures that our costs are efficiently incurred. Customers can visit our website, where they can find many helpful tips on energy efficiency steps they can take to reduce their bills.”
Oil prices have been increasing steadily this year and, according to Forbes, reached their highest price for 11 months last week. Forbes said that production cuts in Saudi Arabia and Russia’s war in Ukraine continued to drive up the cost of oil, which is approaching $100 a barrel.
The move comes after residents complained last month after seeing their Belco bills rise, for which the company blamed people using their air-conditioning units more.
People took to social media to complain of high bills even when they had turned off all but essential appliances when travelling abroad.
One person wrote: “I am never one to complain. But I think something needs to be done about Belco. This month’s electricity bill was through the roof [this is an understatement] while I lost power twice last month and was away for a week. My Belco bill was at the most.”
Another said: “We have been away this summer as usual leaving only the fridge and a dehumidifier running. It was $250 per month last summer. It was almost $500 per month this summer.”
In a response Mr Caines said: “I understand some of our customers’ frustration with high Belco bills this summer.
“It has been a hot, humid summer and it is likely many customers have been running air conditioning, which can substantially increase their bills.”
The rise is likely to be a blow to inflation, which was starting to trend down — it had fallen to 3.1 per cent year-on-year in May, according to the last figures available, compared with 3.8 per cent in April.
Food inflation still remained stubbornly high in May, at about 8 per cent, although that was down from a high of 10 per cent.
• How will the Belco rate rise affect you, your family or your business? What do you think could be done about the cost of electricity? E-mail firstname.lastname@example.org