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Group demands answers on reasons for energy bills hike

The Bermuda Clean Air Coalition is questioning whether the Fuel Adjustment Rate increase approved by the Regulatory Authority is because of the need to implement pollution mitigation measures after the commissioning of Belco’s North Power Station (File photograph by Akil Simmons)

A pressure group is demanding answers from Belco, the Regulatory Authority and the Government regarding the reasons behind the recent hike in energy bills.

The Bermuda Clean Air Coalition has also requested an update on legislation in the works that aims to reduce emissions from the energy plant, and has asked whether Belco will be held accountable for apparent breaches of the Clean Air Act.

The letter has been sent to Wayne Caines, the president of Belco, Abayomi Carmichael, the chief executive of the RA, and Walter Roban, the Minister of Home Affairs.

Belco revealed this month that the cost of electricity will increase by about 20 per cent from this month as a result of an increase in the Fuel Adjustment Rate.

The BCAC said in the letter that it had read the FAR reports on the RA’s website and noticed that one of the alternators at the North Power Station had been offline for June, July and August — peak months in Bermuda for energy consumption.

The group said it was told by “people familiar with the Belco plant” that engines that burn diesel — a cleaner-burning fuel than heavy fuel oil, the primary fuel at the plant — would be used more than normal to compensate for the alternator being shut down.

It has questioned whether the increase in the FAR was brought about by the need for the energy plant to burn diesel to mitigate pollution.

Mitigation measures, including the burning of a diesel fuel, were implemented after Belco’s decision to optimise the North Power Station for liquefied natural gas, a fuel that was never approved by the RA.

Mr Caines has said emissions and soot from the plant since the station was commissioned were caused by that decision, and the BCAC has said the customer should not foot the bill for the risk Belco took before fuel-type approvals being given.

The BCAC said in its letter: “We made inquiries and were advised that the shutdown of the N3 alternator could reduce soot pollution and bring Belco closer to what is required in the Clean Air Act.

“Would shutting down the N3 alternator result in less soot output? Is Belco now within the parameters required under the Clean Air Act? Is that why the N3 alternator was shut down?”

It added: “Part of BCAC’s complaint to Belco and Government years ago was that Belco needed to convert to a cleaner fuel, but that the associated expense should not be passed on to the people of Bermuda since it was Belco’s decision to build the ill-fated North Tower [North Power Station], which is causing most of the nuisances and issues.”

The BCAC highlighted that according to Belco’s Q4 report, diesel cost $153.62 per barrel in May, while the heavy fuel cost $130.22 per barrel.

It found that when comparing June, July and August of this year with the same period in 2022, Belco used 10,852.97 barrels more this year — an 82 per cent increase.

When it compared 2023 with 2021, it found a 918 per cent increase in consumption of diesel. BCAC took the cost of the increase and divided it by 27,418 households as recorded in the latest census and arrived at a cost of $60.56 per household.

The BCAC added: “What we have to keep in mind is that the increase we are all upset about is recovery money for Belco. They are making back the money that they spent in the last quarter. We still have three months to go in this year, so they have to also make sure that they end the year whole as possible.

“So, after they make their money from Q3, they have to try not to lose money in Q4.”

The letter questioned: “Why did Belco use so much more diesel between June and August 2023 than in the past two years? Is it related to Belco trying to reduce their air and water pollution?”

Belco said when announcing the FAR increase: “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.”

Mr Roban threatened to take the independent RA to court after it upheld the increase.

The increase also brought protesters out in front of Belco’s head office on October 9.

Finally, the BCAC asked the RA and Mr Roban about the Clean Air Act. It said that Mr Roban promised to consult the BCAC over the legislation before sending it to Parliament. It added: “Nothing has happened and nothing has been upgraded in Parliament.”

The letter said: “Meanwhile, Belco continues to pollute the country, and the RA and the Government are allowing it to happen. Avoidance of this modernisation allows Belco to avoid acting responsibly and the people impacted by Belco’s pollution can't do this for another 30 years.”

The BCAC also asked the status of an investigation that was launched by the Ministry of Health and taken over by the Ministry of Home affairs into a breach of the Clean Air Act.

The BCAC formally invited representatives from Belco, the RA and the Government to a community meeting on October 26.

Belco, the RA and the Ministry of Home Affairs have been contacted for comment.

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Published October 17, 2023 at 7:59 am (Updated October 17, 2023 at 8:26 am)

Group demands answers on reasons for energy bills hike

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