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Electricity price cut promised by Government fails to materialise

Walter Roban, the Minister of Home Affairs (File photograph)

The Government has failed to scale back recent hikes in the price of electricity — despite making a pledge more than two months ago that prices would fall “in the immediate future”.

Dramatic, price-busting measures and decisive decision-making have been stymied by “ongoing discussions” between the Government, Belco and the Regulatory Authority that have dragged on for more than seven weeks.

Belco raised its prices by about 20 per cent in October. The increase was the result of a 50 per cent rise in the Fuel Adjustment Rate component of the bill, from 16.513 cents per kilowatt-hour to 24.517 cents per kWh.

That rise was approved by the Regulatory Authority, but later condemned by Walter Roban, the Minister of Home Affairs.

The minister said that he was sickened by the increase and demanded that the RA explain the methodology used to calculate the FAR.

News of the increase sparked public outrage and protests outside Belco’s Hamilton headquarters, and a pledge from Mr Roban that he would consider taking legal action against the RA if it did not lower the FAR.

At a press conference on October 7, Mr Roban said: “If there are errors in law, the RA will be held accountable and the mistakes rectified. Bermuda's people, economy and environment deserve no less.”

Within a week, the three parties were considering two options to scale back the increase.

At an RA board meeting held on October 18, the Government was already considering a tax reduction on oil imports in an effort to curb prices.

Minutes from the meeting also show that RA staff were authorised to team up with Belco and “pursue options” to temporarily reduce the FAR increase to 20.4 cents per kWh until the end of the year.

According to Belco and the RA, no progress on either of those initiatives has been made.

The minutes noted a report made to the board by the RA’s chairman, Mark Fields.

The minutes state: “The chairman of the board attended a meeting with the Ministry of Home Affairs on October 16 to discuss the Belco fuel adjustment rate increase effective as of October 1, and how the RA and Belco can remedy the effects of hardship the increase to the FAR could have on consumers.

“The board advised that the Government was considering tax relief on fuel imports to lower the FAR.”

According to the minutes, board members were also given a detailed explanation of how the FAR had been calculated for the last three months of this year.

The minutes of that meeting said that “multiple sensitivity analyses scenarios for the Q4 period were presented and explained”.

The minutes conclude: “It was resolved by the board to authorise RA staff to pursue options with Belco to temporarily level the FAR at 20.4 cents per kWh through year end.”

A spokesman for the Ministry of Home Affairs did confirm that meetings had been held and that “all of the stakeholders at the table agreed to co-operate to reduce the FAR in the immediate future”.

However, Belco bills issued to customers this week show that the FAR is still set at the 24.517-cent rate.

Asked by The Royal Gazette yesterday for an update on those efforts , a spokesman for the RA initially would only confirm that the minutes were accurate.

The spokesman said: “As stated in the board minutes, the RA staff have been authorised to pursue options.”

Pressed for more information, the spokesman said: “It remains a priority for the RA to ensure that any decisions concerning the FAR are in the best interest of consumers, aligning with our consumer protection mandate.

“Further details will be communicated upon the conclusion of ongoing discussions.”

That position was shared by Wayne Caines, the president of Belco.

Mr Caines said: “Discussions with stakeholders regarding the way forward are ongoing. To avoid prejudicing the process, Belco has no further comment at this time.”

The Royal Gazette sent a series of questions for the attention of Mr Roban yesterday. No response was received by press time.

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Published December 08, 2023 at 8:01 am (Updated December 08, 2023 at 8:12 am)

Electricity price cut promised by Government fails to materialise

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