Average monthly electricity bills are expected to increase by a little more than $2 this month after a fuel adjustment increase, the Government announced yesterday.

The Regulatory Authority of Bermuda has set the Fuel Adjustment Rate at 14.23 cents per kWh — up from 13.78 cents per kWh — effective from July 1, a government spokeswoman confirmed.

For the average residential customer, the new rate adds about $2.17 to the monthly bill, an increase of about 1 per cent, she added.

The rise would have been steeper without government fuel duty relief, the spokeswoman said.

She added: “Without that relief, the Fuel Adjustment Rate would stand at roughly 16.46 cents per kWh.

“The relief holds about 2.19 cents per kWh off the fuel component that households would otherwise carry and absorbs the larger part of the underlying cost increase.”

The spokeswoman said the increase reflects higher international fuel prices over the past quarter, driven by volatility in global energy markets.

She said the increase carries no change to Belco’s base rates or regulated returns.

In a statement, Belco said the FAR reflects the cost to purchase, ship and deliver fuel to its central plant.

The utility confirmed that the rate of the rise is calculated quarterly and the cost is directly linked to the global price of fuel. It said the mechanism is revenue and earnings neutral.

Belco said it does not profit on the fuel component of the bill since the full cost is passed down to customers with no mark-up.

Wayne Caines, the president of Belco, said: “Fuel costs are set by global markets, not by Belco, and this quarter they rose.

“We know any increase affects the household budget, and we encourage customers to visit belco.bm for tips on managing consumption and reducing their monthly bill.”

In March, Belco said electricity bills were unaffected by global oil price surges stemming from the war involving the United States, Israel and Iran — and the resulting halt to shipping through the Strait of Hormuz.

However, Joe Barbosa, a senior finance director at Belco, explained in an opinion article for The Royal Gazette that a prolonged war could have led to increases in the FAR beyond April.

Alexa Lightbourne, the Minister of Home Affairs, said this week: “I know what a rising power bill means in a Bermudian home.

“Global fuel prices rose this quarter, and the Government chose to stand between that increase and the family bill because we want to protect Bermudians during times of global instability.

“A cost that would have reached 16.46 cents now sits at 14.226 cents, because the Government stepped in.

“We will keep this protection in place and keep watching every cent to help those we serve.”

The government spokeswoman noted: “Belco revised its filing after updated analysis captured a recent downward movement in global fuel prices.

“The revision lowered the proposed increase from about 5.97 per cent to about 3.21 per cent.”