Electricity tariff reduced as RA works on new tariffs
Working together, the Regulatory Authority and Belco have achieved a midyear reduction in the retail tariff that is applied to electricity bills.
Across the board, the tariff decrease averages out at about 1.6 per cent. It will take effect from June 1 and last until the end of the year, although consumer bills could rise if the fuel adjustment rate – another component of Belco bills – increases due to changes in the cost of importing oil.
The tariff reduction was announced on Sunday.
In an interview with The Royal Gazette, Denton Williams, chief executive of the RA, said the Authority is working on fixing structural problems with some existing tariffs, and implementing new tariffs, including an electric vehicle public charging tariff, a low income tariff, and an economic development tariff.
Regarding the reduced retail tariff, which is part of the usage charge on Belco bills, Mr Williams said: "The goal was to try and provide some sort of relief during the Covid-19 period as much as possible. It is very specific to this year.
“Six months has gone by, so the effect of it is more for the remaining balance of the year. The terms will offset enough to make up an approximate 1.6 per cent decrease across all customers.”
Residential customers are likely to benefit from a 1.7 per cent reduction, and the average rate for commercial and demand customers is expected to fall by 1.8 per cent and 1.4 per cent respectively.
Mr Williams added: "There is a variable that is fairly significant, and that is the cost of fuel. We don’t have oversight on the international fuel markets, they fluctuate, so there is a risk of change there."
The move comes a month after the RA fee, that is also added to Belco bills, was increased from 0.475 of a cent per kilowatt hour, to 0.635 of a cent per kWh. The RA said this was a temporary increase to ensure delivery of Bermuda's first Integrated Resource Plan, which is expected to be completed within two years.
The RA has started to prepare for the next retail rate period, which will begin in January. The next period will span three years.
Mr Williams added: "We are also looking to implement some new tariffs. We think there are some structural problems with some of the existing tariffs as well, so we will fix those.
"We are going to introduce the electric vehicle public charging tariff. We're developing a low income tariff, and also an economic development tariff, which is designed to encourage companies to domicile in Bermuda. Those are what we are working on."
Details on these will be revealed in due course, and they are expected to be rolled out in the new year.
Belco has warned that revenue deferral that enabled the retail tariff decrease to be made will create rate pressures in coming years.
It said that in an effort to reduce rates it had proposed a revenue deferral to the RA “to ease the impact on customers for the balance of 2021 as the country begins to rebound from the economic impacts of Covid-19”.
It said it continues to work on increasing efficiency and reducing operating costs, while supporting initiatives such as the adoption and expansion of electric vehicles on the island along with “increasing Bermuda’s appeal as a preferred international business and tourist destination”.
Wayne Caines, president of Belco, said: “Belco worked with the Regulatory Authority to implement the current retail tariff reduction for our customers. While the next couple of rate cycles will likely be challenging, we remain committed to working with the RA to achieve outcomes that are sensitive to customer impact and improve the efficiency and effectiveness of our electric system.”
On Sunday, the RA also lifted its moratorium on the deployment of 5G technology on the island, paving the way for telecom companies with the appropriate licence to roll-out Fifth Generation wireless technology, which allows for faster data speeds than 4G networks used on the island today.
When asked if there will need to be more antenna towers to accommodate 5G equipment, Mr Williams said the RA did not see any need for new towers, but that it depends on the deployment of the provider.
He said: “There are low-band, mid-band and high-band versions of 5G. Some aspects of 5G are similar to 4G, in that they use the same spectrum, and can be deployed in the same manner on the existing radio towers.”
A low-band 5G tower could give coverage for hundreds of miles, with data speeds of 30-250 megabits per second, according to VentureBeat.com. A mid-band tower could have a range of a few miles, with speeds of 100-900 Mbps, and a high-band antenna could cover an area of a mile or less, with speeds of one to three gigabits per second.
Mr Williams said: “The high-band, it has short wavelength, so it does not penetrate very far and it doesn’t have very high power output, so it tends to have antenna every 100 or 200 metres depending on the topography. Usually they only do that in places like cities.”
He added that the RA was not trying to tell providers how to deploy 5G technology, but wanted to make sure it is done in a safe manner.
Tomorrow, in the second part of this interview, Mr Williams talks about how the RA deals with conflicts of interest, why it needs to use consultants, and when it will issue its thoughts on December’s island-wide electricity outage.