Electricity bills are set to jump in June with the average household likely to face a monthly $5 hike because of rising oil prices around the world.

And current predictions point to an even greater increase later in the summer when Belco buys its next three-month reserve of fuel.

By the end of summer, the average monthly bill could be $13 higher simply as a result of changes to the fuel adjustment levy being applied to all bills.

The levy accounts for about one quarter of the total bill. It is currently 7.5 cents per kilowatt hour working out at an ?add on? cost to a typical household of $53.

That is set to rise to $58 next month and, by the end of the summer, could be to as much as $67 for a household that uses the average of 711 kilowatts of power in a month.

The fuel adjustment levy is a mechanism to smooth out the peaks and troughs in world oil prices so that household bills due not fluctuate wildly. If the world oil price drops the levy can, as has happened in the past, also go down.

However, there appears to be little likelihood of that happening in the near future and with the rises now expected, customers are being urged to take action to reduce energy consumption to avoid being hit by higher bills.

Switching off water heaters when not needed, raising the threshold settings on air-conditioning units and not leaving them switched on when there is no one at home, or simply closing blinds and drapes to reflect away direct sunshine can reduce electricity usage.

Likewise businesses can take energy saving measures such as ensuring computers, copiers and other equipment are switched off at night.

Although the energy company admits it exists to make profits, it also acknowledges its responsibility to help people avoid facing extremely high bills by encouraging them to make energy-saving decisions.

Belco senior vice president Andrew Parsons said: ?We are advising customers that these price increases are beyond our control. This increase has nothing to do with price increases in Bermuda, it has been generated from outside Bermuda.

?A number of issues have impacted the price of oil and the price of a barrel of heavy fuel in January was $24, but when we bought our last consignment in March it was $47.?

The next three-month supply is expected to be even more expensive. Belco is paying between $82 and $102 per barrel of oil it brings to Bermuda once Government duty and wharfage fees are paid.

Since the beginning of 2006, the fuel adjustment levy on electricity per kilowatt hour has been unchanged. But the energy company is now seeking permission from the watchdog Price Control Commission to increase the cost by 0.75 cents as from June 1. A further hike of around 1.25 cents per kilowatt hour is likely to come later in the summer.

The anticipated June rise is a direct result of a sharp rise in fuel prices in April when the company purchased its latest consignment from Esso. An element of the calculation also reflects anticipated demand for electricity when the more expensive fuel is being used at the Hamilton power station.

Belco maintains a three month reserve of fuel on the Island and is about to place its next order on the world oil market, hence its prediction the fuel adjustment levy later this summer will be even higher than the proposed rise for June.

The rise in the levy from 7.5 cents to 8.25 cents must first be approved by the Price Control Commission.

Mr. Parsons said there was a likelihood the next shipment of oil from the refinery in Trinidad and Tobago would be even more expensive and result in a potential levy of 9.5 cents per kilowatt hour.

He pointed out that Belco has increased its efficiency by four percent this year and is continuing to seek improvements to lower the cost of producing electricity on the Island. The company intends to buy power generated from a submerged power generator off the coast of Bermuda from the end of 2007 to lessen its overall reliance on oil.

The company is also investigating using financial market strategies, such as hedging, to lesson the impact of fluctuating oil prices on customers? bills.

Mr. Parsons said the price increases have nothing to do with the major blaze at the power station last year, which caused an Island-wide power cut.

Belco vice-president Linda Smith said: ?We want customers to be aware and to be able to change their habits and be economical. Customers have taken action in the past to do this. As an example, after last year?s fire people did make efforts, so they do know things they can do.

?Set the air-conditioning at 76 degrees Fahrenheit, shut shades on the sunny side of buildings and close the drapes at home to keep the sun out, don?t turn on the air-conditioning until you are going to use a room, set things on timers, such as water heaters and air-conditioning.?

Newspaper advertisements outlining the reasons for the price increase and giving tips on how to reduce bills will be appearing within the coming weeks, she added.

The company does not foresee demand for electricity outstripping supply this summer. The power station has the capacity to produce 140 megawatts and will, even at projected peak times, have a reserve margin of between 10 and 20 megawatts.