Bermuda Electric Light Company Limited (Belco) Announces Increase in Electricity Rates Effective October 1

HAMILTON – Opposition leader Jarion Richardson has described the announcement by the Bermuda Electric Light Company Limited (Belco) that it will be increasing the rate of electricity as of October 1 as “a punch to the gut” .

“Unexpected, significant increases in key household expenses during these volatile economic times shouldn’t be introduced without lengthy explanation and justification, especially given the economic and social repercussions.

“The average resident is already struggling to cover basic necessities, like groceries and housing. The same applies to the cost of doing business; it’s becoming intolerable,” Richardson added.

But Belco President Wayne Caines said “it is not lost on us that this most recent FAR increase is significant.

“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.

“The Regulatory Authority holds us accountable and ensures that our costs are efficiently incurred. Customers can visit our website, where they can find many helpful tips on energy efficiency steps they can take to reduce their bills,” he added.

In its statement, Belco said it is increasing the fuel adjustment rates (FAR) from the existing rate of US16.513 cents (per kilowatt hour (kWh) to US24.517 cents per kWh.

It said with the approval of the Bermuda Regulatory Authority, the FAR is comprised of US20.09 cents per kWh FAR and US4.427 cents per kWh government tax on fuel.

“This increase of 48.5 per cent relative to the third quarter of 2023 is primarily the result of the mix of fuel necessary to meet the demand in light of current and projected engine availability for the quarter.”

Belco said that the FAR reflects the total cost to deliver fuel to its central plant and is comprised of two parts, namely the fuel adjustment and Bermuda government taxes, adding the fuel adjustment is based on the total cost of purchasing fuel and includes shipping costs.

It said the second part of the FAR is comprised of two separate government taxes. At present the government charges US$31.79 per barrel of fuel in addition to a tax of US$0.40 per barrel of fuel, which provides funding for the St George’s Unesco World Heritage site.

Belco said the FAR is calculated quarterly and rises and falls as the purchase price of its fuel rises and falls. The FAR is a cost recovery mechanism and both revenue and earnings are neutral as 100 per cent of the cost and any savings owing to a reduction in Belco fuel costs are passed on to customers.