BELCO Announce Fuel Adjustment Rate Increase

Bermuda Electric Light Company Limited (BELCO) advised that beginning October 1st, 2023 there will be an increase in the Fuel Adjustment Rate (FAR).

With the approval of the Bermuda Regulatory Authority, the FAR will increase from the existing rate of 16.513 cents per kilowatt-hour (kWh) to 24.517 cents per kWh. The FAR is comprised of 20.09 cents per kWh FAR and 4.427 cents per kWh Government tax on fuel.

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

The FAR reflects the total cost to deliver fuel to the BELCO central plant and is comprised of two parts – the fuel adjustment and Bermuda Government taxes. The fuel adjustment is based on the total cost of purchasing fuel and includes shipping costs.

The second part of the FAR is comprised of two separate Government taxes. Currently the Government charges $31.79 per barrel of fuel in addition to a tax of $0.40 per barrel of fuel which provides funding for the St. George’s UNESCO World Heritage Site.

The FAR is calculated quarterly and rises and falls as the purchase price of BELCO’s fuel rises and falls. The FAR is a cost recovery mechanism and both revenue and earnings neutral as 100% of the cost and any savings due to a reduction in BELCO fuel costs are passed on to customers.

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.”

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