BELCO has powered up an idea that could save 44 per cent of residents money.

But if someone is paying less, others will have to pay up. The 28 per cent of the highest energy users will see their overall monthly electricity bills go up.

It has submitted a proposal to the Energy Commission yesterday to revise the residential Facilities Charge to assist lower-energy-usage customers, many of whom have lower incomes or are on fixed incomes.  

Minister of Education and Economic Development Grant Gibbons said the proposal, if approved “will provide some helpful cost relief for those residential customers who are low users of electricity and who tend to be seniors, as well as families and individuals in the lower income brackets”.

Currently all residential customers pay a $33.00 per month Facilities Charge regardless of their energy usage. 

The new proposal is for a Graduated Facilities Charge that would reduce costs for lower-usage residential customers and slightly increase the overall cost for those who consume the highest number of kilowatt hours (kWh) per month.

A BELCO spokesperson said; “The proposal is in response to the call to assist lower-income customers who struggle to meet monthly bills, during these difficult economic times. 

“If it is approved by the Energy Commission, 44 per cent of BELCO customers will see reductions in their overall monthly electricity bills; 28 per cent will be unaffected; 28 per cent of the highest energy users will see their overall monthly electricity bills increase slightly, depending upon energy consumption.”

The only exception to the proposed Graduated Facilities Charge is for customers on BELCO’s Net Metering Programme who will remain on a fixed $33.00 per month charge. 

Customers on the Net Metering Programme draw energy from the grid when needed and intermittently sell excess power back to the grid when their consumption is less than what is being produced by their personal renewable energy systems. 

Mr Gibbons added while it was premature to comment on how the Energy Commission might rule “the Ministry and the Department of Energy are working hard to ensure that we move Bermuda in a positive direction and that we implement strategies that ensure a more sustainable energy future. The goal is to lower the cost of energy for all individuals, businesses and organizations while maintaining the reliability that we have come to expect in our energy supply”. 





Bermuda Electric Light Company Limited (BELCO) submitted a proposal to the Energy Commission today to revise the residential Facilities Charge to assist lower-energy-usage customers, many of whom have lower incomes or are on fixed incomes.  

All residential customers now pay a $33.00 per month Facilities Charge regardless of their energy usage. The charge covers the cost of specific infrastructure and business services required for each metered connection.  The new proposal is for a Graduated Facilities Charge that would reduce costs for lower-usage residential customers and slightly increase the overall cost for those who consume the highest number of kilowatt hours (kWh) per month.

The proposal is in response to the call to assist lower income customers who struggle to meet monthly bills, during these difficult economic times. If it is approved by the Energy Commission, 44% of BELCO customers will see reductions in their overall monthly electricity bills; 28% will be unaffected; 28% of the highest energy users will see their overall monthly electricity bills increase slightly, depending upon energy consumption. 

If approved, the Graduated Facilities Charge would be based on each customer’s average daily kilowatt kWh consumption over the previous 12-month period, which would be reassessed monthly, updating the Annual Rolling Average.

The only exception to the proposed Graduated Facilities Charge is for customers on BELCO’s Net Metering Programme who will remain on a fixed $33.00 per month charge. Customers on the Net Metering Programme draw energy from the grid when needed and intermittently sell excess power back to the grid when their consumption is less than what is being produced by their personal renewable energy systems. 

Proposed Graduated Facilities Charge Based On Annual Rolling Average of kWh Consumed Monthly

 

Daily kilowatt hour (kWh) Usage

Facilities Charge

Old/New

Estimated Percentage

Increase/Decrease

On Overall Bill *

Percentage of

Customers Affected

Tier 1

0-10 kWh per day

$33.00 to $15.00

21.1% reduction

26%

Tier 2

10-15 kWh per day

$33.00 to $25.00

5.0% reduction

18%

Tier 3

15-25 kWh per day

$33.00 Unchanged

NO CHANGE

28%

Tier 4

25-50 kWh per day

$33.00 to $49.50

3.8% increase

22%

Tier 5

50+ kWh per day

$33.00 to $75.00

3.9% increase

6%

















*Projected average for each tier of customer usage; individual results will vary.

 

BELCO’s proposal before the Energy Commission provides no profit to BELCO.

Why Can’t BELCO Just Lower Its Rates?  Maintaining revenue neutrality is essential for BELCO to be positioned to successfully access capital markets for investment in new plant and equipment which provides opportunities to move to more efficient technologies, including alternative fuel options, renewable energy and longer-term improved affordability.

This proposal follows in the wake of several substantial actions BELCO has taken, since the beginning of the recession, to reduce operating costs while maintaining a system with a 99.9% reliability rating. These steps include voluntarily: waiving a rate increase, cutting staff and reducing pension costs.                       

Specifically, BELCO waived an approved 1.5% rate increase due to take effect at the start of 2011. That same year, the company achieved the equivalent of an 8-9% staff reduction through the early retirement of 26 employees. The company froze its Defined Benefit Pension Plan and moved all employees to a Defined Contribution Plan effective 1 January 2012.  Although BELCO incurred a significant one-time expense, the change provides sizable future cost reductions.

BELCO also continues to reimburse Government directly for the Facilities Charge paid by customers on Financial Assistance. This programme, which has been in effect for over a decade, has more than doubled in cost over the past five years.  In 2013, waiving the Facilities Charge for these customers cost BELCO $274,000 in revenue for which the company seeks no recovery. 

How Can Customers Monitor Their Average Daily kWh Consumption and Annual Rolling Average?   Should this proposal be approved by the Energy Commission, an additional line will be added to residential customers’ monthly statements.  Under the heading Consumption Comparisons the Annual Rolling Average will be added to the information.  Customers will be able to review their Annual Rolling Average on a monthly basis, in addition to the existing Current Month, Previous Month and Same Month Last Year consumption information. This information provides individual customers’ usage trends.

If approved by the Energy Commission this proposal incentivises conservation at the higher-use levels, as those placing the greatest demand on the system will be paying a higher overall cost. The proposed structure is also more aligned with Government’s White Paper objective to encourage conservation, as it allocates the greater cost to those with the largest carbon footprint.  

The BELCO application does not affect approved Energy Charges (cost per kWh), the on-time payment discount, or the Fuel Adjustment Rate that is calculated on a monthly basis and approved by the Energy Commission to cover the fuel cost, above $30.00 per barrel, used in the production of electricity.  BELCO makes no profit on the Fuel Adjustment Charge, and is actively working on initiatives for alternative fuel options, newer and more efficient plant and equipment, renewable energy, efficiency and conservation.  

BELCO provides energy savings tips through the media, on its website www.belco.bm and in customer mailings.  


Statement from the Minister of Education and Economic Development, Dr The Hon. Grant Gibbons, JP, MP

“The Ministry of Education and Economic Development has been in on-going discussions with BELCO and are pleased that the utility has submitted their proposal on the restructuring of the facilities charge.

“We believe that if approved, this proposal will provide some helpful cost relief for those residential customers who are low users of electricity and who tend to be seniors, as well as families and individuals in the lower income brackets.

“It would be premature to comment further because it is the Energy Commission who must consider and rule on the submission by BELCO.

“While we await the Commission’s decision, I will add that the Ministry and the Department of Energy is working hard to ensure that we move Bermuda in a positive direction and that we implement strategies that ensure a more sustainable energy future. The goal is to lower the cost of energy for all individuals, businesses and organizations while maintaining the reliability that we have come to expect in our energy supply.”