Brace yourself for bigger BELCO bills

MONDAY, NOVEMBER 14: BELCO has applied for a rate increase.

The utility has submitted a proposal to the Energy Commission, seeking permission to increase base rate tariffs in 2012, 2013 and 2014, while also simplifying the rates structure. 

BELCO did not increase rates in 2011 (although it had approval to do so) due to economic conditions on the Island. 

Ascendant, the parent company of BELCO, reported a $3.1 million profit for the first six months of 2011, down 47.2 per cent from the same period in 2010. Fewer people living in Bermuda has seen a reduction in demand for power.

The new rates also help BELCO replace aging equipment over the next 10 years. The company said it will cost $300 million to do so.

A spokesperson said the utility is concerned about the public interest and is therefore proposing that future rates be linked to the Consumer Price Index (CPI). BELCO has requested that the Energy Commission consider the following average rate increases:

Residential customers — 3.5 per cent average rate increase per annum through 2014, including a facilities fee increases of $3 in 2012 and 2013, and $2 in 2014. 

Commercial demand customers – 5 per cent average rate increase per annum through 2014.

Small commercial customers – 3.75 per cent average rate increase per annum through 2014, including the same facilities fee increases as for residential customers.

The average monthly usage by residential customers is 700 kilowatt hours (kWh).  Under the proposed increase, a customer using 700 kWh per month would see their electricity bill rise from $280.13 in 2011 to $283.05 in 2012, a difference of $2.92. The present average price per kWh for this customer inclusive of the facilities fee and with an average fuel adjustment rate of 15 cents per kWh is 40.02 cents, as compared with the proposed price of 40.04 cents per kWh for 2012.

The recommended rate structures have been designed to encourage customers to use energy efficiently, with higher prices for higher usage.

BELCO plans to pilot a Time-of-Use rate in 2012 to encourage customers to perform certain tasks when rates are lowest, such as running pool pumps, doing laundry and so on.

BELCO issued a press release on its plans today.

Capital expenditure is required both in the central plant and on the transmission and distribution system, which will also be upgraded to incorporate large- and small-scale renewable energy sources.

In the past, BELCO was largely able to avoid rate increases and finance operations and capital expansion from income growth that was achieved by kWh sales growth and cost containment efforts.  BELCO continues to make strides with respect to cost containment. 

However, stagnant electricity sales have led the company to submit the application for rate increases to ensure a strong fiscal platform that can support the debt financing costs of the capital replacement programme.

As has been BELCO’s practice, the utillity will not increase rates if income levels are appropriate to sustain its requirements.

“Capital work over the next decade is imperative, so that BELCO may continue to provide a secure, reliable, base load electric power system for Bermuda’s residents and businesses,” its statement said,

In May 2011, BELCO received Planning permission to move forward with development of a new North Power Station within its existing Pembroke footprint.

The North Power Station development will enable BELCO to retire aging equipment, replacing it with new, more efficient plant.

The North Power Station is scheduled to be commissioned in 2013, when BELCO expects that new, more efficient engines will result in higher output per barrel of fuel.

In addition to building the North Power Station, over the next three years, BELCO will undertake major transmission and distribution capital projects, including the addition of a new submarine cable to the East End of the Island to ensure redundancy, and replacement of the aging submarine cable that feeds the West End via Dockyard. 

BELCO will also replace critical, but aging transmission cables to its core Flatts Substation, and will replace aging equipment in, and increase capacities for, substations in the City of Hamilton and Prospect, which serves the National Sports Centre complex.

For more information

Support information for BELCO’s base rate tariff increase application is available at www.belco.bm, and at the reception desk of BELCO Headquarters at 27 Serpentine Road. It is also available from The Department of Energy, 2nd Floor, F.B. Perry Building, 40 Church Street, Hamilton and on the Energy Commission’s “Filings and Decisions” webpage at www.energy.gov.bm.

Members of the public are invited to make written submission to the Energy Commission by 5:00 PM, 30 November 2011. Submissions should be delivered to The Energy Commission c/o Department of Energy, 2nd Floor, F. B. Perry Building, 40 Church Street, Hamilton or mailed to The Energy Commission, P.O. Box HM 101, Hamilton HMAX or emailed to The Energy Commission at [email protected].