RA: ‘BELCO Instructed To Initiate Rate Review’

October 30, 2018

[Updated] BELCO has been instructed by the Regulatory Authority to “initiate a rate review, which will assess all costs associated with producing and distributing electricity,” the RA said today.

An RA spokesperson said, “This will result in an updated rate per kilowatt hour [kWh], that is, the rate on a BELCO bill that is shown as ‘usage charges’ and that does not include the cost of fuel. The cost of fuel is identified separately on BELCO billing, as the Fuel Adjustment Rate.

electricity light bulb TC October 30 2018

“The rate and structure of the ‘facilities charge’ which is shown separately on BELCO’s billing, will also be assessed in the retail tariff review.

“This is the first electricity retail tariff review conducted by the Authority and it will use the retail tariff methodology [Methodology] that was set earlier this month after extensive consultation with stakeholders.

“The review will determine the allowed revenue for the Transmission, Distribution & Retail licensee [BELCO] and will convert the allowed revenue into retail tariffs.

“The rate review will analyze information such as BELCO’s cost to generate, transmit and distribute electricity, including operation and maintenance, overhead expenses, administration and other costs.

“Under the Methodology, BELCO’s allowed revenue will be capped, which is a change from the current state where BELCO’s allowed maximum return [profit] is capped at 8%.

“The Authority has introduced cost-efficiency incentives whereby BELCO can improve its profits against a capped allowed revenue, by improving efficiencies in operations, the benefits to be shared between the utility and its customers.

Regulatory Authority Interim CE, Aaron Smith said, “The retail tariff methodology has set the path for a future of certainty and accountability for Bermuda’s electricity rates and the process is now underway to determine what is a reasonable rate.”

Mr. Smith added, “Bermuda’s electricity rates are frequently criticized by the public as being too high. While we know that delivery and operating expenses for many services in Bermuda are high, this review will allow the Authority to determine a fair and just rate while maintaining high quality service standards with safe and reliable electricity to all.”

“The per kWh rate was last updated two years ago before the Electricity Act 2016 regulated the industry. The updated tariff will be published by mid-2019.

“A General Determination setting the Methodology was issued by the Authority on October 19th and is online here.”

Update 4.35pm: BELCO said they “welcomed the announcement by the Regulatory Authority (the “Authority”) that it has commenced its electricity retail tariff review.

BELCO President Dennis Pimentel said: “BELCO is pleased to provide the Authority with the information it requires to conduct its review as this will assist with BELCO’s efforts to reduce electricity rates for all its customers.

“BELCO is in full support of the Authority and looks forward to working with the Authority to assess all costs associated with producing and distributing electricity.”

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Comments (6)

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  1. inna says:

    All of this makes no sense to the average voter.

    Can someone, please, explain in laymans terms what the hell is going on with the RA and BELCO?

    • Hope says:

      No idea on the inner workings, but if an organization has a cap on profit and finds that their revenue is too high (and would breach the cap) then they will also increase expenses to reduce profit to be under the cap. If there is a cap on revenue however, then the end consumer should (in theory) see more competitive rates and if the organization is concerned that this revenue amount will not give them high enough profits then they will be incentivized to reduce expenses (i.e. find efficiencies).

    • Goose says:

      Some Marvin Gaye, some Luther Vandross, a little Anita etc

  2. Rocky5 says:

    Figures can lie, and liars can figure….

  3. BermieBorn says:

    With all the funding the RA receives from end users why aren’t they performing this calculation instead of asking a utility to audit the numbers themselves?

  4. Hellco says:

    prices are insane for electricity here, higher than anywhere on earth. My old bill at my old appartment was like $80. Now I live in almost darkness in my house, one lamp with a 15w LED bulb, unplugged all waterheaters like 23hrs a day, very little applicances and high efficiency split unit AC. My bill has fluctuated between $140 which is more reasonable to $240-$340. There is never a change of my use of electricity, yet the price can literally double. I called Belco over the years about this and they never reply, they dont care, they made false promises to come check my meter is not broken and never bothered to come. It’s like they are pulling a scam on people, charging you double and not being able to justify it, other than cooked numbers on paper which nobody but God could know if its true or not.