Column: Deciphering Your BELCO Bills
[Column written by Denise DeMoura]
People all over Bermuda feel helpless about confusing BELCO bills. They trigger many emotions since we know that most of us can’t get our electricity anywhere else.
Feeling that electricity rates are out of our control, and getting even more expensive, causes anxiety. We feel powerless against such a large corporation and confusing bills. BELCO’s primary goal is to make profits for their shareholders.
But it has to be balanced with fairness to the customers who generate those profits. Government [which is likely BELCO’s biggest customer] decided that they can’t be trusted to do it on their own.
So they “regulated” BELCO to protect both us—and them. Since 2016 it’s by the Regulatory Authority [RA]: “an independent regulatory body, mandated to promote fair business practices, protect consumers and industry stakeholders, and encourage innovation and integrity….”
The RA is designed to be independent from both Government and industry. It sets the actual electricity rates, after input from BELCO about their expenses, including equipment and fuel.
The electricity rates have been set by the RA every 2 years and new ones are due for 1 January, 2024. Exactly how the RA determine these rates is supposedly going to change again soon. There is pending new legislation.
But it’s still been worth learning how to decipher past, and present, bills. It wasn’t easy because the websites don’t explain things very well. And even though I’ve felt like an idiot at math [since secondary school--long story], I kept at it until I felt like I’d cracked a code.
I just focused on residential rates and, thankfully, I find the new bill layout easier to read. At the top of the bill is the number of kilowatt hours [kWh] used each month. Everybody is charged the same price, or rate, up to 250 kWh. But if you use more, it gets more expensive.
There are 3 different levels of energy charges which on the bill are called: First Block, Second Block and Third Block.
The first 250 kWh is charged the First Block rate, which is presently 0.1377 per kWh. I hate decimals so I round it up to about 14 cents.
From 251 up to 700 kWh is charged the Second Block rate of 0.2436 or about 24 cents.
Over 700 kWh is charged the Third Block rate of 0.3803 or about 38 cents.
A cheaper First Block rate does help cash poor people to more easily afford to keep electricity service hooked up. BELCO says the average residential usage is 650 kWh. So most households pay both First and, the not quite double, Second Block rates.
BELCO suggests that higher rates for using more electricity gives customers motivation to use less, and save money. It doesn’t work for most people. It punishes for using more; rather than rewarding for using less.
Other utility companies have studied this in order to increase their efficiency. They want to motivate customers to lower demand for electricity during during peak morning, and evening, hours. This is to prevent having to start up extra generators to meet the demand of few peak hours.
They’ve found that people will more likely shift their electricity use if they are rewarded with credits. But they tend to ignore a punishment for using more system, like the RA and BELCO use.
The Fuel Adjustment Rate [FAR] can change every three months. It’s supposed to even out BELCO’s costs for changing fuel prices. It’s like sharing in the cost of fuel at any gas pump when filling a vehicle. The RA is supposed to ensure that the cost sharing is done fairly.
Presently the really high seeming FAR is about 25 cents. This is multiplied by the number of kWh used. It is not affected by the higher level “Block” charges.
The Regulatory Authority Fee is also calculated on kWh used; but it is only about half a cent. Helping to pay for a regulator makes sense to me, we’d likely be worse off without it.
The Facilities Charge [FC] is different because it is based on the whole year’s annual rolling daily average of how many kWh are used per day. It’s fixed for each customer on January 1 and stays the same for the whole year. It is to cover BELCO’s costs of equipment and infrastructure needed to deliver electricity.
BELCO charges five different rates FC rates for residential [only 1 for commercial] based on the amount of energy used, despite its website saying, “The fixed cost associated with the FC does not vary with energy use.
“The graduated Facilities Charge [FC] is intended to encourage energy conservation and low energy usage which is reflected in the price of the tiers as your daily consumption increase.” These are at 10, 15, 25 and 50 kWh. Most people don’t know this and it’s another punishment for using more.
Since it is calculated based on yearly average, one very high month with visitors, could possibly push you up to a higher Facilities Charge for the next whole next year. It increases about $10 per month for the lower 3 tiers. Over 25 kWh it is MUCH more expensive–$70.75 and over 50 kWh it is $107.70. BELCO makes lots of money from this because their fixed costs to deliver electricity do not change.
The 5% discount is only given if you pay your bill early by the date shown at the top, and bottom, of the bill. It is only for the Total Usage Charges plus Facilities Charge. After it’s subtracted it appears as Net Amount due. If you pay later than the date shown, then you are charged the Gross Total which is the same as Total Billings Charge.
Also not written on the bill is that interest is charged on unpaid bills starting 30 days after the invoice date.
The green bar graph at the bottom of page two makes it easy to compare how much electricity you used each month. Often it goes up when you have visitors or at Christmas. It should go down when you go away, especially if you turn off your water heater.
To the far right of the bar graph is your annual rolling daily average, which determines your yearly set Facilities Charge.`
That’s my interpretation of the whole bill. I also learned that utility bill frustration is worldwide. Mistakes happen. I’ve heard of many and confirmed one. So it’s well worth understanding, and checking, your bill to and asking for any mistakes to be fixed.
Here are two bill examples below. I imagine kWh are the same each month for calculating the Facilities Charge. And, although I checked my numbers many times, I’m still afraid I might not have all the math exactly right!
First Example: Usage Charges of 250 kWh
- 250 kWh times First Block usage charge of 0.137 cents = $34.25
- 250 kWh times Fuel Adjustment [FAR] of 0.245 cents = $61.25
- 250 kWh times Regulatory Fee of $0.00545 cents = $1.36
- Facilities Charge = $22.67 [based on Annual Rolling Daily Average]
Add them all up:
Total Billing Charges = $119.53 also Gross Total
- Not shown on bill: Method for 5% Discount:
- Total Usage Charges $34.25 + Facilities Charge $22.67= $56.92
- 5% discount = $2.85
- Net Amount Due: $116.68
Some bills are lower but the average, according to BELCO, is 650 kWh:
Second Example: Usage Charges for 650 kWh
- 250 kWh times First Block rate of 0.1370 cents = $34.25
- 400 kWh times Second Block rate of 0.2436 cents = $97.44
Add these two together to get:
- Total Usage Charge = $131.69
- 650 kWh times Fuel Adjustment [FAR] of 0.24517 cents = $159.36
- 650 kWh times Regulatory Fee of $0.00545 cents = $3.54
- Facilities Charge of $45.29 [Annual Rolling Daily Average in 3rd tier]
Add up the above:
Total Billings Charge $339.88 also Gross Total
- Not shown on bill: Method for 5% Discount:
- Total Usage Charges $131.69 + Facilities Charge $45.29 = $176.98
- 5% discount = $8.85
- Net Amount Due: $331.03
Good luck deciphering your bills. If you’re like me, it’ll take awhile to become confident doing it. But I found it well worth the effort.
I used this web page for figuring out some of this. It also includes commercial rates.
- Denise DeMoura
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Great work, Denise. Now with a hypothetical offshore wind farm feeding in, increase the monthly bill by a minimum of 50%. My guess is closer to 100% (or higher) but let’s go on the low end for now and work up to the cardiac level shocker at a later date.
What do you mean “hypothetical offshore wind farm”? Are you suggesting that Greenrock is not going to build the offshore wind farm they have been promoting?
I know of no one at Greenrock who would personally invest their own money in the wind farm. One can only hope that the RA will end its offshore wind farm consultation with a no-go decision before spending the estimated $4 million recommended by consultants to “de-risk” the project. However, I never received an answer from the RA about what the criteria are to pull the plug.
Just remember, neither Greenrock nor the RA will release any spreadsheets showing how numbers were calculated. Huge red flag. Neither will provide the Estimated Consumer kWh Rate (ECkR) cost range that will be delivered to consumers and businesses by BECLO purchasing wind-generated electricity. Huge red flag.
Can we get an independent fact-check on this column?
I’d prefer something written with less conjecture and more sourced information. It’s hard to take someone seriously when they struggle with middle-school math. I’ve never known BELCO to charge interest on their bills. It’s required by law to say this if they do.
Also, the Facilities Charge is not set for the year in January. Mine has changed some months depending on my annual rolling daily average. This is one of the least intuitive calculations on the bill because of the rolling average. Which means I can reduce my electricity usage each month, but it has to be lower than it was compared to the same month last year (not the previous month) to reduce my rolling average. (Simple math)