Column: Pearman On BELCO’s Price Hike & More

[Opinion column written by Shadow Legal Affairs Minister Scott Pearman]

Belco’s latest decision to increase Bermuda’s already high electricity costs – with the kilowatt hour rate projected to go up next month by almost 14% – amounts to a punch in the gut for everyday Bermudians.

Many on our Island already struggle to meet the existing high bills, with some Bermudians forced by hardship to choose between paying for food, rent, electricity, or healthcare.

Belco’s move seems tone-deaf to the plight of hard-working Bermudians, people trying desperately to keep their heads above the rising waterline.

And the PLP Government has been noticeably quiet on this issue, seeking to shift the problem of Bermuda’s high energy bills into the lap of the independent regulator [RA]. However, as the OBA has pointed out before, the RA’s involvement as regulator does not excuse Government inaction. Inaction that demonstrates, yet again, the hollow promises of Government to lower the cost of living. Costs that seem only to keep going up and up and up.

If our economy were not such a mess, a financially stable Government might intervene to lower fuel taxes, helping offset Belco’s impending price increases. Yet PLP mismanagement has left our Island in a rocky financial state, so that creative tax solution can no longer be sensibly deployed.

Instead, the Government simply repeats its line that this is the RA’s problem. And so Belco will now increase our electricity costs. And Bermudians will suffer.

Of course Belco and the Government are not the only ones who will face public criticism. It was the RA’s decision to permit Belco to implement increases.

The RA is supposed to be the independent watchdog here, with a statutory duty to protect the rights of consumers and end-users. When Belco seeks an increase, the RA is bound under Bermuda’s existing laws to consider a number of factors.

Earlier this year, Belco took the RA to Court to determine how the RA must interpret those various existing factors. Although the RA eventually saw off Belco’s legal claim, the RA may now be wary of further legal battles.

The OBA recognizes this is a complicated issue. One central question the public will wish to have answered is this: Has Belco gone so far as to assert that without this significant price increase the utility cannot reliably provide power to the Island?

If not, then what has Belco said to persuade the RA to permit Belco’s latest increase? Put more simply, what’s actually at stake here?

Doubtless Belco must now explain to the public why our already high costs will be getting even higher this August. Additionally, the RA must explain to the public why the RA decided to permit Belco’s requested increase – a decision many will find surprising given our current economic climate. Finally, the Government must explain what they plan to do about it.

Some may rightly ask what the OBA would do if we were the Government.

Well, for a start, we would not have left it so long and let things get this far down the road. As long ago as the Summer of 2022 [RG 12 Aug 2022], the OBA highlighted the urgent need for greater engagement by the Government on the issues concerning Belco and the RA.

When Belco’s 2023 rate increases were announced last Autumn, the OBA swiftly called to ‘press pause’ on those increases [RG 13 Oct 2023] – recommending that all parties rethink matters, because Bermudians could ill afford such increases.

Opposition Leader Jarion Richardson also stated publically [RG 23 Oct 2023] that the One Bermuda Alliance was prepared to work with the Government to explore bipartisan legislative solutions to delay Belco cost increases. The PLP declined the OBA’s offer to seek a bipartisan solution, instead announcing the Government would carry out “a much more critical review” of the RA’s methods in approving the increase. The following day, the Government then claimed victory, promising a reduction in energy bills.

It is unclear whether the Government’s promised review of October 2023 ever happened. If it did, it is unclear what that review determined about the scope of the RA’s powers?

Were the OBA to form Bermuda’s next government, we will conduct a comprehensive review of Bermuda’s energy needs, targeting how best to achieve a more sustainable mix, with less reliance on fossil fuels, and identifying how we can harness modern and more sustainable solutions for energy generation. And as to the RA, we must also explore whether consumer protection is being given sufficient weight in the RA’s statutory determinations of whether or not to permit Belco’s requests to increase costs?

Bermuda is a prominent international financial centre. Bermudians have a reputation for understanding the needs of business. Many Bermudians will readily understand that Belco must achieve a reasonable rate of return on its investment in order to justify the cost of service provision and continuing investment.

Yet Bermudians also know Belco is more than simply a business – Belco is also a public utility. And on our Island, Belco has an effective monopoly in the service it provides to the people. In such circumstances, it is legitimate to question what weight the people’s position is being given alongside the other factors the RA must legally consider when regulating Belco.

If Government has now concluded the review of RA powers that it announced last October, why has Government not yet shared its conclusions with the Bermudian public? Is there something the Government is trying to hide? And if the RA is to be a successful energy regulator, the RA’s statutory remit must be broad enough to enable it to keep Belco’s costs in check. Otherwise, what purpose does the RA serve in our energy sector?

- Scott Pearman, Shadow Minister for Legal Affairs & Home Affairs

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