Residents have been hit by another electricity bill hike — meaning the average family is now paying 18 percent more than four years ago.The fuel adjustment rate has increased from 17.5 cents to 19.5 cents per kilowatt hour, raising the bill for a family using 730 kWh per month from $312 last month to $327 in June.Belco yesterday warned bills could get higher still as its own cash flow has been affected by lower energy sales and customers taking longer to pay their monthly bills.Reacting yesterday, Family Centre executive director Martha Dismont called for Belco to show more consideration for families at a time they are already struggling to cope with shrinking wages, unemployment and the soaring cost of living.Ms Dismont said growing numbers of hard-up families have seen their power switched off because they can’t afford their bills.Belco, which argues an average family now uses 700 kWh per month, yesterday released figures showing the bill has climbed from $265 in June 2008 to $313 in June 2012.It says the fuel adjustment rate, which is determined independently by the Energy Commission, is used to pay for the growing cost of fuel.Ms Dismont told The Royal Gazette: “For a utility company to put the cost on the consumer is terribly inconsiderate in an environment where people are struggling.“There are ways to achieve efficiencies and you have to ask if Belco go far enough towards doing that.“Many families are trying to get back on their feet in the recession. We know there have been numerous families who have been switched off. I have spoken to a couple and we hear of them through our family forum.”The electricity bill is broken into three sections: the fuel adjustment rate, which had been at 17.5 cents per kWh since last October; a facilities charge which has been fixed at $30 since 2010; and a cost based on usage.Yesterday, Belco said fuel adjustment rate increases were largely responsible for the 18 percent rise over the past four years. Without the fuel adjustment hikes, the average bill would have risen by just two percent, said spokeswoman Linda Smith.Ms Smith said in June 2008 the fuel adjustment rate was 13 cents per kWh, based on a purchase price of $129.12 per barrel for diesel, and $107.56 per barrel for heavy fuel oil.In June 2012, the fuel adjustment rate is 19.5 cents per kWh, based on a purchase prices of $156.96 per barrel for diesel, and $135.28 per barrel for heavy fuel oil.She said Belco’s cost per barrel of fuel includes a Customs Duty charge of $15.10 per barrel and all other associated cost including freight, exchange rate and throughput charges.“Belco does not profit from the fuel adjustment rate, as it is used to pay for the cost of fuel in excess of $30 per barrel,” said Ms Smith.“This first $30 per barrel is factored into Belco’s base electricity rate. The total amount of the recoverable fuel adjustment rate is whatever Belco paid for fuel above $30 per barrel.“Belco is required to pay for all fuel upon receipt and then recoup these costs through the fuel adjustment mechanism over several months.“Since Belco does not maintain sufficient cash reserves to pay for fuel shipments, Belco has a short-term credit facility from a local bank to cover this.“Belco has frequently carried an under-recovered position on its fuel purchases to avoid large increases in the monthly fuel adjustment rate to customers, and spread the collection for the higher cost fuel purchases over a longer period of time.“Unfortunately, Belco’s ability to carry an under recovery in fuel adjustment has been severely compromised by a decline in cash flows due to lower energy sales and customers taking longer to pay their monthly bills which include the fuel adjustment recovery.”Ms Smith said the projected break even rate for fuel adjustment for June is approximately 23 cents per kWh, which means Belco will be carrying an estimated under-recovery of its fuel cost of $1.6 million by the end of June 2012.“This can only be effectively managed on a short-term basis, and if the cost of fuel purchases in the near-term cannot be made at lower prices, then the fuel adjustment rate will need to increase further to recoup the under-recovery,” she said.The highest ever fuel adjustment rate was September to November 2008, when the fuel adjustment charge was 20.5-cents, said Ms Smith.She said the three key factors impacting the rate are price, sales volume and efficiency.Regarding price, she said: “Increases and decreases in world fuel prices are directly correlated to corresponding increases and decreases in the fuel adjustment rate, ie if fuel prices increase, the fuel adjustment rate increases.”On sales volume, she said: “Increases and decreases in fuel adjustment rates have an inverted correlation to increases and decreases in kWh sales. If kWh sales decrease, the fuel adjustment rate increases. The recovery is spread over fewer sales — in this case we are speaking of fewer residents, and consumers using less electricity — so the cost of fuel is spread over fewer volume sales, but still needs to be recovered in a timely fashion in order to provide appropriate financing for additional purchases.Regarding efficiency, she said: “Increases and decreases in fuel adjustment rates have an inverted correlation to increases and decreases in efficiency. If efficiency increases, less fuel is used and the fuel adjustment rate is lower than it otherwise would be — in 2011 Belco’s fuel efficiency increased 1.8 percent from 689.9 kWh per barrel of fuel in 2010 to 702.5 kWh per barrel of fuel in 2011.“This led to 18,869 less barrels being consumed, equivalent to $1.97 million fuel cost savings that did not therefore need to be recovered as part of the fuel adjustment rate.“Forward purchase of fuel in 2011 enabled Belco to save $5.6 million in additional fuel costs. Belco continues to purchase forward in an effort to obtain the best price.”Last month, Government rejected Belco’s appeal to increase its rate by 4.3 percent, 3.9 percent and 4.1 percent respectively, over the next three years, to support the building of the North Power Station to replace the inefficient, ageing plant.