Roban grills RA on Belco price hike
The Government has launched an inquiry into how electricity supplier Belco was allowed to increase energy bills by 20 per cent.
At a press conference yesterday, Walter Roban, the Minister of Home Affairs, said that he had sent the independent Regulatory Authority a series of questions to establish if it acted within the law when it approved the increase.
Belco had submitted a recommendation to the RA for the increase, saying that it was necessary because of “global events”. The RA approved the request and the new fuel rate kicked in at the beginning of this month.
Mr Roban said that he was angered by last weekend’s news of the increase, saying it felt like “a kick in the stomach”.
He revealed that the ministry had contacted the authority to ensure that it was “doing the right thing”.
He insisted that the RA had always acted with integrity but added that, in this instance, it needed to be confirmed that the authority was operating “according to the law”.
He said: “The chief goal of those questions is to understand more fully the methodology used to determine the various rates. We need to be sure that the RA has considered all relevant parts of the act and exercised due diligence.
“We want to ensure that integrity and thoroughness of approach have continued with these recent decisions to dispel any doubt. To that end, we are also looking at both the requirements of the Regulatory Authority Act 2011 and those of the Electricity Act 2016. The goal is to ensure the RA is living up to its responsibilities according to the law.”
Mr Roban said that the Government was now considering what action it may be able to take if it is found that the RA acted unlawfully.
“We are also exploring what legal options are available for us to pursue should there have been any error of law discovered through our inquiry. I note that this process of discovery will take some time and we look forward to updating the public in due course,” he added.
“With this said, this is no mere rattling of a sabre. If there are errors in law, the RA will be held accountable and the mistakes rectified. Bermuda's people, economy, and environment deserve no less.”
The price hike was brought about by an increase of almost 50 per cent to the Fuel Adjustment Rate component of electricity costs.
Walter Roban sent a letter to Mark Fields, the chairman of the board of commissioners of the Regulatory Authority.
The letter contained five questions concerning the near 50 per cent increase in the Fuel Adjustment Rate.
• What does the RA understand to be the purpose of the FAR?
• How does it take into account Sections XYZ of the RAA 2011, which stat (economic interest, etc)?
• What was the methodology used for this FAR? Does it differ from the methodology of the past FARs?
• Please explain how the FAR fulfils the purposes of the Act under section 6.
• Please provide the supporting documentation of the RA’s verification of the submissions from Belco. We presume that all submissions are verified, and so we are seeking that assurance.
The letter also contained a series of questions on the Feed-In Tarif, a rebate that Belco gives to customers who have solar panels. The rebate was cut significantly this month.
The letter concludes: “Precise responses are required, and I look forward to complete responses no later than Friday, October 13, 2023, at the close of the business day.”
Wayne Caines, the president of Belco, has repeatedly insisted that, while he understood the public’s anger at the increase — which is significantly above the rate of inflation — the company’s numbers were correct and necessary.
Earlier this week, he said: Global events are significantly impacting the cost of fuel. Belco does not have control of the global increase in fuel prices and fuel cost increases or decreases are passed on to customers.
“Belco does not make any profit on the increase in the FAR as the rate is only associated with the costs associated with the fuel and taxes on fuel. It’s this portion and only this portion of customers’ bills that will increase.”
Mr Caines was backed by the head of the RA.
This week, Abayomi Carmichael told The Royal Gazette: “Per data supplied, fuel charges inclusive of first costs and supply-chain costs have increased worldwide due to global events and this situation is not unique to Bermuda.”
Mr Roban pointed out that the Government had no legal right to dictate decisions to the RA.
“They operate independently. The Government does not get involved with any of the process directly with any of the adjustments.
But he added: “I do have the capacity to ask questions and give directions under the law.
“We have posed questions to the RA but frankly those answers have not been satisfactory to this point. We want, specifically, very detailed answers.
“I have an official communication that I’ve sent to the RA. We expect answers as soon as possible, if not immediately. These frankly are questions that the RA should easily be able to answer.
“If they have followed the proper process and due diligence in coming to the decisions that they have to the adjustment of the Fuel Adjustment Rate or the Feed In Tariff, these should be questions that they can answer.”
Both Belco and the RA have been contacted for comment.
• See Related Media for the full letter sent to the Regulatory Authority
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