The Regulatory Authority has approved an increase in Belco’s allowed revenue that will result in an 8 per cent increase in consumer bills.

Belco had applied for a proposed allowed revenue of $289,483,785 for 2024 but after a retail tariff review, the RA approved it at $265,540,307 — a decrease of approximately $24 million.

For 2025, that figure was $164,066,055, down almost $25 million from that proposed by Belco.

The base rate, which is exclusive of fuel costs and is the subject of the RA’s review, would increase by 13.79 per cent on the implementation date in 2024, down from Belco’s applied-for 30.3 per cent increase.

It will then go up by 3.7 per cent in 2025.

About 75 per cent of residential customers use up to an average of 555kWh monthly. For those, the rise will roughly equate to $20 per month, effective from August 1.

The RA outlined the main observations leading to its conclusion that the applied-for 10.13 per cent be adjusted to 7.79 per cent compared with 7.17 per cent the RA approved in 2023.

The report said: “Many projects which the RA reviewed demonstrated the need for customer benefit, prudence, cost-effectiveness, appropriate planning and due process, and were accepted.

“However, a significant number and value of Belco’s proposed capital budget justifications did not provide evidence of these combined attributes and therefore non-critical projects were rejected.

“After reviewing Belco’s proposed 2024-25 operating expense allowance, the RA modestly decreased the requested allowance, due to efficiency adjustments and fair value for consumers.

“The revenue allowance is decreased by a further $1.33 million in 2024 as a result of adjustments related to energy sales adjustment, energy purchase adjustment, performance regime adjustment and operating expense efficiency regime adjustment.”

The Royal Gazette asked the RA how much had been spent by Belco on remedial and mitigation work related to the North Power Station’s performance.

It came as a result of Belco burning heavy fuel in a station originally configured for liquefied natural gas, along with related challenges.

The Gazette also asked whether the costs were included in what the customer absorbs.

A spokesman for the RA said: “The specifics regarding the retail tariff review outside of what is stated within the provided public report are deemed to be confidential under Section 33 of the Regulatory Authority Act 2011.

“We cannot disclose detailed information to ensure compliance with legal guidelines and avoid potential litigation. We recommend contacting Belco directly regarding this line of questioning.”

Asked what capital projects were rejected and why, the spokesman added: “Projects that didn’t meet the assessment criteria were rejected, which resulted in a $35 million modification to Belco’s revenue allowance versus the additional $59 million requested.”

The RA listed the key drivers underpinning the increase, including Belco’s operational costs being affected by “sharp increases” in the cost of materials and labour, accounting for a 7.9 per cent rise, and an increase in the cost of financing its assets, accounting for a 5.4 per cent rise.

The continued need for Belco to invest in projects aimed at ensuring the safety and reliability of service accounted for a 4.8 per cent increase.

It said those increases had been offset by a number of factors including a penalty imposed on Belco because network reliability performance fell underneath the target set by the RA.

This accounted for a 0.5 per cent decrease.

The spokesman said there was no specific issue to be resolved in relation to the penalty.

He said: “The performance is accessed at the end of each year in accordance with the Service Standards General Determination and Performance Indicators.”

The RA also cited lower sales attributed to there being more solar customers with self-consumption.

The report said: “The increase in Belco’s operational costs is the single largest contribution to the recommended increase in the base rate.”

Non-fuel base rate costs were broken down as follows: operational expenses, 69 per cent; capital costs, 26 per cent; independent power producer and distributed generation purchases, and deferrals.

• UPDATE: this story has been amended to correct that customers' bills will increase by 8 per cent and not 14 per cent, which is instead the rise in the base rate. We apologise for the error