Research to discover the extent of “fuel poverty“ on the island needs to be carried out as a matter of urgency, according to a charity.

Family Centre spoke out after electricity provider Belco announced a hike in the price of fuel, which kicked in this month. The increase to the Fuel Adjustment Rate could see bills rocketing by more than 20 per cent.

Sandy De Silva, the executive director of the charity, said that the island needed to take “a more honest and deliberate look” at how residents were surviving through the cost-of-living crisis.

She warned that the Belco increase will affect poorer families disproportionately, impacting their ability to afford basic essentials.

Dr De Silva said: “In the UK, research has been done on ‘fuel poverty’. This type of research may be important for Bermuda to conduct so that we can have a more honest and deliberate look at how people are trying to survive in Bermuda, which is becoming increasingly more expensive to live in.

“We need to take a deeper look at how many families are choosing between how much money they can contribute to their electricity bill and how much to save up for food until the next pay period.

“The amount of financial support, pay or pension received weekly or monthly does not change as consistently as costs are increasing, so our government and major stakeholders need to come together to ensure that we are all contributing to an equitable Bermuda for all.

“Given the existing challenges with managing the cost of living in Bermuda, another increase in the cost of electricity will further affect the disposable income of families in Bermuda.

“This problem will be magnified for families who are already struggling to stay afloat financially. There will be even less disposable income after paying for housing costs, electricity and fuel needs.

“Lower-income households typically spend a disproportionate amount of their income on electricity, so increased costs will mean less money for food and other essential items. People are already trying to reduce spending, but feel like they will never catch up to the rising costs across the island for basic needs, goods and services.

“We do not want anyone going hungry or without power to have running water and cook a meal, so we need to find a solution to curb what seems to be an increasingly untenable situation in our island.”

Dr De Silva’s concerns were echoed by one activist who said that inflation was forcing more people to leave the island.

Robert Stubbs, head of research at the think-tank Seed Bermuda, said that an overhaul of the tax system was needed to curb prices.

He said: “Bermudians are already leaving the island in droves due to our sky-high cost of living and lack of job opportunities, and, of course, Belco's latest rate rise only makes these circumstances worse.

“As the most expensive jurisdiction in the world by a considerable margin, we’ve known about our uncompetitive pricing for some time but the Government seems to experience great difficulty in addressing any of the root causes of our unsustainable pricing.

“One of the impediments to addressing our uncompetitive pricing is our severe resistance under both the PLP and OBA to getting on with meaningful tax reform.

“Our tax system is heavily dependent on consumption taxes which affects electricity prices as well through the Government’s tax on fuel. Cayman’s tax system is also heavily reliant on consumption taxes and it’s no mistake that they’re the second most expensive jurisdiction in the world.

“Bermuda’s uncompetitive pricing is a concern for everyone. For those companies affected by the OECD’s soon to be implemented global minimum tax, Bermuda’s tax advantages will be significantly eroded and we will have to look to improvements in other areas to improve our competitiveness.

“Fundamental reforms to our underlying cost structure will have to be addressed if we are to achieve significant reductions in the cost of living and doing business in Bermuda.”

One non-profit organisation that promotes sustainable energy solutions said it was flooded with calls after news of the latest increase broke over the weekend.

Claire Smith, the cofounder of Sunny Side Solar, said an increase in Belco’s Fuel Adjustment Rate was “prompting concerns among energy consumers”.

Ms Smith estimated that customers could expect to see their electricity bills increase by about 20 per cent from this month.

She said: “Furthermore, it is anticipated that future fuel price hikes, coupled with ongoing efforts by Belco to raise their rates, will continue to challenge energy affordability on the island.”

Last night, Wayne Caines, the president of Belco, defended the latest hike, which saw the Fuel Adjustment Rate increase from 16.513 cents per kilowatt-hour to 24.517

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.”

Mr Caines, who is also a government MP, said that the Fuel Adjustment Rate was set at the beginning of each quarter and reflected “a combination of actual and forecasted costs”.

He added: “The energy component of the electricity rate has not changed. However, the fuel adjustment associated with the compliment of fuel required to run various engines has been adjusted upwards over the next quarter. Throughout the summer months electricity demand increases, and Belco runs more engines to meet this demand.

“Just prior to the end of each quarter, a ‘true up’ is performed to adjust the next quarter’s FAR to ensure that Belco recovers no more than its actual cost of fuel.”

Bermuda regularly tops lists of most expensive destinations in the world, with the cost of basics such as accommodation, food and fuel cited as reasons for the No 1 position.

The rate of inflation has slowed in recent months, dropping to 3.1 per cent in May, from 3.8 per cent in April.