The head of the Regulatory Authority of Bermuda has defended a decision to approve increases in the cost of electricity.

The RA has also explained why rebates given to Belco customers who used solar panels have been reduced.

Abayomi Carmichael, the chief executive, spoke out after it was revealed that the cost of electricity will increase by about 20 per cent from this month.

The rise came about after Belco sought an increase in the Fuel Adjustment Rate from 16.513 cents per kilowatt-hour to 24.517 cents.

The request was granted by the RA and came into effect at the start of this month, although it will be reviewed at the end of the year.

Mr Carmichael said: "We confirm that Belco's most recent application to the Regulatory Authority sought an increase to the Fuel Adjustment Rate.

“At the RA, we understand the significance of this issue, not just as regulators but also as residents of Bermuda who are not exempt from these price increases. Thus, we take this matter seriously.

“However, 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.

“While provisional approval of Belco's FAR submission was granted, the RA is actively assessing the matter to ensure that all fuel costs have been reasonably and efficiently incurred.”

Under the new price structure, customers who have installed solar panels — or distributing generators — have had the Feed-In-Tariff rebate they earn through returning electricity to the grid reduced from 0.2265 cents per kilowatt-hour to 0.131 cents.

According to a report on the RA website, the original figure had been calculated in 2018, but did not take into consideration “avoided costs”. As a result, the solar panel rebate had been miscalculated and customers had been overcompensated by more than $254,000.

The report stated: “DGs have been overpaid during the period of October 2022 through to September 2023.

“Therefore, avoided costs of generation have been estimated to be lower than what DGs were actually paid, leading to the negative value. As such, the FIT value will have to be reduced in order to account for the imbalance from the scheme over the past year.

The report added that it was decided not to “true up” all of the $254,000 overpayment over one quarter, which would result in “a sharp decrease” in the rebate.

The report added: “This would result in price shocks and lead to confusion among customers. Instead, we recommend trueing up 15 per cent of the overpayment in Q4 2023 and the rest over 2024, which would provide stability in the FIT value going forward.”

Mr Carmichael concluded: “We understand the importance of safeguarding the interests of Bermuda's residents and consumers, and we are committed to transparency throughout this process.

“The RA remains dedicated to upholding its mission, which includes promoting fair practices, transparency and accountability within the regulated sectors. We will diligently continue our examination and pledge to provide updates to the public should any irregularities be uncovered."