Increases in the price of electricity are set to be scaled back and the method used to calculate the Fuel Adjustment Rate amended, according to the Government.

Walter Roban, the Minister of Home Affairs, announced last night that Belco customers “will soon be advised of the changes to the FAR, which will reduce the recent increase in consumers' energy bills”.

The Regulatory Authority approved a request from Belco — a subsidiary of Canada’s Algonquin Power & Utilities — to increase the FAR of bills last month.

The change, which increased electricity bills by about 20 per cent, came into effect on October 1.

News of the increase sparked public outrage and protests outside Belco’s Hamilton headquarters — and a pledge from Mr Roban that he would consider taking legal action against the RA if it did not lower the FAR.

The minister said that he was sickened by the increase and demanded that the RA explain the methodology used to calculate the FAR.

Wayne Caines, the president of Belco, had insisted that the numbers were correct and were a result of global increases in the price of oil.

Mr Caines was backed by Abayomi Carmichael, the chief executive of the RA, who defended the increase and insisted it was necessary and justified.

Last night, it was revealed that legal action had been averted after the two sides, along with representatives from Belco and Sol Petroleum, held a meeting last Thursday.

A ministry spokesman said: “This rate increase has had substantial implications for the general public.

“All of the stakeholders at the table agreed to co-operate to reduce the FAR in the immediate future.

“Recognising the ongoing global events driving an upward trend in fossil fuel prices, the stakeholders have also agreed to change the process and methodology for calculating the FAR.

“This change aims to provide a more sustainable approach to addressing the volatility in fossil fuel prices in the long term.

Mr Roban said: “Ultimately, any decision regulating the cost of energy must have the best interests of the public consumer in mind. Following this meeting and agreement, I am satisfied that we can avoid costly litigation related to the recent increase.

“The Ministry of Home Affairs will continue directing policy and giving general direction as prescribed by The Regulatory Authority Act 2011, which includes remaining committed to finding responsible and sustainable energy solutions that will best serve the interests of both businesses and residents in the long term.

“This includes the ministry’s commitment to follow the principles and guidelines established under the Regulatory Authority Act 2011.”

Mr Roban first announced that he was taking on the RA and Belco — which has a monopoly on the market — on October 6, just days after the increase was announced.

At a press conference, 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”.

Demanding that the RA provide his ministry with evidence of how the FAR had been calculated, he said: “This increase is not in the public’s best interests, and this decision does nothing but cause hardship.

“The ripple effect will be massive, stifling job growth and economic recovery, hitting seniors and hard-working families hardest and discouraging investment in tourism development at a critical time.”

“They have served the country well as an independent body, and I have confidence in that, but I think under the current conditions, the decisions that have been made deserve much more critical review.”

“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.”

Neither the RA nor Belco would comment on the matter.

In his statement last night, Mr Roban did not say if Belco and the RA was also considering making adjustments to the Feed-In Tariff — the rebate that Belco gives to properties that use solar power.

The rebate was cut dramatically at the same time that the FAR was increased.