The Regulatory Authority has initiated an inquiry into Belco’s operations, which it expects will lead to a reduction in the Fuel Adjustment Rate for customers.

The North Power Station is a focus of the investigation.

Wayne Caines, the president of Belco, said that the company is committed to improving operations at the plant, which has experienced significant challenges with emissions since it was commissioned in 2020.

“The RA's investigation will specifically determine whether any costs associated with the operation of the Belco generation plant, in particular the NPS, have been unreasonably incurred,” according to the authority.

“This examination is in line with the RA's commitment to ensuring that entities operate transparently and responsibly within the established regulatory framework.

“The investigation has been initiated in response to information provided by Belco as part of the 2024 and 2025 Retail Tariff Review. The data and insights gathered from this investigation will be crucial in informing and concluding the RA's comprehensive assessment during this tariff review exercise.

“Should the inquiry reveal any impropriety or breaches of fair practice, the RA is prepared to take further necessary actions.

“The RA emphasises its right to conduct this inquiry within the bounds of its authority as defined by law.”

The Retail Tariff Review is a process that determines how the RA calculates and sets fees that Belco is allowed to pass on to the consumer.

According to the Electricity Act 2016, the tariff methodology should seek to enable Belco to make a “reasonable return on investment that is commensurate with the return on investments in business undertakings with comparable risks, and that is sufficient to attract needed capital”.

The RA also has a remit to protect the rights of the consumer.

The North Power Station has been fraught with complications, having been configured for liquefied natural gas, a fuel that ended up not being approved for use in Bermuda, and run on an alternative fuel — primarily heavy fuel oil.

The firm has spent millions mitigating the resulting emissions, including the burning of diesel — a cleaner, more expensive fuel — along with HFO.

The RA said in October that fuel charges, inclusive of first costs and supply-chain costs, have increased owing to global events.

Belco sought an increase in the FAR 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 October, resulting in a 20 per cent increase on the consumer bill.

“This inquiry serves as an unequivocal assertion that the RA rigorously monitors all regulated entities, emphasising the non-negotiable stance against unfair practices, dishonest conduct or any operations that violate the law within the confines of Bermuda,” the RA added.

“Due to being a ‘fundamental part of the fabric of Bermuda, with a commitment to serve the local community and operate in the long-term public interest’, the RA anticipates full co-operation from Belco as it pertains to this line of questioning.

“The RA reaffirms its unwavering commitment to its mandate for the betterment of Bermuda as a whole and maintains a steadfast dedication to protecting consumers and stakeholders.

“Subsequent to this announcement, the RA anticipates a formal FAR submission from Belco. The information provided in this submission will play a crucial role in determining the course of action and, based on its content, the RA expects to approve a reduction in the FAR.“

The RA is “entrusted with a mandate focused on consumer protection, stakeholder interests and overall investment welfare”, the regulator said.

Mr Caines said: “Belco is committed to providing safe, reliable electricity to the people of Bermuda.

“The NPS was built using the latest technology to provide our base load of energy. The NPS is more efficient than the older engines that were retired in recent years. However, since commissioning the NPS, we have faced some operational challenges.

“Our team is dedicated to improving the operations at the NPS, and we have taken a systematic, phased approach to reduce our impact on the community. We are seeing steady improvement in the operations of the NPS.

“Belco looks forward to discussions with the RA on its inquiry.”