Figures published on the Belco website show how a 60 per cent reduction in a tax on fuel for energy is expected to help offset an increase in customers’ bills.

The Customs Tariff Amendment Act 2024 was introduced to Parliament last month in an effort to mitigate the effects of a hike on base electricity rates.

Belco said then that the tax reduction would result in a lowering of the fuel adjustment rate.

The company confirmed at the time that the previously announced increase in the base rate would not change.

In its latest online blog post, Belco highlighted how customer bills would be affected by the Government’s reduction of the customs duty on fuel.

The power company said: “The change will take effect on August 1, 2024 and will be applied to all meter readings taken on or after that date. This coincides with the recently announced change to the base electricity rate that also comes into effect on August 1, 2024.

“Fuel for energy generation is the largest segment of the per kWh rate.

“The cost of fuel is recovered through the fuel adjustment rate. The FAR reflects the total cost to deliver fuel to Belco’s central plant and is comprised of two parts: the fuel adjustment and Bermuda Government taxes on fuel.”

In a video that accompanied the blog post, Shelly Leman, Belco’s managing director for transmission, distribution and retail, said: “Recently, the Government has implemented a 60 per cent decrease on fuel tax, which has helped to offset the increase in the base electricity rate.

“To be clear, this is not an increase on your total bill. This only affects a portion of your bill.

“For example, low-usage households with a consumption of 150 kilowatt hours per meter reading cycle will see an increase of approximately $2.57 on their monthly bill.

“The average household with a consumption of 600 kilowatt hours per meter reading cycle, which is the majority of Bermuda residential customers, will see an increase of approximately $9.46 on their monthly bill.

“High-usage households with a consumption of 1,500 kilowatt hours per meter reading cycle will see an increase of approximately $41.70 on their monthly bill.”

The blog post added: “The 60 per cent reduction in fuel tax equates to a 2.14 cent reduction in the FAR.

“The FAR is now 17.574 cents per kWh for all meters read on or after 1 August.”

Figures provided by Belco to The Royal Gazette showed that the FAR for the second quarter of this year was 18.895 cents per kWh, 4.5 cents of which was associated with taxes on fuel.

For Q3, the FAR was approved at 19.714 cents per kWh, 4.6 cents of which was associated with taxes on fuel.

That figure was in place for July but was revised to the new rate of 17.574 cents per kWh for August and September, as a result of the reduction in fuel taxes.

Belco added that 1.8 cents per kWh of the latest rate was associated with the taxes.

Customers were warned in July that the base-rate rise would result in increases to monthly electricity bills of about $7 for low-usage householders, $27 for average-usage householders and $86 for high-usage households.

Belco said at the time that the company was not immune to the challenges presented by a “global inflationary environment” and that continued investments in the grid and other infrastructure were required to provide the island with a safe and reliable electricity supply.

It pointed out that the rate increase followed a lengthy collaborative process with the Regulatory Authority of Bermuda.

Walter Roban, the Minister of Home Affairs, on July 16 described the RA’s announcement of the bills increase as “outrageous and disheartening news”.

A day later, the Government revealed that a significant reduction in energy taxes would be introduced, and the Customs Tariff Amendment Bill 2024 was laid in the House of Assembly by the end of that week.

David Burt, the finance minister, said then that the slash to duty was expected to cost the treasury about $10 million.

Scott Pearman, the Shadow Minister for Legal Affairs, said yesterday: “As predicted, Belco has not reversed its decision to increase base rate charges. So people’s electricity costs have gone up.

“Rather than tackling the underlying causes, government has instead deployed a temporary tax cut, diverting those taxpayer funds away from other important projects.

“This is only a temporary fix. The tabled legislation will expire in November. People should be calling on the Government to share its long-term plan.

“The OBA believes the regulator needs sufficient teeth to keep Belco’s costs in check, which could be achieved by giving greater weight to public policy concerns.

“The Government announced a review of the regulator’s powers in October 2023 — almost a year later the public has yet to see the Government’s conclusions.

“Instead, Belco’s costs keep going up.”

The Government was invited to comment on the latest figures from Belco, and, later, on the remarks from Mr Pearman, but none was received by press time.

Mr Roban said last month that the Government’s decision to carry out a critical review of the RA’s methods “was a strategic move aimed at addressing the root causes of the proposed cost increases”.

He added then: “This review was necessary to ensure that any future adjustments to energy costs are both fair and justified and ultimately protect the interests of the Bermudian people.”

A government spokesman later told the Gazette: “The RA is currently reviewing the methodology for determining the FAR.

“This review thoroughly investigated Belco’s operational efficiency from late last year, which could have influenced the FAR.

“This review must be completed before the Government can provide a definitive timeline for when this information will be available to the public.”