The cost of electricity in Bermuda is to be reviewed by Belco following an instruction from the Regulatory Authority.

The retail rate review will result in an updated usage charge on bills, based on rate per kilowatt hour.

In addition, the facilities charge that is shown on Belco bills will also be assessed in the review.

The review will analyse the cost of generating, transmitting and distributing electricity, and using what has been termed “retail tariff methodology” will cap Belco’s allowed revenue.

This is a change from the current situation, where it is Belco’s return, or profit, that is capped, not its revenue. Currently Belco’s return is capped at a maximum of 8 per cent.

Aaron Smith, interim chief executive officer of the Regulatory Authority, said: “The retail tariff methodology has set the path for a future of certainty and accountability for Bermuda’s electricity rates and the process is now under way to determine what is a reasonable rate.

“Bermuda’s electricity rates are frequently criticised by the public as being too high. While we know that delivery and operating expenses for many services in Bermuda are high, this review will allow the Authority to determine a fair and just rate while maintaining high quality service standards with safe and reliable electricity to all.”

In a statement, Belco said it welcomed the announcement by the Regulatory Authority that it has commenced its electricity retail tariff review.

Dennis Pimentel, Belco president, said: “Belco is pleased to provide the Authority with the information it requires to conduct its review as this will assist with Belco’s efforts to reduce electricity rates for all its customers.

“Belco is in full support of the Authority and looks forward to working with the Authority to assess all costs associated with producing and distributing electricity.”

Belco’s per kWh rate was last updated two years ago, before the Electricity Act 2016 regulated the industry. The updated tariff will be published by mid-2019.

The review does not include the cost of fuel, which is identified separately on Belco bills as the fuel adjustment rate.

This article has been updated with a new statement issued by Belco.

• A general determination setting the methodology was issued by the Authority on October 19 and is online at: https://rab.bm/electricity-administrative-determinations/