Belco has proposed to increase base tariff rates over the next three years to finance a planned expansion of its facilities after electricity sales have stagnated.According to the proposal being made to the Energy Commission, base costs for residential customers would increase by 3.5 percent annually in 2012, 2013 and 2014. Facilities fees would increase by $3 in 2012 and 2013 and $2 in 2014.A Belco spokeswoman said that because the rate of electricity increase is based on how much is used by a customer, the rise would be less than 3.5 percent for most.She said the average residential customer uses 700 kilowatt hours (kWh) per month. Based on that usage, a Belco bill would increase from $280.13 to $283.05, or around $2.92 per month between 2011 and 2012.“The present average price per kWh for this customer inclusive of the facilities fee and with an average fuel adjustment rate of 15 percent per kWh is 40.02 cents, as compared with the proposed price of 40.04 cents per kWh for 2012,” she said.“The recommended rate structures have been designed to encourage customers to use energy efficiently, with higher prices for higher usage.”According to a notice appearing in yesterday’s The Royal Gazette, the company proposes to remove the $40 minimum bill for residential service as of next year.Commercial demand customers would see rates increase by five percent per annum until 2014, while small commercial customers would see a 3.75 percent rate increase annually during the same period.The spokeswoman said: “In the past, Belco was largely able to avoid rate increases and finance operations and capital expansion from income growth that was achieved by kWh sales growth and cost containment efforts.“Belco continues to make strides with respect to cost containment. However, stagnant electricity sales have led to the company to submit the application for rate increases to ensure a strong fiscal platform that can support the debt financing costs of the capital replacement programme.”The spokeswoman said Belco had received approval to increase rates this year, but chose not to do so given the current economic climate.She said the increase in fees will be used to fund a $300 million expansion, replacing ageing equipment that has reached the end of its operational life.“Capital work over the next decade is imperative so that Belco may continue to provide a secure, reliable base load electric poser system for Bermuda’s residents and businesses,” the spokeswoman said.Along with a recently approved North Power Station, to be built in Pembroke, Belco intends to improve its transmission and distribution, replacing underwater cables and ageing equipment in several substations.“Throughout its 105-year history, Belco has always maintained a core infrastructure that accommodates the growth of power throughout the Island, regardless of whether it is an extension to a single-family home or a major commercial development.“Belco’s application to increase rates is necessary to ensure that the people of Bermuda continue benefiting from a secure, reliable and sustainable base load electricity power system that supports the Island’s progress.”Belco also said they are looking at piloting a Time-Of-Use rate next year, which would offer lower electricity costs at times of low usage, and higher rates at high-use periods.More information about the proposed base rate tariff increases is available both at www.belco.com and at Belco Headquarters on Serpentine Road.Members of the public are also invited to make written submissions to the Energy Commission between now and November 30, delivered either at their headquarters at the Department of Energy in the FB Perry Building, or at energy[AT]gov.bm.