Bahamas Power and Light (BPL) customers will see a 30 percent savings in their power bill into 2022, after the power company exacted its first-ever fuel hedging transaction.
A BPL press statement revealed that the fuel charge for customers will be about 10.5 cents per kilowatt hour (c/kWh) for the next year and a half and subject to a review in one year.
BPL Chief Executive Officer Whitney Heastie explained that because the fuel saving is a pass-through cost, there are no savings to BPL.
“Compared to recent history when rates were 19 cents and more in many months, the projected savings for the average customer will be about 30 percent through January 2022,” Heastie said.
“We would like to particularly thank the IDB (Inter-American Development Bank) for facilitating the transaction. They were able to give us access to the market, provide technical expertise and we were able to leverage their relationships.”
According to the statement, the country’s fuel charge hit a high of 27.7 cents per kilowatt hour in 2014 and a low of 8.38 cents in 2016.
“The wildly fluctuating price of oil on the open market has made for wide swings and a high degree of uncertainty in the fuel charge BPL customers pay,” the statement noted.
“Now that the company has inaugurated its hedging strategy, prices stability and predictability have become the order of the day.”
Deputy Prime Minister and Minister of Finance Peter Turnquest said the IDB partnership allowed for this historic moment.
“The government’s partnership with the Inter-American Development Bank has allowed BPL to take advantage of low prices on the international oil market to secure affordable crude oil coverage for The Bahamas over the next 18 months. This unprecedented step will deliver local consumers fuel price certainty for the first time in BPL’s history,” said Turnquest.
An IDB statement explained that the fuel hedging agreement secures for The Bahamas, “an affordable crude oil coverage solution during times of low prices”, will guard “against abrupt oil price movements and offers protection against increases in electricity costs over the next 18 months”.
IDB Representative in The Bahamas Daniela Carrera-Marquis said the hedging assistance is part of the IDB’s commitment to support its member countries.
“Through this transaction, the government of The Bahamas can further strengthen its risk management tools to protect its public finances and best support the people of The Bahamas,” said Carrera-Marquis.