Bahamas Power and Light (BPL) has confirmed to the Utilities Regulation and Competition Authority (URCA) in recent discussions that fuel charges have reached their peak and consumers can expect lower rates moving forward, URCA said in a statement yesterday.
“The company has confirmed the fuel charge will decline this month for many consumers and will be reflected in those consumers’ electricity bills next month,” URCA said.
In October 2022, BPL announced an initiative to increase its fuel charge to reflect the rising cost of fuel and to clear some of the outstanding debt it owed on prior fuel purchases.
It stated this will be done gradually through the use of a glide path strategy.
URCA said, “BPL’s glide path strategy was designed to slowly increase the fuel charge to a peak this summer and then decrease the fuel charge continuously through the end of February 2024.
“By March 2024, BPL is expected to have paid off its outstanding fuel debt.
“This means that as of March 2024, bills are expected to only reflect the actual cost of fuel used in supplying consumers.
“At that point, provided the market price of fuel remains the same, or decreases, the charge for fuel will naturally decrease.
“Hence, consumers will receive a lower bill for the same amount of consumption.”
URCA said that over the course of months, it has received an increasing number of complaints from BPL customers about high electricity bills.
URCA noted that part of its remit as the regulator for the electricity sector in The Bahamas is to ensure consumer protection and support appropriate billing.
“URCA considers electricity a basic necessity that should be affordable and remains concerned about the impact of high electricity bills on BPL’s customers and the economy,” it said.
“Considering the widespread complaints, and in accordance with its commitment to protect consumers, URCA has been monitoring the situation.”
It said that in reviewing consumer complaints, it found that consumers have, unfortunately, experienced the compound billing effects of increased demand during the summer months and the increase in the fuel charge via the glide path strategy.
“Typically, some people’s consumption of electricity doubles in the summer months due to air conditioning and children being home from school. The doubling of consumption multiplied by the fuel charge, which is almost three times what it was last summer, means many consumers’ bills are significantly higher,” URCA noted.
BPL has for years been cash strapped, but in 2020 entered into a fuel strategy which locked in a fuel charge rate of 10.5 cents/Kwh for all customers, which required period hedge trades.
When he announced the fuel charge increases last October, Prime Minister Philip Davis said “monthly bills will go up over the next several quarters, before they begin to come down, in 12 to 18 months”.
BPL said at the time, customer bills will increase on October 1 to November 30, 2022; December 1, 2022 to February 28, 2023; March 1 to May 31, 2023; June 1 to August 31, 2023; and September 1 to November 30, 2023. In each phase, bills will increase by two cents per kilowatt-hour (kWh) up to 800 kWh and 4.3 cents for all units over 800 kWh, the company said.
As of September 1, 2023, the fuel charge for consumers who use under 800 kWh per month is 18.5 cents and 25 cents per kWh for consumers who use over 800 kWh (a decrease from 27.6 cents in the previous period).