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Fuel surcharge drops 18 percent in 3-4 months

Reduction in charge due to combination of tax relief and Clifton Pier output increase
  • Kevin Basden.

Guardian Business Editor

Published: Sep 30, 2013

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The fuel surcharge, which makes up the majority of electricity costs for the consumer, is set to fall by 18 percent ​from pre-July levels ​by next month, the general manager of the Bahamas Electricity Corporation has confirmed.

While a portion of this reduction is due to the government’s decision to eliminate excise tax on fuel, another component is BEC’s recent efforts to increase the proportion of power being produced at the Clifton Pier power plant, which burns cheaper fuel.

Combined, these two developments should have an effect of lowering consumers' electricity bills based on the fact that the fuel surcharge makes up the majority of electricity costs, on top of the base rate, said Kevin Basden, BEC general manager.

Currently, BEC services 78,971 customers in New Providence – 66,465 residential and 10,427 commercial, along with a number of "other" consumers such as churches – and 28,726 customers in the Family Islands.

In an interview with Guardian Business following a presentation on BEC at the Caribbean Energy Summit 2013 at Atlantis on Friday, Basden said that after years of financial challenges for the corporation having set back maintenance at Clifton Pier, the facility is now producing over 50 percent of power for the corporation.

“B​ack in ​June, I ​thi​nk the fuel charge would​'v​e been around 28 cents per kilowatt hour; [in]​ J​uly, it dropped to around 27 cents. We’re down this month to around 24.5 cents. Next month it’s projected we’re going to be just over 23 cents. So if you compare the fuel charge component this month to ​June/​J​uly, we’re probably about 18 percent lower in terms ​of the fuel charge, and the fuel charge is the highest component of the bill – it’s higher than the base rate.​

​"​A lot of that has to do with the removal of excise tax on fuel but another portion of that has to do with improved output from our ​C​lifton​ P​ier plant where we use heavy fuel oil, so by increasing the output from Clifton ​P​ier along with the removal of excise tax on fuel, we’ve been able to substantially reduce the fuel charge,” said Basden.

The general manager said th​e overall improved ou​t​put at the Clifton Pier plant ​has been achieved in the​ last three to four months, and the corporation hopes to push this higher in coming months.

“In essence for many years, we were financially challenged and the maintenance program had fallen behind; over the last two to three years, we’ve been able to catch up with all of the maintenance of our equipment at Clifton Pier and Blue Hills. We’ve also been able to concentrate on ​​the maintenance of our auxiliary systems at ​C​lifton ​P​ier and all of these combined efforts have resulted in our ability t​o​ get to where we are now."

A downside to such increase production at the Clifton Pier plant, versus the Blue Hills plant, is that the fuel is heavier Bunker-C fuel which is less environmentally-friendly than automotive diesel oil (ADO) burnt to produce power at Blue Hills.

In his address, ​Basden pointed to better use of technology, greater standardization of equipment throughout its power network, improved short and long term planning, benchmarking with similar entities ​and applying “lessons learned” from elsewhere as among a selection of means that BEC can use to achieve further improvements in efficiency and cost reductions.

He also noted the introduction of solar water heaters and greater education on energy conservation as important contributors to lowering energy costs through less usage by the customer.

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