Barbados Light & Power Company (BLPC) teams are working “day in and day out” to keep the cost of electricity down.
But with fuel prices making up more than half of every bill, only a fraction of what customers pay is within the utility company’s power to change.
Vice-president of operations Johann Greaves and manager of regulatory affairs Dr Adrian Carter on Wednesday said that was the reality facing BLPC.
They were speaking at the company’s headquarters at The Garrison, St Michael, against the backdrop of the company receiving Fair Trading Commission permission to recover costs related to 11 megawatts (MWs) of temporary generation, which are already installed, and another six MW of the same to come into use later this year, via the fuel clause adjustment (FCA) paid by customers.
Different ways
Officials said the FCA-related cost of the additional six MW of temporary generators would be an additional $1.25 on the average householder’s monthly bill.
“We are challenging our teams day in and day out to look for different ways that we can bring a better cost to customers,” Greaves said.
“When we do tendering for our fuel contracts, we try to get the best possible cost in terms of fuel, we then look in terms of our operation and maintenance practices to ensure that we are as efficient as possible. We actually look in terms of if there are any modifications we can do to our equipment.
“Based on the cost of fuel right now, we saw that there was a disparity between the aviation fuel cost and diesel cost, and we put together a project to challenge our engineers to come up with a plan where we can actually convert our units from burning aviation fuel to diesel to bring benefit to customers.
“We’ve been able to successfully do that, so that’s just an example of what we’ve been doing to be able to challenge our teams.”
Carter noted that a BLPC customer’s bill had three components.
“We have the customer charge, which is what we call a fixed charge, and we have the energy charge, which is the energy to produce the electricity, and then we have the fuel charge,” he said.
“The fuel [charge] accounts for approximately about 55 per cent of a customer’s bill, so the only part of a customer’s bill that you will actually see moving from month to month is because of the changes in the fuel clause.
“Fuel comprises fossil fuel that we actually purchased from the supplier, as well as the renewables that we actually consumed from different renewable suppliers.”
Charge
Greaves explained how the FCA worked.
“Every month we use fuel to generate electricity. Let’s take the month of May. We bought fuel in May and we used that fuel to generate electricity to sell to customers. At the end of May, . . . we go and we reconcile and see how much of that fuel was used to generate electricity,” he said.
“So whatever we used to generate electricity is what we are going to charge customers for in the month of June. So we use the fuel first and then we charge customers for it in the following month.
“The company does not benefit in any way from the fuel clause adjustment. It is just a pass-through.
“What we spend to generate the power is what we charge customers, and that is a formula that is approved and audited on a monthly basis by the Fair Trading Commission.
Carter added: “And all of the cost that goes through the fuel clause, there is no mark-up at all on those costs, so Light & Power doesn’t benefit at all in terms of the shareholders of the company in terms of any profitability from any changes that you see in the fuel clause per month.
“We do understand that every increase is an additional cost for our customers, and that’s why we try to be as efficient as possible to keep the price as low as possible.
“But we also do understand the cost for unreliable power. The cost for the reliability being not what you actually need it to be is a whole lot costlier, and that’s why we believe that it was a prudent move for us and for the regulators to agree with us to allow us to rent these units and have additional capacity as well.” (SC)
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