BPL: Average residential customer bills down 24% compared to June 2018
“From August of 2020 to June 2021, customers and the public treasury have saved $15 million as a result of the hedge program”
NASSAU, BAHAMAS — Bahamas Power and Light (BPL) yesterday confirmed that following a mandated 12-month review, the fuel charge for BPL customers will remain at about 10.5 cents per kilowatt-hour (c/kWh) through June 2022.
The company said this “new low fuel charge” was first secured in July 2020, when BPL “executed the first-ever fuel hedge transaction in company history”.
On July 9, 2020, BPL executed its first-ever fuel hedge, which set the fuel charge at about 10.5 c/kWh from July 2020 through June 2022, subject to review after 12 months. That review has just been completed and the continuation of the rate was confirmed.
BPL noted that fuel is a pass-through cost, therefore there are no savings to the company due to the lower fuel charge — all savings go to the customers.
“In fact, average residential customer bills are down by 24 percent versus June 2018. The average residential customer saved $42 dollars on the fuel charge in June 2021 versus June 2018 — prior to the hedge,” BPL said.
“That extrapolates to an annual savings on the fuel charge of about $500. More broadly, the research shows that from August of 2020 to June 2021, customers and the public treasury have saved $15 million as a result of the hedge program.”
BPL executives expressed confidence that if the current trend continues, the company can project savings of about $40 million to customers and the public treasury from August 2020 to January 2022. The company said this is especially important given the recent spike in oil price, which places upward pressure on the fuel charge.
“The BPL fuel hedging program allowed BPL to hold the fuel charge to 10.5 cents for the next 12 months,” BPL said.
“To illustrate, in August 2020, the price of Brent was $45 per barrel and as at June 30 it was $73. That’s an increase of 63 percent in the market.
“Meantime, through the hedging action, BPL has held the fuel costs to the 10.5 c/kWh despite that sharp increase.”
In addition to the hedging, BPL said it continues to optimize performance efficiency, which in turn facilitates the consumption of less fuel, thus lowering the cost to consumers.
The Caribbean Electric Utility Services Corporation (CARILEC) — an association of electric energy solutions providers and other stakeholders operating in the electricity industry in the Caribbean region — released a tariff survey earlier this month that demonstrates BPL’s rate ranks third lowest amongst CARILEC utilities, with the rate only being surpassed by two utilities that have natural resources.
The hedge was part of the BPL Strategic Plan (Power2Prosper), in which the company pledges to “provide the lowest possible cost per kilowatt-hour for electricity for residential, commercial and industrial customers, as may be applicable”.
“Additionally, BPL should work to reduce the cost of fuel to its customers by utilization of the most fuel-efficient and cost-effective generation assets and engaging in fuel hedging whenever possible,” the company said.
