OPM defends BPL fuel charge hike delay

OPM defends BPL fuel charge hike delay
Bahamas Power and Light's (BPL) Blue Hills Power Station.

NASSAU, BAHAMAS — The Office of the Prime Minister in a statement yesterday pushed back against claims that delaying the introduction of Bahamas Power and Light’s (BPL) fuel charge hike has increased the burden on Bahamians, noting that the timing of the increase was a major consideration.

BPL officials on Tuesday announced that electricity bills are set to increase next month. Customers using less than 800kWh will see an increase of two cents p/kWh, and those using more power will see an increase of 4.3 cents p/kWh in six increments that take effect on October 1.

Prime Minister Philip Davis said that for low-energy consumers, the increase seen this quarter will amount to less than $20 per month.

“When the current administration came into office, we were faced with a historic economic, unemployment, and fiscal crisis,” read the OPM statement.

“Notwithstanding the severe fiscal constraints, we took a number of steps to provide direct relief to families. But the most important task before us was to get the economy moving again. Throughout the first year in office, the Bahamian economy has continued to add jobs.”

It was noted that earlier this year BPL had requested that an increase in fuel charges to be charged to customers,  reflecting the huge leap in global energy prices following Russia’s invasion of Ukraine. 

“The Prime Minister understood that despite the fact that the economic recovery was underway, a great number of  Bahamians were still looking for work. In addition, gas prices were rising, and global inflation was driving prices up across the board – making life even more unaffordable, especially for the unemployed. He decided to delay the increase so that Bahamians did not have to shoulder all these burdens simultaneously so that more Bahamians would have an opportunity to find work, and so that summer electricity bills (when usage typically rises substantially) would not be too expensive for families to afford,” the statement continued.

It was noted that for a large majority of BPL customers, the initial increase will be less than $20 a month.

“If the needed increase had been rolled out all at once, as suggested by some, the resulting surge in monthly electrical bills would be far higher. Instead of approving a sudden increase, the fuel charges are being increased in stages to allow the Bahamian people to prepare and adjust their electricity consumption patterns. In addition, we will raise the VAT ceiling from $300 to $400. This means that Bahamian households whose monthly electric bills are below $400 will not be paying VAT on their bills. This will offset some of the costs associated with the  monthly increase, especially for lower-income households.”

The stated further noted that the increases are being implemented at a time when temperatures are cooling, and electrical consumption is decreasing as a result. 

The corresponding decrease in electric bills that typically occurs during this time of year will partially absorb the fuel charge increase. The destruction caused by the Clifton Plant Fire in 2018 and issues with the installation of the Wärtsilä engines created a situation where we were forced to rely primarily on diesel-powered engines instead of engines that ran on the more affordable Heavy Fuel Oil. This resulted in cost overruns that the savings from the fuel hedge facility introduced in 2020  could offset. As a result, when we assumed office in 2021 it was clear that new investments were needed to strengthen  BPL’s financial situation,” the OPM statement read.

It was also noted that contrary to reports, the hedge funding initiative continues to be used to generate savings where possible.

1 comments

We got no relief. We will pay for the subsidy because it’s borrowed money along with the increase in fuel surcharge. BPL is a drag on economic expansion!

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