Letters to the Editor – The Royal Gazette – October 4, 2023

Dear Sir,

The latest Belco newsletter had a grenade hidden under the usual cotton candy:

“… the Fuel Adjustment Rate will increase from the existing rate of 16.513 cents per kilowatt-hour … to 24.517 cents per kilowatt-hour …”

That is a 50 per cent increase.

The FAR was put in place when oil prices changed by large amounts within weeks. The idea was that rates might be based on a low oil price (say $50) but then next quarter the might price jump to $100. Fair enough.

Fuel prices today have not increased by 50 per cent; the reason for this jump is buried little deeper.

By choosing the fuel it is burning, Belco is using the mechanism to insulate itself from costs that should not fairly be passed on to its customers.

The way that works is that heavy fuel oil is cheap, light fuel oil (diesel in this case) is expensive. Belco should burn mostly HFO, so the FAR should be based on, say, 90 per cent HFO and 10 per cent diesel. What has happened recently is that Belco has drastically increased the amount of “expensive” fuel (diesel) it has been burning, so the total cost of the fuel burnt has jumped.

The cost increase is not about the cost of the fuel, it is about their choice to burn more of the much more expensive fuel.

Remember, this is not just a one-month or three-month surcharge, it will continue for as long as Belco chooses to burn diesel instead of HFO.

The reason for this goes back to the “soot problem” with the new engines in the new North Power Station.

Read more here: https://www.royalgazette.com/letters-to-the-editor/opinion/article/20231004/you-created-this-mess-fix-it/