Light bill hike

Customers of the Barbados Light & Power Co. (BL&P) ended 2024 and started the new year with higher electricity bills linked to increased fuel cost but the company has indicated that they were spared the worst.

Information from BL&P shows that after holding steady at 33.1904 cents per kilowatt hour (kWh) in September, October and November, the Fuel Clause Adjustment (FCA) paid by its customers rose to 34.9611 cents per kWh in December, which was maintained this month.

While Barbados paid more FCA and hence had higher electricity bills in the last two months, the utility company said it “passed on the benefits of lower international oil prices during the year to its customers through the FCA”.

“The FCA reflected on customers’ electricity bills during 2024 was on average the lowest since 2021,” it noted.

Based on information from the United States Energy Information Administration (EIA), the West Texas Intermediate Spot Price for a barrel of oil was US$76.68 in August, US$70.24 in September, US$71.99 in October, US$69.95 in November, US$70.12 in December.

The highest for the year was US$85.35 in April.

BL&P reminded that the FCA “is revised monthly according to the fuel costs incurred in electricity generation”.

It said these fuel costs were influenced by international oil prices, which it had no control over, but explained that customers were spared price shocks.

“It is important to note . . . that BLPC uses a smoothing process when the price of fuel increases drastically to mitigate the impact of the prices on customers.

“In other words, notwithstanding the international prices, the company does its best to hold prices steady – ensuring some predictability for customers – and to keep the cost as manageable as possible for customers. This essentially absorbs any price shocks to customers.”

In terms of electricity usage by Barbadians during the recent Christmas season, BL&P said “contrary to some beliefs, residential customers do not utilise significantly more electricity during the Christmas period”.

“Electricity consumption by residential customers during the Christmas period is comparable with other months of the year. During 2024 the usage during December was similar to May to August, October and November,” it noted.

About half of BL&P’s customers are not utilising the early payment discount.

“The number of customers utilising the early payment discount has remained stable relative to previous years. There has not been an increase in customers taking advantage of the saving but rather steady at approximately 50 per cent of customers,” BL&P reported.

In sharing information on the FCA recently, the company said the December/January FCA of 34.9611 cents per kWh comprised fossil fuel costs of 34.0933 per kWh and renewable energy purchase costs of 40.7920 per kWh.

“The difference in measurement reflects the disparity in costs to produce electricity from fossil fuel and that from renewable sources.

“The cost of fossil fuel in the calculation of the FCA during the month is based on international fuel prices, while the cost of energy purchased from renewable energy suppliers is based on prices determined by the Fair Trading Commission that should be paid to renewable energy customers that supply energy to the electricity grid.”

The EIA predicted last week that crude oil prices “will fall from an average of US$81 per barrel in 2024 to US$74 per barrel this year and US$66 per barrel in 2026, as strong global growth in production of petroleum and other liquids and slower demand growth put downward pressure on prices and help offset heightened geopolitical risks and voluntary production restraint from OPEC+ members”.

This forecast was completed before the US issued additional sanctions targeting Russia’s oil sector on January 10, which the EIA said had “the potential to reduce Russia’s oil exports to the global market”.

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