Utility says smaller customers are subsidizing larger users as 1,500-kWh measure moves toward implementation
The BVI Electricity Corporation lacked the cash needed to secure a fuel arrangement that could have protected the utility from sharp swings in international prices, General Manager Dr. Neil Smith disclosed Tuesday, Aug. 25, as the corporation faces questions over its finances and the high electricity bills confronting customers.
Smith made the disclosure during a government press conference with Hon. Kye Rymer, Minister for Communications and Works, where officials addressed the recent surge in electricity bills and measures being taken to provide relief.
Smith said BVIEC had explored an arrangement that would allow it to lock in fuel prices for a specified period rather than remain fully exposed to changes in the market.
The corporation, however, could not afford it.
“We were trying to do that,” Smith said. “But based on what we are facing, it was just too expensive. We just didn’t have the cash at the time.”
Smith explained that some utilities use futures contracts or similar arrangements to lock in fuel prices. Such agreements can provide protection when international prices rise, but they can require substantial financial commitments upfront.
BVIEC considered such an option while negotiating its current fuel contract, Smith said.
“The intention when we were negotiating the first contract that we’re under now — we haven’t changed it — was that we do something like that, but we couldn’t afford the pricing of doing that at a particular time,” Smith said.
Instead, BVIEC pays the prevailing market price for fuel along with what Smith described as an “escalator” paid to the supplier for logistics and related expenses.
“So we just basically follow what’s going on,” Smith said.
The disclosure comes as residents and businesses face higher electricity bills that government and BVIEC officials have attributed to fuel costs and the absence of a government subsidy that had cushioned customers from higher prices in March, April and May.
Officials said Tuesday that customers will receive a credit to offset the latest bills and another subsidy will be applied in September.
