By EARYEL BOWLEG
Tribune Staff Reporter
BAHAMAS Power & Light Company’s hedging deal is still in place and will continue to cover a portion of the electricity provider’s fuel costs until next year, Latrae Rahming, director of communications in the Office of the Prime Minister, said yesterday.
On Tuesday, Official Opposition Leader Michael Pintard said the Free National Movement left in place the first ever fuel hedging arrangement for BPL that led to an unprecedented level of price stability and lowered the fuel surcharge rates to the benefit of Bahamian households and businesses recovering from the economic ravages of the COVID-19 pandemic.
He said the Davis administration was aware since last October that an extension was needed for the fuel hedge to lock in as low as possible a price for fuel in an environment where fuel prices had started to increase rapidly.
He said the administration “twiddled” their thumbs and did nothing at the time.
Responding, Mr Rahming said: “It is important to note that the hedge is still in place and delivering savings to BPL. The hedge as constructed only covered a portion of BPL’s fuel cost and would continue to do so until next year. The government is not waiting for the hedge to expire prior to finding a solution and is now working on operational and financial solutions to provide long term relief to electricity consumers.
“There are a couple of mitigating factors which makes this adjustment much more difficult than it would have been in normal circumstances. These are the fuel mix between LFO (Light Fuel Oil) and HFO (Heavy Fuel Oil). While the use of HFO has increased recently, the skewing fuel usage by BPL to LFO (diesel) has added to the fuel cost.
“More importantly, the impact of the fire has probably caused BPL an additional $50m in fuel costs at a time when HFO cost was at an historical low. This money could have been used as a cushion against the impact of the rising cost of fuel which we are now currently experiencing.”
The Tribune exclusively reported on Tuesday that BPL chief executive officer Shevonn Cambridge revealed that an internal review is underway to determine whether there will be an increase to billing by way of a fuel charge adjustment.
Mr Cambridge said the review will evaluate if the necessary “triggers or thresholds” have been reached to require the company to make the adjustment. He said as gas prices have gone up when an adjustment comes there will be an increase.