POWER BILLS MAY INCREASE
Talisha Simons, Director of Corporate Communications & Public Affairs for FortisTCI Limited
The cost of electricity in the Turks and Caicos Islands may increase, following ongoing regulatory reform negotiations between Fortis TCI and Turks and Caicos Islands Government (TCIG).
In an exclusive interview with The SUN, Talisha Simons, Director of Corporate Communications and Public Affairs at Fortis TCI, confirmed the negotiations, but she did NOT confirm that there will actually be an increase in electricity bills.
However, given the fact that Fortis spent approximately $30 to 35 million to restore electricity services across Turks and Caicos Islands after hurricanes Irma and Maria in September 2017, analysts said it is highly likely that the company will be pushing for an increase during the negotiations.
Simons explained: "The parallel aims of the discussions are (1) to mitigate the cost of restoring the electricity system and enable the company to return to financial health over time and (2) facilitate the transition to greater Renewable Energy usage in the Turks and Caicos Islands. These discussions are at an early stage," she said. "It is the belief of FortisTCI that the vast majority of Turks and Caicos Islanders, residents, and businesses, appreciate the work of the company to restore power quickly, ensuring that the economy remains strong and attractive to investors. We have seen the return of tourists in record numbers this year, and the groundbreaking of the Ritz-Carlton hotel."
Simons noted that the company wrote to the Government in December 2017 requesting the resumption of the Regulatory Reform negotiations that had started in early 2016 with the appointment then of the Regulatory Assistant Program (RAP) as Government's consultants.
"At that time, RAP held several public meetings across the Turks and Caicos Islands. The need for Regulatory Reform became acute after the 2017 hurricanes, given the cost to restore the electricity system across the TCI," she told The SUN.
She said FortisTCI is a long term strategic partner with the Turks and Caicos Islands, noting that the company's record speaks for itself: the development of a world class electricity system; investment in excess of $200 million in infrastructure over the past ten years; millions invested to
Electricity bills are made up of two parts. The base rate and the fuel factor, (or power cost adjustment). The base rate is a regulated cost and is outlined in the TCIG Electricity Ordinance, Section 32. It covers the company's operational costs.
The fuel factor (or power cost adjustment) is the recoverable cost of fuel used to generate electricity by way of diesel.
Fortis TCI's fuel factor, which is a key component of electricity bills, is based on the price of fuel at the time it is purchased from Sun Oil Ltd. and is subject to fluctuating world market prices.
The fuel factor rate (or power cost adjustment) is calculated in accordance with the Electricity Ordinance and is a mechanism used to recover the cost of fuel used to produce the electricity consumed by each customer.
The calculation is done on a monthly basis based on the fuel consumed for the specific period and determined by the actual price of fuel at the time it is purchased. The fuel factor rate is approved monthly by the Electricity Commissioner. The fuel factor fluctuates with world market prices and allows for both reductions and increases to the consumer.
Diesel is used to generate electricity in the Turks and Caicos Islands as it is throughout most of the Caribbean. Without fuel there would be no electricity.
The fuel factor is directly linked to the rise and fall of fuel prices in the world market.
If the price of fuel rises, it is reflected in the monthly fuel factor calculation. If the price of fuel decreases, it is also reflected in the monthly fuel factor calculation.
Calculations are done based on the cost of fuel at the time it is purchased from fuel supplier and a lag of approximately two months in both increases and decreases are likely as the result of the supply chain to the TCI.
The average price per gallon of fuel consumed for a specific month is reduced by $0.90 per gallon (base cost per electricity ordinance and shall be borne by the company.)
Any cost above $0.90 is considered recoverable at a rate specified by the electricity ordinance (Part V, section 32). Therefore, the first $0.90 per gallon is absorbed by the FortisTCI. Only the cost above $0.90 is recovered from the customer.
FortisTCI Limited (FTCI) is the sole provider of electricity on Providenciales, North Caicos, Middle Caicos, South Caicos, East Caicos and adjacent Cays. In August 2012, Turks and Caicos Utility Limited (TCU), which is the sole provider of electricity on the Islands of Grand Turk and Salt Cay, was acquired by FTCI. Together the two companies serve almost 15,000 electricity customers in the Turks & Caicos Islands archipelago.