Tuesday 26 May, 2020

Hedge? Customers saving on electricity as COVID-19 slashes fuel costs

Light and Power’s Manager of Customer Care Rodney Dottin

Light and Power’s Manager of Customer Care Rodney Dottin

The Barbados Light and Power Company is considering entering into contracts that would see Barbadians paying less for their electricity but it would bind them to the fees for an undisclosed number of years.

This is the definition of fuel hedging and it is one avenue being explored by Barbados' lone electricity provider.

In a statement, Light and Power’s Manager of Customer Care Rodney Dottin said:

"We have commenced a discussion with our suppliers on fuel hedging and have submitted an application to the Fair Trading Commission seeking approval to set up a fuel hedging programme. Fuel hedging at a time like this can bring competitive pricing and stability to the fuel portion of customers’ bills."

Should the electric company hedge the risk of a possible increase in oil prices by purchasing forward contracts now?

Too soon

This announcement comes after Barbadians have been experiencing significantly lower bills for the past three months.

"A significant impact of the pandemic on the global economy is the price of fuel and customers will see a notable ease in electricity rates because of the drop in world fuel oil prices. The Fuel Clause Adjustment (FCA) for the month of May is 16.2176 cents per kWh, compared to 24.1235 cents per kWh for April, a decrease of 33%. Cumulatively, from March to May, there has been a 44% decrease in the fuel component of customers’ bills.

"To understand the impact, here is an example: a residential customer using 350 kWh would have received a bill in March for $195.03, in April for $178.76 and in May for $146.24."

In addition to measures already taken, Light and Power is promising further ease. 

"We will extend the payment discount to Domestic customers on bills issued from March 1 and extending into April 2020, for bills that are settled within fifteen (15) working days following the lifting of the national curfew. For customers who have paid their bill prior to this announcement, the discounted amount will be applied as a credit to your account. There is no need to call Light & Power or for any additional action on your part."

Weeks into this unprecedented period of pandemic response, as a responsible business, the Barbados Light & Power Company is assuring all and sundry that they are doing their part to keep their employees, customers and Barbadians safe. "We will continue to support the efforts of Government and the Health Authorities to minimize the impact of COVID-19. . .

"Light and Power will continue to safely execute on its mandate - to keep the lights on for customers - while keeping the health of employees at the forefront. Our Customer Service Office at Garrison will remain closed and customers are asked to continue utilizing alternative, non-face-to-face options for making queries, requesting new services and paying bills.

"...The safety, health and wellbeing of our employees, our contractors, customers and all Barbadians are of paramount importance. These priorities and those whom they impact will remain the focus for us . . . as we plan for the safe, considered and cautious reopening of our business."

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