Fuel Adjustment Rates (FAR)
The Regulatory Authority currently receives a monthly filing from the Bermuda Electric Light Company (BELCO) for the fuel adjustment rate. One of the duties of Regulatory Authority is to approve or disallow a filing from a specified business for variations to the price or charge for electrical power submitted.
The fuel adjustment rate (cents per kilowatt hour) is calculated using the cost of fuel (which excludes a base cost of $30.00 per barrel of fuel) and projected usage.
The cost of fuel is made up of the actual cost of the fuel purchased on the international oil markets, plus transportation costs, as well as a static Government of Bermuda Customs duty of $31.79 per barrel.
As the actual cost of fuel changes on the market, the fuel adjustment rate also changes. Market fuel prices can change due to demand as well as the impact of political, economic and other factors.
The Regulatory Authority assesses BELCO’s monthly FAR filing and then BELCO publishes its conclusion for the FAR pricing in the Gazette.