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NIA propose the removal of fuel surcharge for residential customers effective September 2022

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by Eulana Weekes

St. Kitts and Nevis (WINN): After extensive debate in Nevis about the fuel surcharge which has been identified as a driver in rising electricity bills, the Nevis Island Administration (NIA) has proposed its removal.

During a press conference on Tuesday morning August 30 2022, Premier of Nevis the Honourable Mark Brantley explained that the NIA is expected to cover the cost of fuel surcharge to the Nevis Electricity Company (NEVLEC) through additional payments.

“We proposed ultimately to eliminate the fuel surcharge for everyone, but in this first step, we will eliminate the fuel surcharge for residential customers only. The NIA will provide an additional EC $500 thousand dollars per month to NEVLEC, that will take our payment of subsidy per month to a total of EC$1.75 million dollars. The good people at NEVLEC are telling us that if we can give them EC $1.75 million dollars per month and the actually surcharge remains on or about 77 cents per kilowatt hour (that’s what the actual surcharge was in the month of July), that they can reduce with that subsidy, the fuel surcharge for residential customers to zero; and so that is what we proposed.”

Brantley also stated that the Nevis Electricity Company will maintain the cap on fuel surcharge at 65 cents for commercial users, as was introduced in June 2022.

The Russian invasion of Ukraine which has disrupted supplies of shipping globally has also disrupted the flow of oil on the world market. This has caused dramatic increases in the cost of fuel. Premier Brantley shared with the public how the cost of oil has escalated locally over the past year and how it contributes to the cost of fuel surcharge.

He said, “In June of 2021, the average price per imperial gallon of diesel to NEVLEC was EC $6.87, by July of 2022, that’s a year and one month later, that same price of one imperial gallon of diesel is now EC $14.86. So, in one year, the price to Nevlec for diesel has moved from EC $6.87 per gallon to EC $14.86 per gallon. That is well over 100% in terms of the increase of diesel.”

“The total cost associated with the fuel surcharge, the latest month that we have, which was July 2022 was 3. 821 million dollars. If all factors remain the same, including fuel prices, the cost of the next 12 months will be approximately 45.85 million dollars. That is what we would expect if all things remain the same as they are today… It means that NEVLEC has to find that amount of money to keep the lights on essentially,” Brantley explained.

The fuel surcharge is a tax that was put in place to help NEVLEC recover the fuel cost so that it can pay for the fuel used in the production of electricity. As such, the price paid by NEVLEC for fuel is the main driver of the fuel surcharge. NEVLEC has made efforts to minimise the impact on the rising cost of fuel. Premier Brantley revealed that since June 2021, the utility company has subsidised customers to approximately EC$ 4 million dollars.

Despite efforts to curb the impact of fuel cost on consumers, the impact was still being felt considerably. Some people through social media and other means called on the Government to address the electricity surcharge issue and provide some relief.

Brantley mentioned at the press conference that there are good signs that the fuel prices might lower in the month of August than July, notwithstanding that the ongoing war in Ukraine can cause this to change.

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