The RA Saves Energy Consumers up to $90 Million

Data from the Regulatory Authority of Bermuda (RA) outlines that the regulator has saved consumers approximately $90 million from revenue allowance sought by BELCO between 2020 and 2024. 

In February 2024, the RA successfully defended an appeal from BELCO’s legal challenge. The utility sought $478 million and a rate of return of 8.96 per cent over two years. Instead, they were granted $454 million and a 7.16 per cent return rate over the mentioned period.

In reflecting on their success, the RA is releasing new information to showcase further savings the organisation has diverted from being passed on by BELCO to the public.

It is evident that the RA has carefully scrutinised the utility’s expenses year after year. Most recently, in 2023, the RA saved approximately $12 million in approved revenue and $23,943,478 in 2024.

This information, along with the court ruling, affirms the RA’s unwavering dedication to safeguarding Bermuda’s regulated sectors.

Background

Every year, the regulatory requirements set out by the Electricity Act 2016 require the RA to set the retail tariff, and the retail tariff methodology enables BELCO, as the TD&R licensee, to generate a total revenue.

The allowed revenue recovers reasonable service costs incurred in achieving the service standards. These factors include investment costs (return on investments), operating expenses, fuel, generation procured, and other costs, including government authorisation fees and the Regulatory Authority retail tariff filings submitted by BELCO, which are carefully assessed.

However, on multiple occasions, the RA has identified several areas of significant concern across assumptions, calculations, and proposals from BELCO’s application. Simply put, the RA has questioned the reasonableness and accuracy of associated costs.

Last year, when the RA’s judgements were validated by Chief Justice Larry Mussenden, in his 85-page judgment, Mussenden CJ emphasised that the process followed a due process of highly technical, scientific, and financial analysis.

Justice Mussenden dismissed all eight of BELCO’s arguments against the RA, claiming insufficient information, lack of transparency, and unfair treatment during the review process.

The Regulatory Authority has successfully upheld the protection of our island community’s economy. Our organisation has maintained its position to act fairly in the public interest through a methodical approach.

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