Georgetown: With the 10 per cent reduction in electricity rates, the average Guyanese consumer can expect to pay $48 per kilowatt hour (kWh) come March 1, the Guyana Power and Light (GPL) announced. This represents a 10 per cent reduction from the $53 presently being paid.
In addition, consumers classified as ‘lifeline residential’ by the GPL will pay as low as $43 per kWh while commercial businesses will pay $62 as opposed to $69. For industrial businesses: small, medium and large scale will pay $48, $54 and $56 respectively.
During a media briefing at GPL’s Head Office in Kingston, company Chairman Winston Brassington added that for those classified as Governmental, those in the residential category will pay $52 and $53 respectively, while for commercial businesses under this category, the cost will be $65 per kWh.
He further stated that industrial businesses will pay $50, $56 and $59 respectively. With the new rates, GPL anticipates that consumers will collectively save some $3 billion annually on their electricity bills.
Further, consumers whose billing cycle begin in the latter part of February and ends in March will benefit from the reduction on their entire consumption for this period, Brassington said.
He pointed out that this means that the GPL will not prorate consumption when applying the reduced rate.
But, it was made clear by the Chairman that consumers should be aware that the 10 per cent reduction is being applied to energy charges and not fixed charges.
The decision to lower electricity rates was announced Monday, given that fuel prices began to drop significantly on the international market last June.
However, to safeguard the sustainability of the company, this decision will be reviewed on a quarterly basis. Brassington stated that while the cost of fuel was unstable on the international market presently, in order for the present 10 per cent reduction to be reduced, the cost of fuel would have to increase to US$70 per barrel.
At present, fuel is being sold for approximately US$52 per barrel. Brassington also highlighted that while the cost of fuel played a significant role in the price of electricity, the Government has measures in place that would ensure rates remained within a certain margin.
This means that should rates go up because of increased gas prices in the future, consumers are not expected to pay more than they are currently paying.
The next review of rates is scheduled for July.
When asked how the reduction of 10 per cent was arrived at, Brassington explained that while the company can afford a larger decrease, the reduction was calculated based on the company’s accumulated foregone revenue.
He explained that in 2013, it was revealed that the company was entitled to a 12 per cent increase in rates because of increased gas prices among other contributing factors.
But the company did not capitalise on this, thus that 12 per cent was reduced to a little over four per cent last year, which again, the company did not take advantage of.
Sustain self
Given the loss in revenues the company sustained after refusing to take advantage of this suggested increase, it believes the 10 per cent reduction is justified and will not be objected to by the Public Utilities Commission (PUC).
Brassington pointed out that the total projected foregone revenue for 2014 amounted to $29 billion. This loss in revenue has been happening for the past 10 years, officials of the company stated.
But, this year, as a result of the drop in fuel prices, the company anticipates it will be able to comfortably sustain itself.
“This year we will not require subsidy for operation cost from the Government, which is the same as last year,” Brassington stated.
However, he added that it was very likely that the company would continue to require assistance from the Government for capital projects. He explained that “in any company, loans are taken to carry out capital works.”
He added too that GPL was not indebted to any private company (third party) for loans taken since all instalments were paid when due.
The company had stood to save $7 billion annually, but since $3 billion of this amount is being passed on to consumers, the allotted savings is now $4 billion annually.
Further, the company expects to save about US$35 million this year in fuel costs at the present cost of fuel on the international market. But, if fuel prices were to increase to about US$70 per barrel, then the company will meet its projected fuel bill of US$70 million for 2015.
Last year, the company spent US$105 million of fuel, creating a saving of US$15 million on the projected fuel bill for that year.
On Monday, President Donald Ramotar, during the commissioning of GPL’s new power station at Vreed-en-Hoop, announced the reduction in rates after he had previously revealed that he was lobbying for lower electricity costs since the fall in fuel price.
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