The Anguilla Electricity Company (ANGLEC) has admitted to being “severely challenged” with the price of oil in these harsh economic times and is expecting to adjust its prices for electricity in the next few weeks.

General Manager, Thomas Hodge

Its General Manager, Mr. Thomas Hodge, observed: “ANGLEC is severely challenged right now with the price of oil. If you can remember, we took a significant reduction in the fuel surcharge and that was when fuel was at an all time low. Fuel has steadily increased since then and we have not increased the surcharge.”

According to Mr. Hodge, the rising price of fuel was something that his company was grappling with and was also putting the adaptation to renewable energy on “the front burner.” He added that one of the main considerations was to ensure that the tariff structure could accommodate renewable energy usage which is much more intermittent and sporadic than “the consistent use of conventional power.” Hodge said there would be something to report on regarding the tariff restructuring within a month or so.

Hodge opined that the lack of transparency in the current structure was one of the main things that the general public found difficult. “You can’t pick up a newspaper, look at the price of oil and link it to what you are paying for fuel. So the general public has to trust that we are doing it in the right way. We do report our audited financial statements on a yearly basis [but] it is somewhat of a lagging indicator…”

Mr. Hodge stated that the tariff restructuring would take care of the transparency issue by making the process much more visible. He said if the price of diesel could be predicted, persons would be able to determine what electricity rates would be.

The ANGLEC GM explained the reason for the lag in electricity price-change in Anguilla after oil and diesel prices change in the United States and around the world. “There are two separate and distinct factors here that I think may contribute to some confusion. One is the lag and the other thing is looking at the wrong index,” he informed.

There can be a two to a two and a half month delay in electricity price changes behind fuel price changes. Hodge opined that this is quite palatable when prices rise because the delay is on the increase. He commented that it becomes very discomforting when prices fall and “you are still paying these high prices.”

Hodge pointed out that for ANGLEC's prices to be adjusted the company would have to exhaust its older diesel stock (at the old prices). The new rates would have to be taken from the particular refinery from which fuel suppliers in Anguilla are buying the fuel. The fuel suppliers’ old stock has to be exhausted before the new pricing takes effect when ANGLEC buys any new fuel. Hodge stressed that a considerable lag occurs due to those considerations.

“A further lag occurs,” Hodge said, “because the meter is read at the end of the month and the bills are sent out to customers.” The units that ANGLEC generate (for which the customer pays), and any price changes due to fuel price changes, would be reflected in the following month.

Regarding the index, the ANGLEC's Head stated that the most common indicator for gauging fuel prices is the price of ‘Light Sweet Crude’ on the New York Mercantile Exchange. “Our prices are based on Caribbean Postings for Gasoil from [the] refineries Petrotrin and Shell West (in Trinidad),” he went on.

Hodge explained that the prices on the New York Mercantile Exchange and the mean of the Caribbean Postings are correlated so that if prices rise on the Mercantile Exchange it could be expected to rise similarly on the Postings. He highlighted, however, that the prices on the Exchange and the Postings were not “tied.”

“You may find that, over short periods, one is rising and the other is falling and if you look at those volatile plummets on the New York Mercantile Exchange those may not be happening on the Caribbean Postings.” Hodge noted and warned that it is very important that people follow the correct index. He disclosed that the upcoming tariff restructuring would consider publishing the Caribbean Postings in the media on a regular basis. He said there were confidentiality issues that were still being addressed.

| Printer-friendly page | Send this article to a friend |

World News