FRIDAY, JUNE 29: Big organisations like BELCo could help power up the economy by cutting the cost of energy, according to a Government Senator.

Senator David Burt, the junior Finance Minister, said that reducing the cost of energy for average domestic consumers was another way of putting more money in the pockets of families — which could be a boost for local business as more cash would be available to buy goods and services on the island.

He said: “The Government has put forward a plan, the Energy White Paper, which has ambitious targets as we move towards more renewable energy.

“But that also means people pay less for their energy, which will reduce the pressure on average families.

“If Bermuda, as a country, spent 25 per cent less on energy and that amount of money is spent elsewhere in the local economy, that improves things for everyone.”

But BELCo said the cost of fuel oil — over which it has no control — accounted for around 50 per cent of island energy costs.

A spokeswoman added: “The cost of fuel includes a Government tax of $15.10 per barrel which contributes over $15 million per year to Government revenues.

“BELCo invests between $20 million and $30 million annually in energy infrastructure, the financing of which comes from revenues that could otherwise be paid out in dividends to shareholders.”

The spokeswoman added that BELCo investors got between five and six per cent in returns on average over the last few years, which dropped to less than four per cent in 2011 — well below the average US rate of 11 per cent and other island communities’ seven and 18 per cent.

She said: “Economic development and Bermuda’s reputation as a sophisticated business jurisdiction are dependent on BELCo’s ability to continue to supply a reliable electricity service.

“As Government and the private sector promotes Bermuda as an international business destination of choice, it must not be forgotten that confidence in the reliability of Bermuda’s electricity infrastructure is an important selling point.”

Drop in profit

The Ascendant group of companies, which includes BELCo, made a profit of $11.12 million in 2011. This marked a 30 per cent drop from $16.02 million the year before.

The sale of electricity by BELCo dropped by $3.22 million —put down to a shrinking customer base as more people left the island.

Sen Burt said that tax breaks to encourage more fuel efficient cars would, as well as reducing pollution, release more money to spend on other things.

He said: “Energy costs have gone up a great deal and that has put a brake on global expansion as well.

“Energy efficiency is one of the things which will lead to a reduction in the cost of living. With cars, the less money we spend on gas, the more we have to spend elsewhere in the economy.

“It’s about sustainability — we use dryers now instead of drying clothes on a line, which uses more energy.”

Sen Burt added: “The average Bermudian consumer is hurting, yet we read about continued profits for BELCo when they ask for price hikes.

“We read about continued profits for insurance companies who are increasing rates for consumers. We don’t get to see the figures for private companies like supermarkets but one must ask if, during this time, private industry is doing all it can to help the country during this tough time.”

He said: “Government is also helping by increasing pensions for seniors and with things like Future Care to provide an alternative to private insurers.”