|The price of cool: PPC explains what’s behind electricity rates|
|Thursday, 16 September 2010 09:49|
During the summer months, electricity prices become a hot topic when air conditioners run up energy bills, causing many to sweat their ability to pay.
As the main supplier of energy in the country, PPC Ltd. is constantly under fire for their charges. Electricity bills are made up of two costs, Fortis TCI CEO Eddinton Powell explains.
“There is a base rate and what we call the fuel factor (also known as energy factor) which changes based on the current price of diesel,” Powell said.
The base rate, which has remained consistent at $0.90 for the past five years, is made up of transportation, administration and production costs of electricity and maintaining the electrical grid across the country.
PPC produces electricity every second of the day in the Turks and Caicos Islands using low-sulfur No. 2 diesel, the same fuel used in diesel engine automobiles. That fuel is more expensive but less polluting than cheaper fuel used in many other countries, according to Commissioner of Electricity Lee Cummings.
Getting that fuel to the utilities is more expensive here because there are no deep water harbors, especially on Provo, Cummings said. So fuel has to be transshipped in smaller vessels from the Bahamas, where it incurs additional handling and duty charges.
As often reflected at the fuel pump, the price of this diesel changes daily as the price of crude oil fluctuates on the open commodities market. Since January 2009, there has been a steady increase in the price of crude. In January 2009 a barrel of crude was trading for $33.07, today it is much closer to $70 per barrel, making a marked change in the price of electricity in the TCI.
Powell also notes there are many other factors which can contribute to the price paid locally, including regional or local factors such as hurricane risk or a strike at the Sun Oil station in Curacao.
Each month the fuel factor is adjusted locally to reflect the average price paid for diesel in a given month. Depending on all the factors involved in the end price PPC pays for the fuel, the factor may go up or down. This fluctuation is difficult to predict or for the consumer to prepare for. Powell says the price paid by PPC will be reflected approximately three months later on the customers bill.
PPC is constantly purchasing fuel from supplier Sun Oil. The supply chain of diesel to PPC is critical in the TCI, as reserves are very limited on island.
However, Powell says PPC does not want the customer to worry about that part of the process.
“We don’t want the consumer to think about us,” he said. “We want you to turn the switch and the power comes on.” In this area, PPC has made great strides since it took over the power production plant in 1999. According to Powell, PPC’s reliability rate is 99.9 percent, one of the highest in the region.
“This is very important for inward investment,” Powell says. “Investors don’t have to worry about electricity supply or other factors or costs such as back up or stand by power.”
While many argue renewable resources such as solar, wind and water should be looked at to reduce the dependency on diesel, Powell says fluctuating energy prices is a fact we all have to live with, at least for now.
“People come to me all the time with ideas,” Powell says. He added that PPC is open to speak to anyone who can provide them with energy at a lower rate than they pay for diesel, but he does not see that happening in the near future.
“The simple fact at this stage is that renewable energies cost more to produce, and they are not as reliable,” Powell explains.
While a greater resource for alternative energy is not available at present in the TCI, Powell says PPC urges customers to look at ways of using smaller alternate power sources for their homes. A solar powered hot water heater is a good example, he explains. PPC also urges its customers to practice energy conservation to help keep power bills as low as possible.
“People think we are in the business of making money, and it is not in our interest to help customers lower their bills. But it is not in our interest to have customers who cannot afford to pay their bills,” he says.
Powell says PPC tries to inform customers on a regular basis of changes in the fuel factor rate. He also says they offer customers tips for how to save energy and in so money on their power bills.
|Last Updated on Wednesday, 22 September 2010 16:50|
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