Leacock – Fuel surcharge mechanism is outdated

St Claire Leacock, New Democratic Party (NDP) area representative for Central Kingstown, is of the view that the fuel surcharge mechanism currently in use by St Vincent Electricity Services Ltd. (VINLEC) is outdated.{{more}}

He expressed this view at the last sitting of the House of Assembly on May 31, as he asked Prime Minister and Minister of Finance, Dr Ralph Gonsalves to give comparisons of the fuel surcharge back in 1973 and now.

“When people tell me we mustn’t pay for fuel surcharge, where are you going to get the amount from?” Gonsalves questioned.

He continued saying that it was the policy of the government to deliver an efficient electricity system at the cheapest cost that can be allowed and that there was an energy policy.

According to the prime minister, VINLEC had already reduced the basic component cost of electricity to consumers, but the fuel surcharge had eroded this because of the high prices of fuel over which he said the government had no control.

Gonsalves said that it was the increase in fuel prices that affected the fuel surcharge.

The fuel surcharge moved from 9.42 cents per kilowatt hour in 1990 to 16.42 cents in 2000, to 36.37 cents in 2010, to 46.7 cents in 2011, Gonsalves said.

“The fact is if fuel prices in 2012 were the same as they were in 1990, then electricity consumers in St Vincent and the Grenadines would be paying basically the same as they were in 1990,” Gonsalves said.

So he explained that for a consumer back in 1974 when the fuel surcharge was 1.51 cents per kw/hour, the bill for 100 units would have been $13.91; however, as of March 2012, where the rate was now 52.73 cents, the same 100 units would then cost $102.73.

“We don’t manufacture oil, we don’t produce it – we have to import it,” he continued.

The cost of the average monthly consumption of fuel, according to the prime minister, in 1990, for example, was $5.4 million; 2000 – $14.4 million; 2010 – $46.1 million; and in 2011 – $56.7 million.

Gonsalves also explained that back in 1974, when the fuel surcharge was introduced, the monthly fluctuation in electricity to customers was the result of charges in the fuel surcharge rate and that all electricity companies needed to address the issue of increasing fuel prices.

But while he admitted that a mechanism was needed to help recover the cost of fuel, Leacock said that he believed the fuel surcharge mechanism was outdated.

“It is obvious that you have to recover the amount in the exercise; however my argument is to prove that we are looking in the wrong place for a solution to the electricity problem,” Leacock said. (DD)