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Slight increase in electricity bills likely

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Residents may pay a little more for electricity later this year if a government proposal to increase the charge on fuel purchased by St. Lucia Electricity Services (LUCELEC) by 50 cents per imperial gallon – for the second consecutive year – takes effect.

In his Budget Statement on Tuesday, Prime Minister Dr. Kenny Anthony said it is better to raise the fuel surcharge than imposing the 15-percent Value Added Tax (VAT) on electricity as recommended by public sector unions.

He explained: “Mr. Speaker, in last year’s Budget, the charge on fuel purchased by LUCELEC for generation of electricity was increased to 50 cents per imperial gallon. In this year’s Budget, I propose to increase the fuel charge by a further 50 cents.

“I am aware that this comes on the heels of the increase last year, but as I have maintained, this approach is far more palatable than the option of imposing VAT on electricity consumption at 15 percent, as recommended by Public Sector Unions.

“Our analysis suggests that raising the surcharge increases revenue by about the same as imposition of VAT at the standard rate (under an assumption of a threshold for domestic consumers), but has a smaller impact on the bills of the final consumer.

“Mr. Speaker, allow me to illustrate. Consider the case of a consumer who uses 100 kilowatt hours (kWh) per month. At current rates, this will cost the consumer $90.30 at current rates. If we were to apply 15% VAT to this bill, there would be an additional charge of $13.55, taking the bill up to $103.85. However, our proposal of increasing the fuel surcharge to $1.00 would lead to an increase of only $3.0. The same consumer would now pay a total bill of $93.30. Therefore, increasing the surcharge would mean the consumer would pay $10.55 less on a monthly basis compared to implementing VAT on electricity.”

This revenue measure is expected to yield an additional $9.5 million, the prime minister said.

BELOW IS THE PRESS RELEASE FROM LUCELEC WHEN GOV’T INCREASED THE SURCHARGE LAST YEAR

An increase in the tax charged by the Government of Saint Lucia (GOSL) on fuel purchased by Saint Lucia Electricity Services Limited (LUCELEC) came into effect on June 16, 2014 when the statutory instrument for that purpose was published in the Saint Lucia Gazette.

Consequently, all fuel purchased by LUCELEC from Buckeye St. Lucia Terminal Limited since then has attracted a levy of fifty cents ($0.50) on every gallon. This increase in the levy will be reflected in customers’ bills beginning in July. LUCELEC customers can expect a marginal increase in the fuel surcharge applied to electricity bills. For July bills that’s a difference of about 0.9 cents per unit (kilowatt hour).

Despite the adjustment, the fuel surcharge for July is minus 0.1 cents per unit, as the overall price paid for fuel by LUCELEC during the month of June was still marginally below the average price paid for fuel the previous year. LUCELEC customers can see details of the basic tariff and fuel surcharge on their monthly electricity bills.

The increase in the fuel levy from 20 cents ($0.20) per gallon to 50 cents ($0.50) per gallon was announced by Prime Minister Dr. Kenny Anthony during the presentation of the 2014/15 Budget Statement in May this year.


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