October electricity bills will be later than usual but consumers can look forward to continuing to pay a reduced Value Added Tax (VAT) for another six months, the Barbados Light & Power Company (BLPC) announced on Thursday.
But the utility company also warned of a “slight increase” linked to the increase in fuel prices that it passes on to consumers.
BLPC’s Manager of Customer Services Rodney Dottin told the media in a conference call that the government had only just confirmed an extension of the ease of the VAT on electricity bills, following its expiration on September 30, which led to this month’s bills being printed only this week.
“The VAT reduction on the residential accounts that was previously announced by the Government of Barbados back in February this year, that came to an end on September 30. The Ministry of Finance has subsequently confirmed the extension of that relief, and that it will run from October 1 this year until March 31, 2024,” said Dottin.
Residential customers have been paying only 7.5 per cent VAT on the first 250 kilowatt-hours of electricity, which is the average use per household, instead of the usual 17.5 per cent rate.
The reduction in VAT on electricity bills for domestic customers first ran from August 1, 2022, to January 31, 2023, before it was extended another eight months, until September 30.
Dottin told reporters that as a result of waiting for the update on the extension to the VAT reduction, the BLPC had to delay the October billing cycle. This, he said, will result in the bills being a few days later than usual. But he quickly pointed out that the discount date and the due date for the payment of the October electricity bill were adjusted accordingly.
“The discount is primarily driven by the date that we do the billing on the account. So I want to assure customers that the discount date will automatically be adjusted, as well as the due date for which you have to pay the bill,” he said.
“Since receiving that news, we began our billing process on Wednesday. So customers can expect, given the timing of printing and mailing of bills, the first set of bills we anticipate will go out on Monday. Those customers who are on e-billing, they will receive their bills as early as today [Thursday].”
Dottin said he did not expect the bills to be put into the post on Friday due to the pending passage of Tropical Storm Tammy.
Despite the VAT reduction, the Light and Power official said that for the month of October, customers will notice a “slight increase” in per kilowatt charge of electricity use, given that there was a 4.9891 cents increase in the Fuel Clause Adjustment (FCA) for October, up from the 39.69.72 cents for September.
This means that customers could see a minor increase in how much they pay for electricity this month. For example, a customer who uses 250 kilowatts of electricity could end up paying $12 more than they paid the previous month.
The 44.6863 cents for the FCA for the month of October is the highest that charge has been since December 2022, when the FCA was 41 cents. The FCA fell to 32 cents in January 2023 before starting to climb as world oil prices rose.
The FCA is a mechanism used to price the fuel oil used to generate electricity, reflecting the changes in the price of fuel on the world market. Based on purchase contracts made in advance, the price is adjusted for each kilowatt-hour of electricity, as the cost of fuel rises and falls.
