APUA Says Fuel Variation Charge Remains Subsidised Despite Increase

The Antigua Public Utilities Authority says it is absorbing a portion of the fuel costs associated with electricity generation, even after increasing the fuel variation charge to 80 cents per kilowatt-hour.

Acting Financial Controller Sabrina Benjamin said the fuel variation mechanism is intended to capture increases or decreases in the price of fuel used by the authority.

APUA uses both heavy fuel oil and diesel, with the monthly fuel mix depending on the generating units operating at the time.

Benjamin explained that diesel is generally the more expensive of the two fuels, but recent geopolitical developments have caused the cost of both to rise significantly.

The authority’s fuel orders increased from approximately EC$11 million in January to more than EC$21 million in July.

“For every 10-cent increase or decrease in the price of fuel, there is a one-cent change in the fuel variation,” Benjamin explained.

APUA officials said the calculated fuel variation charge should have risen to approximately 66 cents in April and 88 cents in May. However, the authority held the rate at 55 cents in April and charged 70 cents in May.

In June, the rate increased to 80 cents, although the actual calculated fuel variation cost remained around 88 cents.

Officials estimated that APUA is absorbing at least 20 per cent of the fuel-related costs instead of passing the full amount on to customers.

Benjamin said the authority must balance relief for customers against its responsibility to pay suppliers, maintain infrastructure and provide reliable utility services.

She could not commit to increasing the level of subsidy, saying any such decision would require a proper financial assessment.