The opposition New Democratic Party (NDP) says that the pressure it placed on the Government caused VINLEC to subsidise the increased fuel surcharge resulting for the non-operation of its hydro plants.
Opposition Leader Arnhim Eustace said his party knew that state-owned power company can afford the subsidy because the revaluation of its assets had generated EC$21 million and their self-insurance fund contained a further EC$33 million.
“So we have provisions in there, and that is what VINLEC has announced they are going to do. They will not charge the 7 cents,” Eustace said on radio on Tuesday.
The state-owned electricity company announced in January that consumers would pay 7 cents more per unit on their fuel surcharge for approximately one year until its five hydro plants damaged in the Christmas floods are restored.
VINLEC announced last week that it would pay for the increase itself, but said the decision had nothing to do with political pressure, a point that the Opposition has disputed.
The subsidy could amount to EC$10 million, according to Chief Executive Officer of VINLEC, Thornley Myers.
“… if we were not vigilant on that matter, all of you here, including myself, would be paying that increased thing … for January,” Eustace said.
“The New Democratic Party, I think, made a significant contribution to this country during the past couple weeks by keeping the fire to their feet, so, they take into consideration the average man in this country.
“… And I am proud of the role we have played as a party in bringing this matter to the public’s attention and for VINLEC to react, because VINLEC ain’t doing that without the Government. They backed off,” Eustace said, adding that the NDP showed how VINLEC could subsidise the surcharge.
He said the 7-cent increase in the fuel surcharge would have had “serious financial implications” for all electricity consumers.
Eustace, an economist and former prime minister and finance secretary, said that in 2011, VINLEC supplied energy to 36,330 domestic connections, 4,421 commercial connections, and 22 manufacturers.
He further noted that the fuel surcharge is in addition to payment for the units of electricity used.
“And now the fuel surcharge, in some instance, is the biggest part of your bill.”
He said that if there were a 7-cents increase, taking into account the number of connections and kilowatt hours used, and assuming no further increase in fuel prices, consumers would have had to pay EC$4.2 million more for fuel surcharge, commercial customer EC$3,882,000 more, and industrial customer, an additional EC$479,000.
“So what we are talking about, for that time when the hydro is out, they would be paying EC$8.8 million more for surcharge in 2014. … Your neighbour, you, would have been paying EC$1,031 in 2014. That is assuming no increase in prices,” he said.
Eustace said this is an important issue for a number of reason, adding that the average commercial enterprise pays EC$7,385 in fuel surcharge a year, while industrial consumers pay an average of EC$191,000
He said that if VINLEC had not decided to subsidise the fuel surcharge, businesses would have passed on the increase to customers.
Businesses would make less profit, generate less revenue for the Government, and people would be laid off, he further said.
Eustace pointed out that from 2006 to 2013, the annual average that consumer paid for the fuel surcharge rose from EC$$577 to EC$912.
“And if you didn’t put on the 7 cents for 2014, it would have been $1,031 for the average customer,” he said.
“When we looked at what the impact was going to be on consumers, we say they can’t raise the fuel surcharge, they must hold it back and VINLEC must absorb that 7 cents.”
Eustace said he and Central Kingstown MP, St. Clair Leacock, an NDP Vice-President and former human resources manager at VINLEC advanced that position repeatedly on radio.
“Well, they roll it back because they realised that we had a point, and it was horrible to force that kind of payment on our electricity consumers.”
But VINLEC said at a press conference last week that it did not announce the subsidy at its first media briefing in January because its board of directors was yet to meet.
At that briefing, VINLEC said consumers should expect a higher fuel surcharge for about a year, because its fuel consumption would increase while its hydro plants are down.
“We knew that we needed to explain to the public why the fuel surcharge was increasing and what would naturally happen once we don’t have our hydro electricity plants,” Chief Executive Officer of VINLEC, Thorley Myers said at the briefing last week.
He said that at the time of that initial press briefing in January, VINLEC’s board of directors had not met and the company was responding to comments that the increased fuel surcharge was to pay for the damage to the hydro plants.
“We needed to respond, but this is a response that was coming, that we as the management could not have offered to the public [earlier in January], because, clearly we did not have the propagative to do so,” Myers said of the fuel subsidy.