Like many consumers, two MPs are asking whether the US$80 million geothermal power project expected to come on stream in St. Vincent and the Grenadines in 2018 will end the fuel surcharge on electricity bills.
“The question is, what will it be changing. Does it mean that the fuel surcharge, for example, will be a thing of the past?” MP for Northern Grenadines, Godwin Friday, an opposition lawmaker, asked Parliament on Tuesday during the debate of the Geothermal Resources Bill, which was passed into law that day.
“The way in which VINLEC charges the consumer for electricity, will that be affected? Can we say that the impact will be such that the fuel surcharge will be something that would be severely reduced or eliminated? Will there be a new dispensation in terms of how VINLEC charges the consumer for electricity is generated?’ Friday said.
“If that is the case, then the label ‘game changer’ might be worthwhile. If not, then it is just hyperbole,” he further said.
Sen. Jomo Thomas, a government lawmaker, speaking after Friday, also raised similar questions.
“Will the generation of geothermal energy result in the removal of the dreaded electricity surcharge?” asked Thomas, who is the ruling Unity Labour Party’s candidate for South Leeward.
“Because we all know that the upfront cost for geothermal energy production is high, but the operating cost will be relatively low,” Thomas said.
On Wednesday, Thornley Myers, chief executive officer of VINLEC, the state-owned and sole electricity company in SVG, told I-Witness News that the fuel surcharge might not totally disappear when the geothermal power plant begins operating.
“Once VINLEC uses fuel, there will be some element of the surcharge. You can always restructure a rate. It might be to cents instead of 33 cents, it may be one cent, it may be five cents,” Myers said.
He said some persons need to recognise that the fuel surcharge results from the cost of the fuel used to generate electricity.
“Clearly, with geothermal, there is expected to be a huge reduction in the cost of electricity and with that reduction one would expect that you would have much, much lower [fuel surcharge] … I would expect that to be small compared to what it is today I am sure.”
Myers told I-Witness News that some persons, “including some lawmakers, and unfortunately so, still don’t know what the fuel surcharge is.
“The fuel surcharge essentially represents a cost of fuel used to generate electricity. So, if geothermal takes us to the position where we are not using any fuel, I think the fuel surcharge would disappear. Probably the doubt comes because some persons are not fully aware of what is the fuel surcharge,” he said.
Asked if electricity prices will fall when the geothermal plant comes online, Myers told I-Witness News:
“The expectations are that electricity prices will fall… The quantum is to be determined…”
He said that both the government and VINLEC are aware that if the price of electricity would not fall then it is not in anyone’s interest to invest in geothermal energy.
“It is not an exercise essentially to bring geothermal just for the sake of bringing geothermal,” Myers told I-Witness News.
“… there are figures that clearly point to the fact that electricity prices should fall. One needs to understand that this is the essential business plan and there are certain decisions that should be made now and there are certain decisions that would be made at a later stage,” he said.
But the government is yet to give a forecast of the margin by which electricity prices could fall.
“I think the concern with respect to stating numbers is because … if you say it is going to fall by 25 per cent then persons would hold you to that and if it falls by 20 per cent they would say you were lying. If it’s 40 per cent they would say thank God,” Myers said.