Subsidy to mitigate sharp rise electricity tariff

Consumers on Saba will be spared a drastic increase in their monthly electricity bill. Thanks to a subsidy of the Public Entity Saba, consumers will not have to pay the full electricity tariff increase to cover the higher fuel costs and other expenses.

The Public Entity Saba has decided to grant Saba Electric Company (SEC) a one-time incidental subsidy of US $235,000 to mitigate a drastic tariff increase. Saba’s Executive Council this week approved a proposal for a subsidy agreement following several discussions between SEC and the Public Entity Saba, the company’s shareholder, in the past few weeks about ways to relieve the burden that the unavoidable tariff increase would create for consumers.

Without the subsidy, SEC would have to raise the tariffs with a considerable amount. The increase has to do with higher fuel prices and other expenses, but also with the temporary absorption by SEC of the higher tariffs after the September 2017 Hurricanes Irma and Maria. The current one-time subsidy will cover the network losses over 2017-2018 and the recalculation of the non-received tariff income over 2018.

An additional reason why the electricity tariff would increase is the fact that the COVID-19 subsidy provided by the Ministry of Economic Affairs and Climate (EZK) will end this year. Another factor is that SEC has been generating less income than normal due to the pandemic with fewer medical students and tourists occupying apartments, cottages and hotel rooms.

With the subsidy from the Public Entity Saba, the increase in tariffs would be comparable to St. Eustatius and Bonaire where a raise of respectively US $15 to US $10 will be implemented because of higher expenditures. Without the subsidy from the Saba Government, electricity prices on Saba would increase around US $45. With the subsidy, SEC will be able to keep the rise in line with the increase on St. Eustatius and Bonaire. The increase of the variable fee on Saba, with the subsidy, will be around 9.6% per July 2021. Without the subsidy, the increase on Saba would have been 29.5%.

The Ministry of Home Affairs and Kingdom Relations (BZK) and the Ministry of EZK have been informed about the subsidy agreement. The Public Entity Saba will tap into the COVID-19 related budget for this purpose.

The letter through which SEC informed its clients is HERE.

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