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Fuel Surcharge Increase Likely, LUCELEC

Carmy Joseph, LUCELEC Corporate Communications Officer
Carmy Joseph, LUCELEC Corporate Communications Officer

Customers of the island’s lone electricity company LUCELEC will begin to feel the brunt of volatile gas prices on the world’s market sooner than expected.

Carmy Joseph, the company’s Corporate Communications Officer who spoke to The VOICE earlier this week said that “consumers are likely to begin seeing the impact of the increased fuel surcharge in their March bills,”

This comes on the heels of a change in fuel prices announced by government last month. Gasoline and diesel increased by one dollar on March 21, moving from $13.95 to $14.95 per gallon.

Prime Minister Philip J Pierre in an address to the nation last month said government will continue to subsidize the 20 and 22 lbs. cylinder of cooking gas.

“We believe this to be the best compromise at this time, which leaves the government with excise tax revenue of only 27 cents per gallon on gas and 19 cents per gallon on diesel much less than the $4.00 excise tax budgeted by the former government by $1.00,” Pierre said.

The changes Saint Lucians are currently seeing in their electricity bills and at the pumps are in keeping with changes in international oil prices and government’s application of the modified market pass-through petroleum pricing mechanism.

Consumers have since lamented about the price hike and some are wondering whether the electricity produced by LUCELEC’s solar farm can be used as a buffer against rising electricity costs.

Joseph in response said, “To the extent that the solar farm reduces the amount of fuel that we would have to purchase, it is, in fact, reducing what customers pay in the fuel surcharge.  How-ever, bear in mind that the amount of fuel saved by the solar farm is only about 1.7% of the fuel LUCELEC uses to meet the demand for electricity.”

The 3MW solar farm, which was opened in La Tourney, Vieux-Fort in 2018 is fully operational.

“In 2021, the solar farm generated 6,263,239 kWhs of electricity which led to reduced fuel consumption by 319, 790 gallons for the year and a fuel costs savings of EC$2,319,245.15.  To date, the solar farm has produced 24, 696,985 kWh since it went live in 2018 leading to a 1.27 million gallon reduction in fuel purchased since then and a cost savings of EC$9,099,354.84,” said Joseph.

In response to whether the solar farm can produce enough electricity to satisfy the needs of Vieux Fort residents seeing that it is located in that area, Joseph said:

“First, the energy generated from the farm is absorbed by the main grid and not just Vieux Fort residents. Secondly, the 3MW capacity of the farm is far, far less than what the company needs to service its customers for the Vieux Fort area. We are working on installing battery capacity at the solar farm to allow it to provide energy beyond normal daylight hours and in the future to be able to provide backup power to sections of the grid.”

So has LUCELEC been able to use less fuel in its production of island wide electricity as a result of the solar farm?

Said Joseph, “Yes. Since the solar farm went live in 2018, it has led to a 1.27 million gallon reduction in fuel purchased and cost savings of EC$9,099,354.84 for the company in terms of fuel purchased and to customers in terms of lower fuel surcharge than they would have paid other-wise.”

With regards to the impact the farm has on LUCELEC locking in the price it pays for fuel, Joseph explained that “these are two separate issues.”

According to the Corporate Communications Officer, “The mechanism that allows us to ‘lock in’ what we pay for fuel is price hedging. With hedging we are able to negotiate a contract for how much we pay for a percentage of the fuel we purchase over a particular period. This means that no matter what the price of fuel is on the world market at the purchase time of our hedge, we will pay the hedged price for the percentage of fuel we hedged. Whatever fuel is purchased outside of that hedging period is done at market price. The solar farm has no impact here.”

As to whether LUCELEC plans to move the farm from its 3-megawatt facility to one which can generate more megawatts, she said “The plan is to install battery storage at the facility. You see, in its current form, we are only able to utilize real time energy from the sun during the day. Battery storage will allow for stored energy from the sun to be used even when it’s not able to produce energy such as with cloud cover or when the sun has set. Last year we began the first phase of installing the battery storage when we laid cable to connect the solar farm to our Vieux-Fort power station. We are in the process of getting a supplier to install the battery storage. The next phase of that project we expect to be completed in 2023.  COVID-19 delayed the implementation of that project.”

According to Joseph, LUCELEC is planning to develop a 10 MW solar farm with battery storage on the East Coast.

“We are in the process of securing land and developing the RFP (Request for Proposals) for this project which we hope to commission in 2024,” Joseph said.

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