Sarah MacDonald, President & CEO of Grand Bahama Power Company (GBPC), discussed plans to develop a fuel hedging policy at the ICD Utilities AGM last evening. According to MacDonald, fuel hedging can be used to either partially or fully “lock in” the price of the fuel supply which will help stabilize the fuel surcharge for GBPC customers. This will mean GBPC’s fuel purchases will be based on an average of prices over time instead of one price in a given month. The hedging program will not reduce the long term price of GBPC’s fuel oil but rather reduce the market volatility in what it pays for oil and what its customers pay for electricity. “The price of oil reacts to a number of forces which drives the price up and down,” remarked Sarah MacDonald, President & CEO of GBPC. “In some cases the movements can be quite dramatic from month to month and it is this volatility that creates changes month to month in the fuel surcharge portion of our customers’ bills.”
MacDonald explained that both GBPC and customers are exposed to these market movements in the price of oil and that this is a program used in other Emera companies to stabilize costs. “The implementation of a hedging program will provide greater predictability of the fuel costs and reduce the volatility in the cost of electricity to customers,” said MacDonald. “Hedging will smooth out the dramatic peaks that people experience in the surcharge and will help customers to plan and budget which is very important.”
Ms. MacDonald went on to explain to the attendees that due to the diligence and hard work of the GBPC staff on improving efficiency, the fuel surcharge has been steadily declining since July’s 24.66¢/kWh fuel surcharge. “While the fuel surcharge is largely driven by the world oil market price of light and heavy fuel which we have no control over, we have been taking measures to control the areas we can, like the efficiency of our generation mix,” said MacDonald. “Due to our efforts, we saw the fuel surcharge drop in August to 21.54¢/kWh and further declines resulting in 21.03¢/kWh for the month of November.
For more information about GBPC’s plans for the future, company policies, and energy saving tips, please download the Customer Information brochure on their website at www.gb-power.com or pick up a copy at GBPC’s main office.