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Bermuda's costs of electricity, imported cooking gas, gasoline and oil

Lack of economies of scale and huge import duties make them very costly compared to North America, primarily from British-style huge taxation

By Keith Archibald Forbes (see About Us) exclusively for Bermuda Online

To refer to this webfile, please use "bermuda-online.org/electgas.htm" as your Subject

Electricity

Electricity for heating, lighting, cooking and cooling is provided exclusively in Bermuda by the Bermuda Electric Light Company Limited (BELCO) at 27 Serpentine Road, Pembroke HM 07, Bermuda. Telephone (441) 295 5111. Fax (441) 292 8975. It has current market capitalization of $216 million, combined with total assets of $340 million and shareholder's equity of $300 million. It has a Bermuda Government legislated monopoly on the supply of electricity locally, is the sole supplier to the government at a preferred rate and is a local commercial joint stock company majority owned by Bermudian shareholders. Average monthly residential customer usage was  696.17KWh in 2008. 

For the year ended December 31, 2009 total electricity consumption in Bermuda was 674 million kilowatt hours (kWh) compared to 655 million in 2007. 

Bermuda's mere 20 square miles - more than 600 miles away from the USA in the North Atlantic - resident population of only 68,500 and obvious inability to have no economies of scale makes local costs very high.

It began in 1904, commenced selling electricity in 1908 and was originally called the Bermuda Electric Light, Power and Traction Company. The demand for electricity has continued to increase and is always greater in the summer than in the winter. Commercial users in Bermuda pay a lot less for their electricity usage than domestic users. Large commercial organizations use about 40 percent of all local electrical output. Belco does not have off-peak rates.

In Bermuda, the architecture, closeness to others and small land size of most Bermuda homes, plus the complete lack of any rivers, nuclear plants, etc. don't allow less expensive alternatives such as wind farms or solar panels or ground source systems, so imported fuel oil - the most expensive way by far to produce electricity in the developed countries - is used exclusively. It is piped directly into the central electricity generating plant owned by the utility on Serpentine Road in Pembroke Parish, west of the City of Hamilton, via a mile underground pipe from the oil docks terminal at Ferry Reach, St. George's Parish. In 2007, the Belco power station consumed over a million barrels of imported oil.

There are two generating stations on 23 acres of property on Serpentine Road in Pembroke Parish. The East and West Power Stations contain a total of 12 diesel engines and 9 gas turbines. Two new engines come on-stream in 2004. About $21 million a  year is spent on plant and equipment. The type of fuel used depends on which engines are in operation. Heavy fuel, used by 82% of the entire system, powers four newest diesel engines which carry the basic load of power used on a daily basis. They are slower to start up than the gas turbines but are more efficient to operate. A very light diesel fuel called Cetane which costed Belco $185 a barrel in June 2008, runs the six smallest gas turbines. Both types of engines generate a maximum of 168 megawatts of electricity at a frequency of 60 Hz. A generator (alternator) produces alternating current. Voltage is about 18,500 volts. A generation transformer increases voltage to 22,000 volts to transfer electricity more efficiently over long distances. Transmission cables are made from copper or aluminum because they have low resistance. 

Underground cables are not as vulnerable to wind damage but cost more to repair than overhead cables.  In most rural and urban areas, the cables are overhead, not underground. But BELCO funded underground cabling in the Town of St. George to help improve the look of the town as it went for and got World Heritage Site status. All electrical cabling for new developments such as office buildings and hotels, both in the City of Hamilton and elsewhere are located underground. Otherwise, this is done only when customers request it and pay for it themselves. 

There is a major step down sub station where electricity is routed for commercial or domestic use.  30 substations transform high voltage to low voltage. For commercial use, transformers in large buildings and some other buildings transform low voltage electricity even lower to  120 or 220 volts. For domestic use, the electricity passes along high voltage poles to pole-mounted transformers to low-voltage poles to households.

In Bermuda, for domestic premises, the average per kilowatt hour (KwH) cost before tax (Fuel Adjustment Charge, FAC) is huge by international standards. It is higher than any of the countries named in the International Energy Agency's key world statistics report. In June 2008 the Bermuda cost to consumers was $0.37 per KwH, including the Fuel Adjustment Charge.  Consumers have been warned to expect higher prices as the price of oil escalates. Prices of both oil and electricity in Bermuda are approved by the Bermuda Government's Price Control Commission. The Bermuda Government's huge import duty on fuel oil is by far and away the highest tax in the world per square mile, both for oil and for the generation of electrical power. These make electricity more than three times the cost of the product in North America, Britain and most of Europe, plus they have no additional Fuel Adjustment Tax of 32% 

Newcomers to Bermuda should ensure the premises (apartment or flat or condominium or house) they rent or buy - see Homes - has its own electricity meter and should establish an account without delay. If returning to the UK from Bermuda after an employment contract, sell or give away your US-type appliances before you go and give one month's notice in writing to BELCO. On request, it will also give a written reference to a customer who goes abroad and uses another electricity supplier.

Belco has asked consumers if they would support the construction of a new power plant or sub-plant and where they think a new plant should go, if built. Alternative energy sources were also featured prominently, with people being asked if they were open to developments such as wind turbines and solar panels. The company's aim is to gather information that would allow them to assess the interest in various energy options in order to gauge what the demand for them would be over the next 20 years, especially with Bermuda's demand for energy expected to rise 1.5 percent annually over the next 20 years. 

In February 2006 Belco signed an agreement with Current to Current Bermuda Limited to purchase up to 20 MW of power. The Massachusetts based corporation and Belco hope to sink the world's first underwater power generator off the south coast of the Island. The Current to Current scheme would capture ocean currents to initially provide nearly ten per cent of the Island's electricity needs.

To those with their own Bermuda homes - not most rented units -solar water heaters are expensive to purchase and have installed - partly because they too attract a significant Bermuda Government import duty and more - but may be able to pay for themselves in a few years. Also available, but again at high import duties and more, are air-sourced heat pumps and geothermal heating/cooling systems.

Recommended to all locals and newcomers are energy-efficient light bulbs and consumer electric appliances such as air conditioners, refrigerators, freezers and washing machines with an Energy Efficiency Recommended logo or North American equivalent.

Air conditioners are essential in Bermuda from May to October to live comfortably at home or in the office. Those who come to work and rent a three bedroom home with say two air conditioners running 24 hours a day to help combat Bermuda's hot and very humid months. At other times - November to April - note there is no central heating in most Bermuda homes and apartments. Some winter days and nights can be damp and chilly for non Bermudians accustomed to seasonal central heating. Some homes have a fireplace, while others may have a ductless split heat pump system with reverse cycle heat during the winter and air conditioning in summer. If not, electric heaters and separate air conditioning units for winter and summer comfort levels are available commercially. 

BELCO and the Bermuda Government - the Ministry of Transport, Ministry of Works & Engineering - partnered to form the Electric Vehicle Demonstration Committee (EVDC). Its mandate is to:

• Identify applications where alternative vehicle technology could replace the conventional internal combustion engine vehicle.
• Source appropriate replacement vehicles and initiate trial programs in Bermuda.
• Quantify the  value and benefit of electric vehicles on the environment.
• Assess the commercial availability and life-cycle cost of electric vehicles.

But they were not deemed to be practical for Bermuda at this time.

Festival of Lights

Every Christmas, this occurs, in a sponsorship by BELCO and the BF&M Insurance Group, with benefits going to charities. The festival provides an opportunity for individuals and businesses to join in the spirit of giving in the holiday season. They participate by completing an entry form, choosing their theme, then decorating with electric lights. Winners in the 13 categories have a cash prize going to the charities of their choice. Also, they got a credit to their electricity bills for the month of December. There is a first, second and third residential winner in the east, west and central parishes. There is one prize in the commercial category.

Outages 

98% of all electricity is from electricity poles placed in the ground. Thus the system often shuts down for days even during a moderate gale. Having an all-underground system would not rectify the problem, would cost far too much, inconvenience far too many people using Bermuda's crowded small roads; and not be the technical answer. It is a national  problem, not a BELCO one. Prohibitive costs are one of many reasons why underground electric cabling is ruled out for most of Bermuda, unless supported  by the Bermuda Government and private sector organizations beyond BELCO.  The Bermuda Government is unable to commit funds to help BELCO put electric cables underground as it has more pressing commitments.

• Bermuda's assets in architecture do not save the Island from the major liability of having more than 75 percent of all its electricity shut down completely, in most cases not just for hours or part of a day but for days or weeks. 

• Only the few areas with underground wiring are spared. It is not realized by Bermuda's air and cruise ship visitors that when power outages occur, far more is lost than just the use of dishwashers, cable and local television, computers, electric can openers, electric clocks & clock radios, electric shavers, electric stoves, freezers, kitchen sinks, refrigerators, shavers, showers, stereo and CD or DVD systems, and other electricity-powered items. Unlike anywhere else in the world, each property in Bermuda adversely affected by a power outage also loses the use of all toilets, bidets, wash basins and kitchen sinks fed from electrical pumps from private (not mains or central systems) water tanks. 

• Only those fit enough to do so are able to walk to water tanks in homes or apartment buildings, to draw water by hand in buckets and haul them inside to pour into toilets and wash basins. 

• For the taxes they pay on real estate, about four times more on average than in the USA, Canada and USA, Bermudians and other property owners do not get centrally piped in water or sewage disposal. When power outages occur in Bermuda, everything in the house powered by electricity, including water pumps to run hot and cold water systems from the water tanks and toilets to flow into private sewage pits, stops completely. 

• No rebate from land taxes is offered by the Bermuda Government in such circumstances.  

• As a direct result, in this high Bermuda temperature and humidity, thousands of locals also lose hundreds of dollars each in frozen foodstuffs in their freezers, money which is not refundable by the utility or government.

• Only very few places have emergency back-up systems - their own generators - when outages occur. 

• In this heat and constant high humidity, many have no option but to buy generators. Does Government make it easy on them? No. The Government insists on its 33.3% import duty and with this duty also applied to gasoline, which, at over $6 a gallon in Bermuda to run the generators, makes the situation very difficult to those totally without power or water or phone service or television.

Computers at home or work

Most homes with computers and businesses running computers should have at least one UPS for each computer. You can lease surge protection equipment for appliances, computers, stereo sets and televisions against damage caused by lightning or fluctuations in electricity.

Paying BELCO bills online

Log on to the Bermuda Electric Light Company Limited website. Double-click on the icon on the bottom left corner of the page, called "Your account." Follow instructions. Fill out on online registration form and physically take it to where specified. Also see your payment history, account history and more.

LP gas companies

With no natural gas available in Bermuda, all gas is imported and is very expensive compared to USA. Canada, United Kingdom and Europe. The Bermuda Government levies a very significant import duty on LP gas, the highest anywhere per square mile. 

LP gas (liquid propane) is available in Bermuda for cooking, heating, hot water supply, clothes' drying and other commercial purposes as an alternative to electricity, but is not produced in Bermuda. It comes from Argentina, is supplied by the giant Shell oil company and imported via one of Shell's locally based subsidiaries by tanker ships in bulk. It is then distributed by the three wholesale and retail commercial companies shown below - all Bermudian joint stock companies. The gas is not underground piped to homes and businesses on a metered system from a central plant. Instead, it is brought to premises in cylinders and piped to the relevant appliances.

Many homeowners and owners of commercial premises use liquid propane for cooking and other purposes, instead of electricity. For home use, there is a standard 100 lb. household cylinder, delivery included. It fluctuates in price. A cylinder lasts for about three months, depending on usage. Home users are billed immediately on delivery, with established customers having 30 days to settle the account. The cylinders remain the property of the company supplying them to households. When a current cylinder is exhausted, the company concerned will remove it and replace it with a fresh cylinder; and bill you for it. There are also barbecue cylinders. These come in the 20 lb. size and can be purchased by consumers. As well as for outdoor barbecue purposes, they are the source of heat for blow torches, etc. Customers can go to the companies and get them refilled immediately. 

Or they can go to the Bermuda Gas & Shell BBQ cylinder exchange program at Shell gasoline stations.

Newcomers will find a selection of new gas operated domestic and commercial stoves and other relevant appliances from reputable manufacturers in showrooms of various companies.

No vehicles in Bermuda use imported propane gas or any imported bio-fuels (unlike vehicles in the UK, Europe, USA. etc).

Bermuda Gas & Utility Company Limited. E-mail bermudagas@belco.bhl.bm. Phone 295-3111. Fax: 295-8311. Masters Limited 295-4321. Fax: 292-8396. Sunshine Company Limited, 295-6246.

Gasoline (petroleum) and oil costs.

Gasoline and oil prices

About the same as in London, but with more justification in this tiny 21 square mile isolated island

How Bermuda prices affect US and Canadian visitors. Bermuda prices for unleaded gasoline (petrol to newcomers from Britain) will come as a very considerable shock to our North American visitors, especially when compared to gasoline prices in the Caribbean. Here, the price of gasoline is higher than most other places anywhere in the world. Only the far North of Scotland, namely Sutherland, Caithness, Orkney, plus in Europe, Norway and Iceland are they higher. Fluctuations in the US$ rates with UK Sterling and the Euro must also be taken into account.

On July 19, 2010 Bermuda's Ministry of Finance, which sets these prices announced prices of Bda $1.80 for a liter of unleaded gasoline; $1.60 a liter of diesel and $1.32 per liter of kerosene.

In Bermuda, costs to motorists and consumers of petrol (gasoline) and oils are on average, three times the prices in USA; nearly three times the prices in Canada; far more than double the cost of anywhere in the Caribbean. 

But when you consider that Bermuda is 

• only 21 square miles (56 kilometers) in total land area, far smaller than anywhere else mentioned above

• not near a mainland but a tiny island 600 miles due east of the nearest mainland, North Carolina, USA

• has a total resident population of under 66,000 and a resident plus tourist population of under 69,000

there is far more justification for higher petrol (gasoline) and oil prices in tiny Bermuda than in Britain, despite the latter being a North Sea oil-producing country of 60 million people. Britain is the only oil-producing country in the world that applies gasoline taxes far more heavily than even the non oil-producing nations.

Comparisons

• In USA see state-by-state prices per gallon at  http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

• In New York, see New York Gas Prices (note, per gallon (each gallon is 3.785 liters)

• In Toronto, see Toronto Gas Prices (in liters)

• In Europe, see http://www.eia.doe.gov/emeu/international/gas1.html

Bermuda consumes more oil and gas annually than the combined Caribbean islands - more than 800 miles to the south - of Antigua, Dominica, Grenada, St. Lucia and St. Vincent combined, yet pays so much more for them than those islands do in government duty and retail prices. It is one of the reasons why Bermuda is so expensive. Prices of oil, gasoline and related petroleum products are key factors mostly responsible for not only the cost of transport by air and land but also the prices we pay for accommodation, electricity, air conditioning, food, furniture, heat, household goods and more.

Bermuda prices are fixed and heavily taxed and, with all gasoline and oil imported, has very high Bermuda Government Customs Duties of US$ 0.54 per liter. This alone is 44 percent of the price consumers pay at the gasoline service stations, the biggest single reason for - and biggest single beneficiary of - the huge local prices. Government duties mentioned above of 44% plus employment and other taxes and their repercussions amount to about 58% of the total price. Perhaps because Bermuda visitors use mopeds - with gas tanks in liters, not gallons - they don't realize the price differential. Bermuda does not produce any oil or gas, all in imported - and is tiny in land area, only 21 miles in total land area. In contrast, the United Kingdom, which is an oil, petrol and gas producing country and is 58,000 miles in total land area, charges consumers 75% in total taxes. 

More than 21,000 automobiles and 30,000 mopeds, trucks, taxis and buses are on the roads of Bermuda.

The Bermuda Government appoints a Price Control Commission (see Bermuda Government Boards) under the Price Commission Act 1974, to approve prices of petroleum products. It meets on or about the 16th day of each month to determine local prices. It sets the maximum levels that service stations may charge.  

It is wrong to state that because Bermuda is only 21 square miles in total area, less gasoline is used proportionately. Because Bermuda's top legal speed is only 22 miles an hour (33 kilometers per hour), it does not enable motor vehicles to use fuel most efficiently. So the impact of the Bermuda cost is even more noticed, not less. Inefficient use adds to the expense instead of mitigating it.

The only two retailers allowed to offer gasoline and oil in the Bermuda marketplace are USA-owned  ExxonMobil (trading in Bermuda as Esso) and the British-Dutch Shell Oil Company. 

Because of the price the Bermuda Government expects per liter from gasoline service stations, there is no competition between Esso and Shell shown below, the only two gasoline corporations allowed to sell to Bermuda and visiting consumers.

May Bermuda gas (petrol) stations are closed during Bermuda Public Holidays. Visitors on mopeds or scooters should tank up the day before or after. Also, gas (petrol) stations keep different - not standard - hours.  

ExxonMobil group of companies

Based at its Ferry Reach head office, Ferry Reach, St. George's Parish, GE 01. Telephone (441) 294-5220. Fax (441) 294-5243. An Esso oil tanker arrives in Bermuda about once every six weeks to discharge fuel. But instead of being in competition with each other, their prices are the same.  About half the 30 gas stations are owned by Esso. It alone pays the Bermuda Government more than US$ 33 million a year in fuel taxes. 

Esso Bermuda is a division of a Bermudian corporation, Coral Petroleum Company Limited, owned by ExxonMobil. Stretching from the Esso Oil Docks at Ferry Reach in St. George's Parish to the Belco electricity generating plant in the industrial part of Pembroke Parish is the Esso pipeline that feeds Belco with heavy atmospheric gas and heavy oil. It enables Belco to generate 509 million kilowatt hours of electricity annually to businesses, hotels, guest houses, efficiency units and homes.

Esso gasoline stations and marinas

Many outlets island-wide. Always call first to ask for opening hours

Shell Oil Company in Bermuda

Update: French oil company Rubis SA purchased Shell Oil’s operations in Bermuda. It continues to be marketed under the Shell brand. Terms of the purchase were not disclosed. Rubis revealed that Shell, which in Bermuda owns two major fuel depots, one liquefied natural gas terminal and 12 gas stations, has sales of $45 million per year in Bermuda and net income of $3.6 million. The agreements signed with Shell provide for a licence to use the Shell brand in the service stations as well as finished goods supply contracts. Rubis already has an extensive network of energy businesses in the Caribbean and French Guiana. The deal was announced in July 2006 at when Phil Burton, country chairman of Royal Dutch/Shell Companies Bermuda said a final decision was subject to the approval of shareholders and the Bermuda regulatory authorities. Shell has had the Bermuda operation on the market since late 2005. Rubis is one of the largest bulk storage operators in France. Through Rubis Gaz, the company distributes liquefied petroleum gas (LPG) to retailers as well as propane and butane to residential and commercial customers.

History: Based at its Ferry Reach head office, Shell House, Ferry Reach, St. George's Parish, GE 02. Telephone (441) 297-1577. Fax (441) 297-8472. In 1947 - a full three years before appropriate legislation officially launched the industry - Bermuda welcomed an organization known worldwide because of its distinctive trademark of a sea shell. With dramatic implications to fuel and light Bermuda's lawyers for future business of equal caliber, the Provident Fund of the combined petroleum companies known in The Netherlands as Voorzieningsfond Der Verbonden Petroleum Maatschappojen was transferred to Bermuda. It had been granted exemption from payment of United Kingdom Income Tax on its investments when it had to quickly transfer its Headquarters from The Hague to London following the fall of Holland in 1940.

Thus Shell arrived in Bermuda, initially as an investment vehicle to protect the pensions of employees of all companies within the Royal Dutch Shell umbrella from unnecessary taxation by Britain. Lawyers Conyers, Dill & Pearman, with bankers Jack Tucker (later, Sir Henry) of the Bank of Bermuda and Hal Butterfield (later, Sir Harry) of the Bank of N. T. Butterfield & Son, assisted in the transfer of Shell's Provident Fund to Bermuda. Three Shell VIPs, Sir George Legh-Jones, Mr. Tim Wilkinson and Mr. Tim Boyle even bought land in exclusive Tuckers Town. They built very expensive homes there, as a visible sign that Shell was here to stay. Its first staff - a group of 20 mostly young ladies - arrived from England on Shell tankers on September 28, 1947. Most have since graduated to the great clamshell womb of heaven. Its first service station - still there -  was on May 12 1952 at East Broadway in Pembroke Parish. 

Shell was also the first to operate a corporate administrative structure for a collection of affiliated international companies outside the City of Hamilton, at Ferry Reach in St. George's Parish. Now they look after the retirement plan interests of Shell employees worldwide.

About half the 30 gas stations are owned or operated by Shell. It alone pays the Bermuda Government more than US$ 33 million a year in fuel taxes. 

Shell gasoline stations and marinas

Many outlets island-wide. Always call first to ask for opening hours.

Kerosene  

It was the first product brought in by the West Indian Oil Agency (later, Esso) for cooking, lighting and heat. It is still imported, mostly for heating kerosene units in the winter months and as an emergency fuel source during frequent electricity outages. Until the year 2000, this was far less expensive than electricity, although also with a very heavy import duty.

Oil  

Then naphtha, it was first imported into Bermuda by West Indian Oil Agency (later, Esso) in Bermuda in 1908 to coincide with the introduction by the Bermuda Electric Light Power & Traction Company (later, the Bermuda Electric Light Company Limited or Belco) of electricity in Bermuda. When commercial aircraft first flew between Bermuda and the USA in 1937, Esso Bermuda supplied the fuel. (Today, Shell does so at Bermuda International Airport).