Fuel costs contribute to high power bills

Fuel costs, including customs duty, have the biggest impact on household electricity bills. 

The Caribbean Utilities Company charges a residential rate of 35 cents per kilowatt-hour of electricity used. 

Of that charge, 24 cents per KWh goes directly towards paying for fuel, including government duties. 

CUC says it makes no profit on fuel costs and bills will fluctuate according to the world market. 

Pat Bynoe-Clarke, a spokesman for the company, said: “Customers only pay for the fuel needed to produce the electricity they consume.  

“When fuel prices go up, the additional costs are passed through to the customers, and when fuel prices go down, the savings are also passed through to the customers.” 

CUC is charged customs duties of 75 cents per imperial gallon of the diesel fuel it imports. 

The company believes it is using the most cost effective technology to produce reliable electricity for the size of the market in Grand Cayman. 

Renewable energy could play a bigger role in the future, but right now the CUC believes the technology is not consistent enough to wholly replace diesel generation. 

There is an opportunity for homeowners to cut costs by using solar panels and selling electricity back to the grid through the CUC’s Consumer Owned Renewable Energy system. 

Ms Bynoe-Clarke said: “The system allows consumers to generate renewable energy at their premises and CUC purchases all of this energy at a fixed rate.”  

Residential systems are limited in size to 20kW or the peak demand of the premises (whichever is smaller) and are paid a rate of $0.385/kWh for all energy generated. Commercial systems are limited to 100kW or the peak demand of the premises whichever is smaller and are paid a rate of $0.375/kWh for all energy generated. 

Discussions are ongoing with renewable firms over a contract to provide 13MW of energy to the grid, but CUC believes there are limitations to the capacity of renewables. 

Ms Bynoe-Clarke added: “CUC is constantly evaluating technologies that will reduce the cost of electricity and the company is committed to bringing new technologies to the business as and if they make economic sense and provide benefits to the Island. Wind and solar are non-firm power and will continue to be supported with firm power such as diesel generation.” 

She added: “While large scale renewable energy plants such as the ones CUC is seeking from third parties can produce electricity at slightly lower costs than diesel, these plants are limited in the amount of energy they can produce simply because of the limitations of the resource. For example it is not possible to get solar power at night or wind power on a calm day without the significant expense of extremely large batteries to store power when it can be produced.  

“However, CUC is committed to working with developers to maximise the output of technologies such as solar and wind power to help reduce and stabilise the cost of energy while still maintaining a reliable supply.” 

For individuals the best way to cut costs is to check consumption, with air conditioning the biggest expense for most people. 

“Consumption is a significant contributor to monthly fluctuations in billings. Research shows that electricity consumed by air conditioning can account for more than half of the electric bill during the hotter months. Once you lower your thermostat, it causes the air conditioner to run longer, which increases energy use. Properly maintained air conditioning units use less energy to cool a home,” 
Ms Bynoe-Clarke added. 

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