WILLEMSTAD - From Tuesday, August 2, 2022, the regulated rate of diesel on Curaçao will increase. The regulated rate of gasoline is going up slightly. The rate for electricity and water will also increase with effect from Monday, August 1, 2022. The Bureau Telecommunication and Post (BT&P) reports this in its monthly press release. BT&P monitors the price developments of oil products and utilities.
Tariff calculation of fuel products
The tariff structure of Mogas 95, Gasolie LSD, LPG 20 and LPG 100 has the elements 1. Purchase price, 2. Import tax LSD, 3. Guarantee fuel supply (1a) 4. Guarantee fuel supply (1b) 5. Marge Curoil, 6. Excise duties, 7. Surplus/Deficit (Recovery), 8. Cross subsidy, 9. Wholesale O.B. 6%, 10. Dealer Margin, and 11. Retail O.B. 6%. For some elements – temporarily or otherwise – the zero rate applies. The wholesale rate includes the first nine elements while the retail rate includes all elements.
The purchase price, with which the calculation begins, is determined monthly for the following month, based on the available fuel supply at the end of the previous month. So: the purchase prices used for the month of August 2022 are in principle based on the available fuel stock at the end of June 2022. In the event that the stock information provided by Curoil is insufficient, recent international price quotations are used. These purchase prices are also checked against international price quotations. Due to this delay, the differences between the regulated purchase price and the actual purchases in a particular month are always settled afterwards via the 'Surplus/Deficit' element.
The end-user tariff for Mogas 95 increases slightly as a result of a sharp decrease in the purchase price in combination with a sharp increase in the surplus/deficit component. The surplus/deficit component is rising sharply as the deficits in the surplus/deficit component caused by the price mitigation measures applied in recent months are now partly being corrected. The retail price for LSD increases as a result of an increase in the purchase price.
Water and electricity rate calculation
The tariff structure for water and electricity has two components: the basic tariff and the fuel clause. The electricity fuel clause consists of two elements: electricity purchase and fuel costs.
The 'purchases' are based on the price of energy supplied by third parties, such as wind energy and solar energy, and the fuel costs relate to the costs of energy generation by Aqualectra itself. The fuel clause for water also consists of two elements, being 'purchase' based on the price of water supplied by a third party and electricity costs for water production by Aqualectra itself.
However, the deployment of the different production means varies every month, also known as 'the production mix'. The level of the fuel clause is therefore determined monthly by BT&P on the basis of Aqualectra's forecast of what the production mix will be, in this case for the month of August 2022. If a month later it appears that the component was too high or too low, it will be corrected. In this case, this concerns the month of June 2022.
The base rate for both water and electricity is determined by BT&P once a year. This rate includes all other (fixed) costs for the production of electricity and water and all costs for their distribution and delivery, such as personnel costs, maintenance costs, depreciation, etc.
The increase in electricity and water tariffs is the result of higher average fuel costs for the production of electricity and higher electricity costs for the production of water, respectively, the forecast production mix as well as a higher correction factor for electricity and water for June 2022.
Approval
The BT&P advises the Council of Ministers (RvM) on the new rates. Only after the RvM approves the proposal, does the Minister of Economic Development, who is also responsible for energy affairs, determine the rates. These are the maximum rates that may be used for a month. With this procedure, which takes international and local factors into account, regulator BT&P monitors the continuity and fairness of the supply of fuel, water and electricity to the local population in an independent, transparent manner.