From April, residential customers’ electricity bills might be slightly higher, as the Government has increased the reduced Value Added Tax (VAT) from 7.5 per cent to 10 per cent.
Prime Minister Mia Amor Mottley announced that the Government will continue the ease of electricity bills for another six months, from April 1, 2024, to September 30, 2024.
During her budgetary speech, Mottley said: “We will continue to support the relief of electricity bills and therefore from April 1, 2024, until September 30, 2024, again, I propose to extend VAT reduction on electricity bills for the first, where residential customers will pay only 10 per cent VAT”.
Instead of the standard 17.5 per cent VAT, residential customers have been paying only 7.5 per cent VAT on the first 250 kilowatt-hours of electricity, which is the average household use.
The VAT reduction on electricity bills for domestic customers initially ran from August 1, 2022, to January 31, 2023; this is the third extension, but it has increased by 2.5 per cent.
As the rate review with the Barbados Light & Power Company Limited and the Fair Trading Commission has yet to be resolved, Prime Minister Mottley called for the involved parties to find a resolution quickly.
“Barbados has set ambitious policy objectives, but we are being constrained by regulatory lag and the resulting delayed investments in critical infrastructure. We cannot afford to take years to settle a simple electricity rate review hearing – it doesn’t happen in other countries – not when the last rate review was 13 years ago. “We need this settled because the country needs investment in infrastructure to enable the onboarding of renewable energy,” insisted the Prime Minister.
She stated that a new Electrical Supply Bill will be laid before Parliament this year, and the Government will convene international experts to review the draft to make recommendations on the country’s utilities regulations. Mottley noted electricity regulation will protect consumer rights.
“We badly need efficient electricity regulation that keeps pace with our needs, aligns seamlessly and without undue delay with policy, supports competitive practices, and protects the consumer.”
The Government will soon start a study on renewable energy, electricity generation, and consumer welfare to guide policy-making.
