Rising global oil prices, driven in part by geopolitical tensions, are pushing up electricity costs in Saint Lucia, with the state-owned utility warning that its ability to cushion the impact remains limited.
LUCELEC Managing Director Gilroy Pultie says while the company uses a fuel hedging programme to stabilise costs, it can only partially shield consumers from the current spike.
He explained that hedging allows LUCELEC to lock in the price of a portion of its fuel purchases in advance, protecting against sudden increases in global oil markets. However, because only a share of fuel is hedged, the company must still buy the remainder at prevailing international prices, exposing customers to fluctuations.
“When global oil prices rise sharply, as we are now seeing, it affects the fuel surcharge and what customers pay on a month-to-month basis,” Pultie said in a video statement today, pointing to ongoing conflicts, including in the Middle East, as key drivers of market instability.
The impact is already evident in electricity bills. The fuel surcharge has climbed to EC$0.255 per unit this month, up sharply from EC$0.007 per unit in March.
Pultie said market conditions prior to the recent escalation in global tensions did not meet the company’s criteria for securing significant hedging coverage, limiting its ability to offset the current surge in oil prices.
Electricity, Pultie stressed, remains an essential service, and the company is mindful of the strain higher costs can place on consumers. While acknowledging that global fuel prices are outside of LUCELEC’s control, he said the utility is focused on operating efficiently and maintaining open communication with customers during the period of volatility.
“We understand the pressure that higher prices can place on customers,” he said, adding that the company remains committed to open communication during the period of volatility.
Looking ahead, Pultie said LUCELEC is reviewing its hedging strategy to increase the proportion of fuel secured at stable prices, even amid the challenges posed by current market conditions.
