By Admin. Updated 9:48 p.m., Wednesday, May 27, 2026, Atlantic Standard Time (GMT-4).
Prime Minister Godwin Friday announced on Wednesday that the state-owned St. Vincent Electricity Services Ltd. (VINLEC) will absorb part of the electricity fuel surcharge if it rises above specified levels.
Friday made the announcement during a national address outlining temporary measures aimed at stabilising rising fuel prices and shielding consumers from international energy price increases over the next three months.
He said VINLEC’s fuel expenses have continued to increase steadily and warned that, without intervention, the fuel surcharge could continue rising beyond the approximately 29 per cent increase recorded during the first quarter of 2026.
“We cannot allow electricity bills to become unbearable for households and small businesses,” the prime minister said.
As part of the intervention, the government will remove the customs service charge and excise taxes on diesel used for electricity generation for a three-month period.
According to Friday, the measure will result in approximately EC$1.65 million in foregone government revenue, with the savings intended to be passed on to consumers through lower electricity costs.
The prime minister also announced that VINLEC would be required to share part of the burden if fuel surcharge rates continue climbing.
Under the arrangement, where the fuel surcharge exceeds 71 cents per kilowatt hour, VINLEC will provide a 50 per cent matching discount on the fuel cost formula. If the surcharge rises above 77 cents per kilowatt hour, the company will provide what Friday described as a “full 100 matching contribution”.
Friday said the measures are intended to ease pressure on households and small businesses facing higher utility costs.
“For households this intervention means relief on utility bills and protection against runaway increases,” he said.
He added that the measures would also help small businesses, including barbers, tailors, restaurants, bakeries, shop owners, manufacturers and food processors, by helping them maintain operating margins and avoid passing higher costs on to customers.
The Fuel Surcharge
Former Chief Executive Officer of VINLEC, Mr. Thornley Myers described the fuel surcharge as a pass-on rate where the company pays for the electricity it uses to produce electricity.
In a June 2021 interview with Searchlight Newspaper, Mr. Myers said:
“VINLEC makes no money, so every cent that you give us as a result of the fuel surcharge, we essentially pass over. We’re almost like a fuel retail company…the fuel surcharge is the mechanism to recover the cost of what VINLEC uses to pay for the fuel. Because the cost of fuel to us fluctuates, then what you pay for, fluctuates,” Myers explained, as reported by Searchlight.
The fuel surcharge has been built into VINLEC’s rate structure for more than 40 years.
The company also produces electricity from hydroelectric generators and solar power.
Recently, there have been calls to abolish the fuel surcharge rate and replace it with a base rate system. The fuel surcharge, as it is a pass-on rate, is usually felt most by consumers when global fuel prices soar.
VINLEC’s Profit
St. Vincent Electricity Services Limited recorded total revenue of EC$175.2 million for the financial year ended December 31, 2024, according to the company’s audited financial statements. The revenue comprised EC$81.45 million from energy sales, EC$92.86 million from fuel surcharge recovered, and EC$893,389 in other revenue.
The company’s operating expenses totalled EC$156.06 million. These included EC$26.48 million for diesel generation, EC$6.15 million for hydro generation, EC$2.5 million for renewable energy purchased, EC$14.35 million for transmission and distribution, EC$91.84 million in fuel surcharge costs, and EC$14.75 million in administrative expenses.
VINLEC reported an operating profit of EC$19.15 million. After recording net finance costs of EC$464,068 and income tax expenses of EC$4.56 million, the company recorded a net profit of EC$13.2 million for the year. This represented an increase from the EC$6.65 million net profit reported in 2023.
The figures were disclosed in the company’s Statement of Profit or Loss and Other Comprehensive Income on page 6 of the audited financial statements.
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