SHTA, SMTA press for utilities tariff structure approval

POSTED: 03/4/11 8:54 PM

St. Maarten – The St. Maarten Hospitality and Trade Association (SHTA) and the St. Maarten Timeshare Association (SMTA) has called for “government to approve the new rate structure for GEBE sooner rather than later” and for “GEBE’s management to immediately adjust the factor in the fuel clause to prevent undue economic hardships.” The requests are part of a joint statement the two private sector bodies issued on Thursday where parties express their concern over what impact the current unrest in the Middle East, specifically in Libya, will have on global oil prices and utility rates here.

A tariff study done by KEMA was submitted to government in 2010 but has yet to be approved.  The proposed new tariff structure would update the base rate for electricity to cover the actual cost of producing and distributing electricity, and the fuel clause would be updated to be only a pass through based on the price of fuel.  Fluctuations in the oil price would not have such a large effect on the cost of electricity.

“While we recognize the gravity of recent events, the SHTA wants to remind the population and government that the core issue is and always has been the proper functioning of the economy.  The effects of the global recession now coupled with the crisis in the Middle East will further exasperate the situation locally,” the SHTA leadership stated.

The SMTA added, “The effect of rapidly rising utility rates on resorts and guesthouses will have severe impacts on operations budgets, threatening the viability of many properties and particularly that of timeshare operations.”

The two bodies believe GEBE’s practice of building its budget based on expected fuel price puts the company in a vulnerable position that depends on the volatile price of oil.

“High spikes in prices result in additional revenues and profits, but drops in prices results in lower than expected revenues that barely cover costs.  Two years ago when oil dropped to $40 a barrel GEBE increased the factor used to compute the fuel clause charges and has not changed this as oil hovers near $100. Relief is needed now; not after more damage has occurred,” the SHTA and SMTA point out.

 

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