GREAT BAY--NV GEBE's base electricity rate has not increased since 2011 and is no longer sufficient to cover the utility's operating expenses, Minister of Public Housing, Spatial Planning, Environment and Infrastructure (VROMI) Patrice Gumbs disclosed during Friday's continuation of the 2027 national budget debate. The revelation prompted an immediate interruption from Member of Parliament Omar Ottley, who challenged GEBE's explanation of how expenses are recovered through its fuel clause and argued that deficiencies in operational cost recovery should not be addressed by transferring expenses to fuel-related charges. The exchange brought renewed attention to the structure of GEBE's electricity tariffs, particularly how the company allocates costs between its base rate and fuel clause.
Ottley interrupted the Minister as he explained that GEBE's base rate was insufficient to cover maintenance, personnel and other operating expenses, and that transferring lubricants from the fuel clause to the base rate would further weaken the company's financial position. The MP said the explanation reinforced concerns he had raised repeatedly about the allocation of expenses and claimed that those concerns had previously been dismissed during discussions with utility representatives. He maintained that a company experiencing difficulty recovering its operating costs should reassess its financial structure rather than use the fuel clause to compensate for shortcomings elsewhere in its tariff system.
"That is wrong. That is absolutely wrong," Ottley declared, arguing that the inability of a company to maintain its operating costs did not justify shifting expenses into the fuel clause. He insisted that GEBE should review its operating arrangements and make the necessary adjustments within the appropriate cost categories, rather than passing those financial pressures into a component of the electricity bill intended for fuel-related expenditure. The MP thanked Gumbs for presenting the explanation, saying it supported concerns he had been raising about the utility's pricing practices.
The interruption highlighted a central issue in the continuing debate over electricity affordability in St. Maarten: whether GEBE's existing tariff structure accurately reflects the costs associated with electricity production and distribution. While the utility maintains that its base rate is inadequate, questions remain about which expenses should properly fall under the fuel clause and whether the current arrangements provide sufficient transparency for consumers. The Minister's response offered additional historical information about the system, although it did not resolve the disagreement over how particular expenses should be classified.
GEBE Explains Difference Between Base Rate and Fuel Clause
Responding to Ottley's questions about the composition of the electricity tariff, Gumbs explained that GEBE operates two principal mechanisms for recovering the costs of producing and distributing electricity. The base rate is intended to cover general operating expenses, including maintenance, personnel, depreciation, financing costs and a reasonable profit, while the fuel clause is used to recover expenses associated with heavy fuel oil, light fuel oil and lubricants. According to the information supplied by GEBE, the company considers lubricants a fuel-related expense because they are derived from crude oil and are used in the electricity production process.
The Minister explained that GEBE's principal concern is that operating expenses have continued increasing over the years while the base rate has remained unchanged since 2011. As a result, the company maintains that revenue generated through that component is no longer sufficient to cover the expenses it was designed to recover, creating additional pressure on its finances. Gumbs conveyed GEBE's position that removing lubricants from the fuel clause and transferring those costs to the base rate would worsen the utility's financial position because the latter is already unable to cover its existing obligations.
"Currently, the base rate is not sufficient to cover all the other costs, as the costs are increasing due to inflation, but the base rate has not increased since 2011," Gumbs stated, reading from the utility's explanation. The statement provided Parliament with GEBE's reasoning for maintaining lubricants within the fuel clause, but it also raised questions about how the company has managed rising operational costs over approximately 15 years without a corresponding adjustment to its base tariff. The Minister did not provide a current calculation indicating what the base rate would need to be to cover all operating expenses, nor did he announce plans for an increase.
Ottley's objection centered on whether an inadequate base rate should influence the classification of costs recovered through the fuel clause. However, the Minister's explanation did not establish that personnel, maintenance or other general operating expenses are currently being charged through that component, as the specific issue raised concerned lubricants. The MP's intervention nevertheless emphasized the importance of determining whether all expenses included in the fuel clause are appropriate under the applicable tariff methodology.
How Lubricants Became Part of the Fuel Clause
Gumbs also provided Parliament with a historical explanation of the fuel clause, tracing the existing arrangements to changes introduced around 2010. According to the Minister, GEBE had previously operated under an outdated formula dating back to the 1970s, which was no longer functioning properly and required revision. Then-Managing Director Mr. Brooks initiated efforts to simplify and correct the formula, leading to a broader examination of the utility's electricity and water tariffs.
The subsequent tariff study involved KEMA for electricity, Royal Haskoning for water and PwC for financial matters, with the objective of developing a more appropriate cost-recovery structure. Following that exercise, lubricants were incorporated into the fuel clause alongside heavy and light fuel oil, an arrangement GEBE continues to defend as appropriate because of their relationship to electricity generation. Gumbs explained that the revised tariff received conditional approval from then-Minister responsible for economic affairs Franklin Meyers, who also reduced the residential base rate from 29 cents to 25 cents per kilowatt-hour.
That historical reduction is particularly relevant to GEBE's current explanation that its base rate has remained insufficient to recover operating expenses as costs increased over the years. However, the Minister did not provide an assessment of whether the original rate reduction contributed directly to the company's present financial difficulties or whether subsequent operational changes affected the adequacy of the tariff. Neither did he indicate whether the classification of lubricants had been independently reassessed since the revised formula was introduced.
BTP Reviewing Fuel Clause Calculations
The exchange comes as government continues examining recommendations concerning GEBE's fuel clause and the broader framework used to regulate electricity tariffs. Gumbs confirmed that the Bureau Telecommunications and Post (BTP) is finalizing its review of the fuel clause calculations, while the Ministry of Tourism, Economic Affairs, Transport and Telecommunication (TEATT) is examining which recommendations can be implemented. He maintained that government has not remained inactive and that the objective is to ensure any changes are properly substantiated, legally sound and ultimately beneficial to electricity consumers.
The Minister also confirmed VROMI's support for regulating electricity tariffs through a national decree containing general measures, commonly referred to as an LBHAM. Discussions with BTP about establishing such a framework are already underway, and Gumbs indicated that further information would be shared with Parliament once the arrangements are finalized. A clearer regulatory structure could help establish how electricity tariffs are calculated, reviewed and supervised, although no implementation date or finalized adjustments were announced during the debate.
The review is particularly significant because GEBE's tariff system involves two components that affect what customers ultimately pay for electricity. Any adjustment to the calculation or classification of expenses could have implications for the utility's financial position and the amount charged to consumers, making the regulatory assessment important to both parties. For now, government has not announced whether the existing inclusion of lubricants in the fuel clause will remain unchanged or whether the review will result in a revised methodology.
Subsidizing Electricity Would Cost Government Cg 35.29 Million Annually
Gumbs also provided financial estimates in response to Ottley's questions about whether government could subsidize the first 200 kilowatt-hours of monthly electricity consumption for residential customers. Based on GEBE's figures, such a subsidy would cost approximately Cg 2.94 million per month, equivalent to Cg 35.29 million annually, assuming all 19,871 residential electricity services qualified and consumed at least 200 kilowatt-hours each month. The estimated monthly expenditure would comprise approximately Cg 1.07 million in energy charges and Cg 1.87 million in fuel clause charges, representing a combined benefit of approximately Cg 148 per customer.
The Minister cautioned that actual expenditure would depend on individual consumption patterns, prevailing tariff rates and whatever eligibility criteria government might establish. He explained that the country's current financial position does not permit government to readily accommodate a subsidy exceeding Cg 35 million annually without identifying a realistic source of financing. Such an initiative would require a budget amendment specifying how the expenditure would be funded, whether introduced by Parliament or government, and no decision to implement the proposed subsidy was announced.
GEBE Customer Base Continues to Grow
Gumbs also provided updated information about GEBE's customer base, reporting that as of October 31, 2026, the company had 20,071 unique active customers representing 26,279 active contract accounts and 46,166 active utility services. These included 19,871 domestic electricity services and 20,234 domestic water services, alongside 3,416 commercial electricity services and 2,645 commercial water services. The figures demonstrate the scale of GEBE's operations and the number of service connections potentially affected by future changes to electricity tariffs.
The Minister further reported that electricity contract accounts increased from approximately 21,207 in 2022 to 23,282 in 2026, while water contract accounts increased from 20,825 to 22,876 over the same period. These figures indicate continued growth in the utility's service obligations, although the Minister did not provide a corresponding breakdown of revenue growth or operating expenditure. Such information would be relevant to a comprehensive assessment of whether the existing base rate can adequately support the company's present operations.
Gumbs additionally clarified that VROMI is resuming its role as government's principal point of contact for GEBE following a decision taken by the Council of Ministers in October 2026. He explained that successive Prime Ministers, initially Silveria Jacobs and subsequently Dr. Luc Mercelina, had coordinated government's relationship with the utility following its cyberattack and the electricity generation challenges that followed. That arrangement continued through the stabilization process and the signing of the generator acquisition agreements on November 4, 2026, after which VROMI was expected to resume the coordinating responsibility.
