JPS Customers To See 2% Drop In Bills — OUR

KINGSTON, Jamaica — Customers of the Jamaica Public Service Company Limited (JPS) should see a near two-per-cent drop in their electricity bills effective September 1, as a result of the Office of Utilities Regulation’s (OUR’s) decision on the energy company’s annual tariff application, which was submitted on May 5.

The OUR, in a release today, outlined that JPS had asked that its 2017 annual non-fuel revenue target be set at $50.8 billion, which, if granted, would have translated to an estimated average increase of 4.5 per cent on the non-fuel tariff across all rate classes.

This would have seen the typical bill for residential and small commercial customer (Rates 10 & 20) (both non-fuel and fuel cost combined) increasing on average by about 2.8 per cent. Meanwhile, the typical bill for large commercial customers (Rates 40 & 50) would have seen increases in the range of one to two per cent, the OUR explained.

According to the release: “The effect of the OUR’s determination is that there will be a 1.8 per cent overall reduction on the average customer bill”.

This, OUR said, reflects the net of:

  • An effective increase of 1.64 per cent in the 2014 base non-fuel Revenue Cap;
  • The termination of the Electricity Efficiency Improvement Fund (EEIF) valued at US$6.5 million annually;
  • The resetting of JPS Heat Rate Target from 11,620 kJ/kWh to 11,450 kJ/kWh;
  • A Z-factor adjustment of 4.89 per cent for accelerated depreciation expenses in 2016;
  • Surcharge adjustment of -4.06 per cent associated with volumes, exchange rate recovery and system losses penalty;
  • Adjustment to the Rate Base (2014) of 0.65 per cent for inflation and exchange rate movement;
  • An adjustment for the Current Portion of Long Term Debt (CPLTD) of 1.59 per cent not previously included in the Rate Base.

The average bill impact across all rate classes is as follows for typical:

  • Rate 10 customer = -1.6 per cent (decrease)
  • Rate 20 customer = -1.6 per cent (decrease)
  • Rate 40 customer = -2.0 per cent (decrease)
  • Rate 50 customer = -2.0 per cent (decrease)
  • Rate 70 customer = -10.0 per cent (decrease)

The OUR said it has approved the introduction of a new interim rate class (Rate 70) for customers whose peak demand at a single location is at, or above,  two mega volt ampere (MVA), which JPS had proposed amidst concerns of grid defection, and the impact this would have on remaining customers.

The light and power company had asked for a 21 per cent reduction in bills for this category of customers arguing that this would encourage them to remain on the grid and thereby prevent the resulting steep increase in the cost of electricity to other rate classes including smaller customers.

“While not accepting the proposed 21 per cent reduction in the average rate for these customers, the OUR approved the establishment of an Interim Rate 70 class and a 10 per cent reduction in the rates to customers who fall within this new rate class,” OUR said.

The OUR also approved a Community Renewal Rate to be charged for residential (Rate 10) service at a flat rate of J$9.59 per kilowatt hour for consumption up to 150 kilowatt hour (kWh).

“This is a special tariff for persons who are on the Programme of Advancement Through Health and Education (PATH). Customers consuming more than 150kWh per month, will pay the regular prepaid or post-paid rate, whichever is applicable, for the incremental consumption above 150kWh per month,” the utilities regulator explained.

OUR said it denied JPS’ claim for the retroactive recovery of returns of J$336.7 million in respect of unrecovered current portion of long term debt in 2016 but the power company’s claim for J$636.7 million for 2017 was approved.

Meanwhile, the regulator said it has determined that JPS is to discontinue the collection of revenues through the EEIF, which was established in 2009 and collected through a separate line item on customers’ bills.

“JPS had requested that the EEIF be disbanded and replaced with the System Benefit Fund (SBF), from which the proceeds would be used to fund house wiring in targeted communities. The OUR rejected this proposal.

“However, consistent with Section 50 of the Electricity Act, 2015 and in compliance with the request of the Ministry of Science, Energy and Technology (MSET), the OUR approved the establishment of the SBF for the purposes contemplated in the Electricity Act, 2015 in the initial amount of US$5.0 million in the first year.

“To start this Fund, JPS has been directed to transfer from existing outstanding obligations accruing to the EEIF, the amount of US$500,000 each month over the next 10 months commencing 2017 September, to an account to be established by the OUR for the SBF,” OUR outlined.


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