The Office of Utilities Regulation (OUR) will review a proposal by the Jamaica Public Service Company (JPS) which could see residential customers paying 17 per cent more in electricity bills, after initially declining the request.
The increased rate request was first made in July 2019 but was rejected by the OUR a month later which said it had “material deficiencies including the absence of critical information and supporting documentation”, according to a release by the regulatory body.
“The proposed 4.69 per cent increase in the overall rate is explained by a change in the average non-fuel tariffs of approximately 17.53 per cent…”– The Office of Utilities Regulation
The JPS revised its application which was resubmitted on December 30, 2019 and accepted by the OUR on January 13, 2020 after a preliminary examination.
Included in the application is a request by the company to make an average revenue requirement of $62.1 billion (US$485.2 million) over the five-year review period.
If accepted, JPS customers will see an average increase of 4.69 per cent increase, subject to annual reviews. “The average impact will vary by customer class, as well as within customer class, depending on consumption and choice of tariff,” the OUR said adding that residential customers would experience the largest increase of 17.14 per cent with industrial and commercial customers getting a 14.06 per cent reduction.
“The proposed 4.69 per cent increase in the overall rate is explained by a change in the average non-fuel tariffs of approximately 17.53 per cent, versus an expected reduction in the fuel tariffs of 6.10 per cent. The non-fuel tariff contribute to approximately 48 per cent of the bill. JPS has indicated that the increase in the non-fuel rate arises from the introduction of more efficient generation, the use of smart technology and other infrastructure investments. On the other hand, the expected reduction in fuel tariffs would be attributable to the commissioning of newer, more efficient generating plants.”
Additionally, JPS has requested an expansion of its residential structure from two to three consumption blocks and proposed that the government implement an electricity subsidy through the PATH subsidy. “The proposal is for the government to directly fund the gap between what is considered an acceptable level of expenditure that vulnerable households should spend on electricity, how much electricity that purchases, and the cost of the lifeline basket of service. The subsidy would be paid to eligible PATH beneficiaries in the form of vouchers to apply to electricity bills.”
The OUR now has 120 days to evaluate the 2019-24 Tariff Review Application and make its decision.