Damian Obiglio, president and CEO of JPS. - file

The Jamaica Public Service Company (JPS) has begrudgingly accepted the Office of Utilities Regulation's (OUR) decision to hold the increase on the non-fuel portion of electricity bills to three per cent.

This is way below the 23 per cent average increase which the JPS requested.

"The JPS is disappointed at the modest level of increase approved by the OUR but has accepted that the revision of its tariffs was taking place in a difficult economic climate," Damian Obiglio, president and chief executive officer of the JPS, said in reacting to the announcement yesterday.

"We are well aware of the difficulties that the country and our customers are facing, and we're taking up this challenge from our regulator to continue to improve operational performance and customer satisfaction on less-than-optimal revenues," Obiglio added.

The JPS's statement came minutes after the OUR announced that customers of the light and power company would begin paying more effective October 1.

However, residential customers will not see the increase until their November bills while large commercial customers will see the increase on their October bills.

According to the OUR, JPS customers will have the non-fuel portion of their bills moving up by between 1.1 and 5.4 per cent based on the rate class.

Non-fuel increases

For example, a residential customer (rate class 10) who now gets a bill for $2,342 will face an increase of approximately $6 on the non-fuel side while a customer who now gets a bill of $5,094 should see an increase of $148, also on the non-fuel side, when the new rate takes effect.

As usual, the fuel charge from the JPS will vary monthly, based on international prices.

In announcing its determination, the OUR noted that it had approved increases far below what was requested by the JPS.

In fact, most consumers will pay less than the 4.3 per cent floor which the JPS had requested in its application submitted to the OUR in March.

According to the OUR, one major factor which impacted its decision was the non-fuel revenue requirement of the JPS.

No useful purpose

Maurice Charvis, deputy director of the Office of Utilities Regulation. - Ian Allen/Photographer

The light and power company had claimed that it needed non-fuel revenue of $37.3 billion but the OUR determined that the JPS could make do with $31.9 billion.

"There was one particular item where they were taking a loan to adjust their debt-equity ratio and we didn't see any useful purpose in providing services with that loan, so we disallowed that," Maurice Charvis, deputy director general of the OUR, told journalists yesterday.

"On the fuel side, their system-loss target and heat-rate targets were much higher and we set much lower targets than they had proposed, so you should see much lower charges on that side," Charvis added.

He said the OUR also adjusted the cost-of-capital claims of the JPS which had used the high interest rates which were prevailing at the time it made its application.

The OUR also introduced additional guaranteed standards for the JPS with the proviso that effective January 2010, the company should automatically compensate its customers when it breaches these standards.

In addition, the utilities watchdog agency has instructed the JPS that it should refund the security deposits to customers who have a record of paying their bills in full and on time over a 24-month period.

No reconnection increase

The company's application to almost double the reconnection fee for customers who were disconnected because of non-payment of bills was also rejected by the OUR.

Instead, the OUR has approved a $359 increase which will move the reconnection fee from $1,141 to $1,500.

However, the OUR approved the company's request that it be allowed to place an interest charge on any bill submitted to persons found stealing electricity.

In the meantime, a release from the People's National Party has joined Jamaica in lamenting a JPS increase at this time.

The release quoted Opposition Spokesman on Energy, Phillip Paulwell, as saying, "Any increase in electricity rates at this time is a burden to consumers and businesses, who are already struggling during this difficult economic period. However, the increase granted is way below what was requested."

arthur.hall@gleanerjm.com

The Office of Utilities Regulation's (OUR) decision to grant the Jamaica Public Service Company a three per cent average increase on the non-fuel charge on electricity bills has sparked concerns in Jamaica's business sector.

Another arrow in our spines

Omar Azan - President of the Jamaica Manufacturers' Association

This raise with JPS is obviously going to increase pricing to the productive sector, which is another weight on our shoulder that is being added. Definitely, it won't go well for manufacturers and, at this particular time, I would have liked to see a hold-off with the implementation until things get a little better for the manufacturers.

Harder to find the dough

Audrey Lecky - President of the Bakers' Association of Jamaica

This increase is going to see bakers facing a very hard time because we are already under pressure with the increased cost for sugar and other inputs in baked products. We are not in a position to pass on the increase to consumers so, at this particular time, it would have been good if the OUR told them to wait until the economic situation is not as bad as at present.

Tourism will feel it

Wayne Cummings - President of the Jamaica Hotel and Tourist Association

I know a lot of work went into the negotiation of the rates, including us making a submission that it is a bad time for any increase. It will affect our business very badly right now because already we are under severe pressure to make what little rates that we are getting cover our expenses.