No electricity rate increase to boost EDF, says OUR
Published:Wednesday | November 13, 2024 | 10:49 AMCarl Gilchrist/Gleaner Writer
The Office of Utilities Regulation (OUR) says there are no current plans to increase the electricity rates to Jamaica Public Service (JPS) customers in order to boost the Electricity Disaster Fund (EDF).
The EDF currently stands at US$56 million and with the JPS seeking US$26 million to address damage caused by Hurricane Beryl in July, there is concern regarding the fund’s ability to meet claims in the near future, should there be any eventuality.
The EDF is funded by customers who pay J$0.126 (or just over 12 cents) per kWh per month. This works out to roughly J$19 for the average customer who uses 150kWh per month. Customers with higher consumption would pay more. The OUR says, in total, customers pump US$2 million into the fund annually.
Customers' contributions account for two-thirds of the growth of the fund. The remainder of the gains come from interest earned by the fund.
The EDF acts as insurance against damage to JPS’s transmission and distribution (TD) assets but the light and power company has to get OUR’s approval to access the funds.
Currently, the EDF’s US$56 million total is equivalent to 11 per cent of the JPS’s TD assets, which stand at US$522 million.
During a webinar last Friday, OUR Deputy Director General Dr Cedric Wilson said “there might be consideration” to increase the inflows so as to increase the EDF to 15 per cent of the TD, which would mean boosting the EDF to around US$78 million.
INCREASE INFLOWS
“It might be necessary for us to make some effort to get to that level, and in that process which we will have to look at as the regulator, to consider whether it might be reasonable to increase the level of inflows into the fund and how much that increase ought to be,” Wilson said during the webinar.
On Monday, Phillip Paulwell, opposition spokesman on energy and climate change, raised strong objection to any such consideration, citing the current cost-of-living crisis.
“I do believe that customers have the right to a transparent process where the details of the claim are disclosed. Neither do I support an increase to consumers’ contributions to the disaster fund at this time,” Paulwell stated.
But in a release on Tuesday, the OUR clarified that there was no plan to increase electricity rates to consumers in order to boost the EDF, adding that it has received no application for any such increase.
“As the economic regulator, the OUR will analyse costs associated with the recent hurricane events to ensure their legitimacy. Naturally, we will also need to examine where the payment leaves the fund in terms of its ability to meet future claims and activate OUR’s usual consultation process with all stakeholders to ensure transparency,” said Director General Ansord Hewitt.
According to the OUR, electricity rates are not arbitrarily increased as the JPS’s licence provides clear guidelines on how and when such matters are considered, including in the review of tariff application submissions, “which are due annually or every five years”.