No plans for electricity rate increase to boost disaster fund, says OUR
Published:Tuesday | November 12, 2024 | 5:25 PM
The Office of Utilities Regulation (OUR) says it has no application for or are there any current plans to increase electricity rates to strengthen the Electricity Disaster Fund (EDF/Fund) following Hurricane Beryl.
The EDF is a self-insurance fund established by the OUR in 2004 to set aside a pre-determined sum annually for disaster occurrences.
The OUR monitors and periodically reviews it to ensure that a minimum adequacy threshold is maintained.
The OUR, at a webinar on Friday, November 8, discussed the EDF and indicated that the Jamaica Public Service Company Limited (JPS) has submitted preliminary estimates of approximately US$26.1M to finance recovery efforts following the Hurricane.
This sum, which will be subject to approval after rigorous assessment, will be taken from the EDF.
The OUR says at the webinar it was made clear that the regulator, as is the practise after every payout, would review the EDF, post-Beryl, to ensure it is properly funded to meet future liability arising from natural disaster occurrences.
According to the agency, that statement sparked a misinterpretation that the OUR was currently contemplating an increase in electricity rates.
In reacting to recent public comments, OUR's Director-General, Ansord Hewitt says, “There is no proposal before us to increase customer contribution to the EDF. 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. At this stage, that analysis has not yet been done, so any suggestion of the need for an increase is premature.”
The OUR says electricity rates are not arbitrarily increased as the Electricity Licence, 2016 provides clear guidelines on how and when such matters are considered, including in the review of tariff application submissions by the JPS, which are due annually or every five years.
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