THE Office of Utilities Regulation (OUR) yesterday backed off from implementing power wheeling by a few months.
Jamaica Public Service Company (JPS) took the regulator to court over what the utility called an "unlawful and irrational" regulatory determination, which came into effect on July 10.
Now, an appeal is expected to be heard in a tribunal within 60 days, and the determination notice has been put off until the matter is resolved.
The light distribution company said that the charges calculated by the OUR do not enable the utility to recover costs incurred in providing wheeling services — which allow consumers access to JPS's distribution network to supply electricity to multiple locations.
JPS also contended, in its application for an injunction against the OUR's decision, that the determination notice will result in setting tariffs that discriminate by location, among other things.
"The determination notice requires JPS to compensate wheeling customers when there are network outages or constraints, which is discriminatory, grants an unfair advantage to wheeling customers over other customers and creates a substantial financial burden on JPS," said the utility in its court application.
The electric company also said that the OUR wheeling charges are not guided by results of a costs of service study conducted by JPS or consistent with tariff and price controls — which would make the determination revenue neutral to JPS and place the implementation within a rate review period.
But the OUR, in its determination notice, said that JPS's proposed wheeling charges failed to satisfy a condition that requires cost-of-service study to capture data over the most recent 12-month period.
JPS's CFO, Dan Theoc, argued that "all references in the determination notice are either to the 2008 cost of service study (used to determine tariff rates in the last five-year review in 2009) or include simplistic projections, estimates or indexation based on that study".
Even so, the OUR claims that JPS was supposed to have submitted a new cost of service study last August.
"JPS only submitted the required cost-of-service study on June 10, 2013," said the OUR in its determination notice. "This was too late for inclusion in the wheeling charges calculation since the OUR, after pushing critical deadlines to the limit, had constructed the wheeling model and computed the wheeling charges using other relevant data that was submitted by JPS."
Instead, the regulator contracted UK Consultants, PPA Energy, to help develop the wheeling framework, as well as the "additional task of conducting a cost-of-service study based on the latest information available".
"In several instances, PPA conceded that they had to resort to the data in JPS's 2008 cost-of-service study as a stable market for their calculations and that many of the methods employed to update the costs were not ideal," said Theoc, in his affidavit in support of JPS's application for a judicial review. "In essence, PPA based its study on the same data that JPS used to prepare the proposal the OUR deemed outdated."
The matter was heard yesterday at the Supreme Court.
"An Appeal Tribunal is now set up and the OUR has agreed to stay the implementation of the determination notice," said Michael Hylton, partner at Michael Hylton and Associates, which represents JPS.
Even though the hearing will take place within two months, the tribunal can order that the decision being appealed shall not take effect until the appeal is determined.
Had an injunction not been granted against the current wheeling framework, which took effect on July 10, an award of damages could not compensate JPS for losses it would incur.
Some entities have started applying to be self-generators under the wheeling framework, which would require them and JPS to make substantial investments to meet the conditions of the determination notice, the utility company said.
The development of the wheeling framework in Jamaica is intended to increase the degree of competition in the electricity market.
However, the wheeling framework does not allow an entity that wheels electricity to sell that electricity to customers who would otherwise buy from JPS.