KINGSTON, Jamaica — The Office of Utilities Regulation (OUR) on Wednesday defended the lowering of customer light bills against criticism from the Private sector Organisation of Jamaica (PSOJ).

The OUR in a news release this afternoon insisted that the light and power company, Jamaica Public Service (JPS), will earn a sufficient return on its investment.

It added that it wants JPS to reduce rather than recover from its system losses, some of which arise from theft.

“The OUR is convinced that the 12.25 per cent after tax return on equity (ROE) allowed on JPS non-fuel tariff is reasonable. Additionally, that the mechanisms created through the EEIF and BPRF create an important incentive structure for JPS to enhance its profitability while lowering fuel cost over the short to medium term,” stated the OUR in its three-page release.

The PSOJ last week questioned the agency’s ruling to reduce the target ROE from 16 per cent allowed in the prior rate review to 12.25 per cent, indicating that it could undercapitalise the entity in its build out of new plants.

The OUR also clarified that it cannot, nor does it attempt to “arbitrarily” set the rates for utility services.

“In this regard, the widely used and accepted Capital Asset Pricing Model (CAPM) to determine the cost of equity for the utility companies it regulates was applied,” the regulator said.