INCREASES to the electricity rates and the flat fees the light company charges customers for its service were approved by the Office of the Utilities Regulations (OUR) last week.

The Jamaica Public Service Company (JPS) will be allowed to increase the non-fuel tariff rates by a range of 1.1 per cent to 1.2 per cent, depending on the type of customer, next month.

It also will increase its customer charge by 7.5 per cent.

But the regulator is arguing that raising efficiency requirements, through the lowering of the heat rate target, should result in a 2.6 per cent reduction in fuel charges.

Consequently, bills are supposed to decline by fall next month, should fuel prices remain the same of fall.

“The reduction of the heat rate target was achieved because of the addition of more efficient generation capacity to the grid,” said the OUR. “Consumers should therefore expect a potential decrease in excess of 1.4 per cent of their total bill based on these targets implemented by the OUR.”

JPS’s guaranteed standards were also reviewed under this year’s annual tariff adjustment.

Among the changes made to the standards is an increase in the number of periods of liability for non-compliance, which means the company can now be held liable for a breach of the standards for up to six periods as against the previous four periods.

JPS also applied for an easing of the system loss target, requiring the light and power company to absorb all losses above 17.5 per cent of total generated output.

It wanted the target to be increased to 18.5 per cent — closer to the 24 per cent system losses it currently incurs — which the company claimed would reduce how much it would have to absorb in 2012 by approximately US$5 million.

“Given the expected reduction in the heat rate target, there would still be an overall 0.39 per cent reduction to the fuel tariff after allowing for this adjustment,” it argued in its submission for tariff adjustment.

The OUR decided to leave the target at 17.5 per cent until next year’s review.