KINGSTON, Jamaica — Jamaica Public Service (JPS) customers are likely to see an increase in their bills come July, following the approval of the company’s extraordinary rate review application by the Office of Utilities Regulation (OUR).

The increase is to allow JPS to recover losses resulting from amendments to its licence in January last year.

The light and power company, according to a release from OUR, claims that the shortening of its asset lives, due to the amendment, has resulted in asset impairment expenses and increased depreciation costs, which will amount to US$28.5 million over the period 2016-2028.

However, OUR said it has determined that JPS should recover US$13.4 million in losses for 2016, as requested in the immediate application, via the Z-Factor mechanism.

This, OUR explained, is “…because it (the asset impairment) is retrospective, while the component associated with the increase in depreciation expenses will be handled via a rate revision since this captures costs that are prospective”.

The utilities regulator further explained that the Z-Factor mechanism allows for adjustments to JPS’ electricity rates outside the scheduled five-year rate review to facilitate the recovery of expenses that:

a) Materially affect the company’s costs;

b) Are not due to managerial decisions;

c) Amount to more than J$50M; and

d) Are not included in the existing tariff mechanism.

JPS’ 2016 Electricity Licence makes provision for alterations to the tariff using the Z-Factor mechanism within the framework of the annual rate adjustment exercise.

While the decisions took effect on February 1, the OUR noted that it will not result in any adjustment to customers’ bills at this time, but could be felt in July following JPS’ annual rate review application.

The OUR said it has also determined that JPS should be compensated for any increase in its deprecation expenses in 2018 and 2019 through a revision to the existing electricity rates.

However, the company is required to provide, by March 3, details on each project in its investment plan for the next two years, as this is material to determining the amount of such compensation, OUR added.