THE Office of Utilities Regulation (OUR) says it will make a decision on the Jamaica Public Service Company Limited’s (JPS) 2018 annual review of its rates by August 2.

JPS’s submission, which the OUR said was received on May 3, includes a request for an extraordinary rate review in relation to debt refinancing.

“While the time allowed for the annual review is 60 days, owing to the extraordinary component in the application, the OUR has sought and received JPS’s agreement for a 90-day review period, which will result in the issuing of the OUR’s determination on August 2,” a release from the utilities regulator said yesterday.

With respect to JPS’s extraordinary rate review application, OUR said the company is proposing to refinance US$179.1 million of its existing long-term debt that is based on an interest rate of 11 per cent per annum, with an equivalent quantum of debt at approximately eight per cent per annum.

“JPS states that this refinancing would translate into savings of US$5.37 million per annum for the remaining three years of the life of the bond or US$16.11 million in total,” the release said.

JPS is also reportedly proposing a Z-factor adjustment for accelerated depreciation and separation costs, which it anticipates will result from the pending decommissioning of the old baseload plants at the Old Harbour and Hunt’s Bay locations. The release said the proposed accelerated depreciation and separation costs, which are to be recovered over a year period, is US$1.89 million.

JPS proposes, too, a two per cent average increase in the non-fuel bill components assuming no change in current fuel prices, and if accepted, would have a total average bill impact (including fuel and IPP charges) of approximately 1.0 per cent increase for customers, the release said. However, the OUR said it will have to undertake its own analysis and verification to determine whether or not the actual adjustments are to be approved.

“This is the third annual review that is being sought under the new Electricity Licence, 2016. In addition to annual reviews, the licence also makes provision for the conduct of extraordinary rate reviews owing to exceptional circumstances that have a significant impact on the electricity sector and/or JPS,” the release said.