JAMAICA Public Service Company (JPS) has finally convinced the Office of Utilities Regulation (OUR) to consider its proposal for a rate review, which could see its residential customers hit with a more than 17 per cent increase on their bills.

Last July, JPS submitted an application for a tariff review to the OUR, but this was rejected by the regulatory body in August, because its technical team concluded that the application was deficient and would not allow for a comprehensive evaluation.

But yesterday, the OUR announced that on December 30, 2019 JPS resubmitted its tariff application for 2019-2024 and it was accepted.

 The OUR now has 120 days to review the application and issue its decision by May 12.

“JPS’s detailed application includes a raft of proposals, with the company seeking approval of an annual average revenue requirement of $62.1 billion (US$485.2 million) in real terms over the five-year review period,” said the OUR.

“According to JPS, if the tariff application is accepted, customers would see an average increase in overall rates of 4.69 per cent, subject to annual reviews. The average impact will vary by customer class, as well as within customer class, depending on consumption and choice of tariff.

“Based on JPS’s proposal, residential customers would see the largest increase (17.14 per cent) while large industrial/commercial customers (on the time of use option) would register a reduction of 14.06 per cent,” added the OUR.

In the tariff review application, JPS is also proposing an expansion of the residential (rate 10) structure, moving from two to three consumption blocks.

The utility company has argued that the revision is to allow sufficient flexibility in terms of price signals.

It has also proposed that Rate 40 and 50 customers, with demand in excess of 1,000 kilovolt ampere (kVA) be transferred to new rate classes.

These new classes recognise the commercial and industrial customers with high demand that do not meet the 2,000 kVA eligibility criterion for the rate 70 tariff category.

JPS has also projected an overall reduction in system losses by 2023, of more than two per cent when compared to 2018.

In addition, JPS has proposed that the Government introduces a direct electricity service subsidy through the Programme of Advancement Through Health and Education (PATH).

The proposal is for the Government to directly fund the gap between what is considered an acceptable level of expenditure that vulnerable households should spend on electricity, how much electricity that purchases, and the cost of the lifeline basket of service.

The subsidy would be paid to eligible PATH beneficiaries in the form of vouchers to apply to electricity bills.

The company has also asked the OUR to revise its guaranteed and overall standards, including the one which deals with timeline for its response to emergencies and implementing exemptions for payment of automatic compensation.

In seeking to justify its request for a tariff review last year, JPS president and CEO Emanuel DaRosa claimed that the company was making significant investments in its infrastructure and systems to maintain, upgrade and ensure the safety and reliability of the equipment that serve its customers.

“This investment will go into upgrading transmission and distribution lines, replacing thousands of poles, replacing all street lights with smart LED street lights, improving and renewing our fleet of generators, and modernising the grid to improve reliability while enabling it to accommodate more renewable energy sources in the future,” said DaRosa.

“We’re also investing in digital technology, such as smart meters and mobile applications that will not only empower our customers, but also make it easier for them to do business with us. All of these investments will allow us to meet our customers’ energy needs, maintain the reliable and efficient service they expect, and keep the electric infrastructure safe,” added DaRosa.

He argued that JPS’s rates are cost-based and aligned with the actual cost of providing the services, while supporting the opportunity for shareholders to earn a fair return on their investment and enabling the organisation to continue to invest in modernising the grid and making it more reliable.

— Arthur Hall