Utilities share infrastructure cost for housing developments
THE EDITOR, Madam:
We welcome the opportunity to respond to statements attributed to Mr Mark Kerr-Jarrett in the article ‘Utility companies could help to lower housing cost’, published in The Gleaner on Monday, October 28, 2019.
Mr Jarrett is quoted as saying that utilities should pay developers the cost of putting in infrastructure in housing developments. What this would mean is that the cost for the utility infrastructure for each housing development would be shared among all ratepayers. This is not a practice that is supported by the regulatory frameworks in which utilities operate generally.
Globally, utility regulators have operated on the principle that the cost to a specific customer should not be borne by all customers. Regulators all over the world, including Jamaica, have therefore developed operating frameworks that require the user who creates the costs to cover those costs.
It is important to note, however, that in Jamaica we have a shared-cost mechanism that requires JPS to take responsibility for some of the cost of putting in infrastructure for new developments. Developers can choose one of two options:
OPTION 1: The developer pays 50 per cent of the cost of the new infrastructure, and JPS pays the other half of the cost.
OPTION 2: The developer pays the full cost of the new infrastructure at the start of the project, and has the opportunity to recover the entire cost over a period of no more than three years. This recovery is dependent on the non-revenue that the new infrastructure generates for the utility.
We look forward to continuing the discussion with developers as we work together to build this nation.
President and CEO
Jamaica Public Service