Steven Jackson, Business Reporter
Jamaica Public Service Company (JPS) will charge its customers US$20 million (J$2 billion), a one-off fee to offset fuel costs, which equates to raising electricity bills by less than one per cent, according to the Office of Utilities Regulation (OUR).
At the same time, the regulator said that other rate adjustments granted to the power utility would result in increases to most customers: 1.9 per cent hike for households and 2.3 per cent for small commercial entities.
Large customers and factories will see a decline of about one per cent, the OUR said.
JPS, which is led by CEO Kelly Tomblin, must however commit to a raft of measures to receive this benefit, including hiking its capital by US$40 million, according to the OUR's determination regarding the JPS's annual rate increase, just posted on the regulator's website.
JPS currently holds some US$378 million in equity with US$455 million in total liabilities, according to its March financials. JPS said it would agree to this measure, but the method of increasing the capital remained uncertain up to print time.
Last month, JPS shareholders agreed to increase the company's authorised preference share capital, but have no immediate plans to issue the shares. Last night, JPS head of corporate communications, Winsome Callum, said the increase in authorised capital was unrelated to the OUR stipulation.
The Fuel Cost Recovery Adjustment (FCRA), through which JPS will recover the US$20m, is a new measure announced in the OUR determination, according to JPS which acknowledged that the measure would affect customers, but only marginally, said Callum.
"This is an incentive to JPS to work even harder to reduce losses - the company's ability to benefit from this [FCRA] will be contingent on its implementation of new measures to reduce losses," Callum told Wednesday Business.
"The OUR will be holding JPS more accountable in this regard, as outlined in the determination. The impact of the FCRA is included in the 0.6 per cent overall increase on customers' bills, prior to the application of the Early Payment Incentive," she said via email.
The OUR said the FCRA will be recovered in equal amounts of US$1.67 million per month over one year. The charges will apply to consumption from July, but will first be reflected on bills issued in August, the OUR said.
"JPS recognises the difficult economic environment in which both the company and our customers are operating. We are therefore happy that the OUR has approved measures that will keep rates flat for our customers, and JPS will continue to work with customers on energy management and conservation initiatives to help keep bills down," Callum said.
"While disappointed that the OUR has not approved some of what the company applied for, we are satisfied that consideration was given to the significant financial and operational exposure caused by electricity theft."
Under the new tariff structure for JPS, the OUR granted adjustments of 10 per cent for inflation and 9.5 per cent for local currency depreciation.
"It is estimated that with the determinations set out herein, on the average, there will be a marginal increase to the total on overall consumers' bills," said the OUR.
"This is resulting from the effect of the 10.35 per cent increase in the base non-fuel rates, effectively 0.80 per cent, given that bills have already been adjusted monthly by 9.55 per cent for foreign exchange differential, a one-time FCRA; and adjustment to the fuel weights for commercial and industrial customer classes," the regulator said.