Sun | Feb 26, 2017

JPS to collect less for disaster relief

Published:Monday | January 19, 2015 | 12:00 AM

Customers of the Jamaica Public Service Company (JPS) have been given a major break with the amount they contribute to the Electricity Disaster Fund (EDF) slashed by 39.28 per cent, even though the Office of Utilities Regulation (OUR) has served notice that it could be reincreased.

The EDF was established by JPS in 2004 to address damage caused to the electricity grid by natural disasters.

The amount customers of the JPS contribute towards the Electricity Disaster Fund (EDF) to help the utility recover from environmental hazards is to be reduced drastically.

Currently, customers of the JPS contribute approximately J$0.28 per kWh or US$7.5 million (including tax) annually to the EDF. The EDF accumulates at a net rate of US$5m annually. At the end of June 2014, the EDF contained US$24.7m.

The reduction will mean that consumers will save an average $11 per 100 per kWh of electricity consumed. Of the 538,000 residential customers, 222,531 consume an average of 90kWh of electricity monthly, while 301,954 use an average of 200kWh each month.

"While conceding that reducing the annual contribution to the EDF from US$5m to US$2m diminish, to some degree, the capacity to pay out full compensation from the EDF in an extreme and highly improbable event, the OUR is of the view that the risks are manageable," the OUR said.

"Furthermore, when balanced against the accumulation in the EDF and benefits of the reduction on the tariff in a high-price environment, the risk seems plausible," it added.

Global Weather Oscillations Inc, a leading hurricane-cycle prediction company, last week predicted that the 2015 Atlantic hurricane season will be the most active and dangerous in at least three years, and the next three seasons will be the most dangerous in 10 years.

Based on statistics it analysed, the OUR said the EDF should be in a position to deal with at least one severe tropical cyclone in two out of every five years.

In its application for a tariff review, which has now been decided on by the OUR, the JPS suggested that the amount charged to customers accounts be reduced from US$7.5 million to US$3 million.