‘Unconscionable’

President of the Small Businesses Association of Jamaica (SBAJ) Garnett Reid says Jamaicans should strenuously push back against a seven per cent increase in electricity rate approved by the Office of Utilities Regulation (OUR) to the Jamaica Public Service (JPS).

A peeved Reid told The Gleaner yesterday that if this rate increase is implemented, Jamaicans from across the country should show strong objection by carrying out peaceful demonstrations.

At the same time, Cordell Williams-Graham, president of the Young Entrepreneurs Association of Jamaica (YEAJ), said the seven per cent increase in electricity cost is “concerning” following the disruptions caused by Hurricane Melissa.

In a news release yesterday, the OUR said customers of the light and power company who are currently receiving service will see a seven per cent increase on their bills issued this month for the November consumption.

The increase has been described as “unfortunate” by the SBAJ head, who noted that it comes following the massive impact that Hurricane Melissa has had on Jamaicans.

Reid said he did not expect the JPS to apply for an increase at this time, as the SBAJ had recently asked the company and the OUR to hold back on any rate increase during this period.

He argued that while the Category 5 storm had a significant impact on the western end of the island, many small businesses across the country have been affected by a downturn in sales.

As a car dealer, Reid said his sales have dropped by about 10 per cent.

“People buy cars from me for the taxi industry, for the tourism sector, and I have several cancellations; and when I ask, ‘Why?’, they said they are concentrating on rebuilding their homes.”

The SBAJ president cautioned that the increase in the JPS rate will hurt the micro, small and medium enterprise sector. Further, he said consumers will be forced to dig deeper into their pockets to purchase food items.

He warned that increased electricity rates will make it even more expensive to do business in Jamaica.

The SBAJ boss also raised questions about the US$150 million that the Government is lending to the JPS to restore power to the country, and highlighted the US$5 million that the OUR provided to JPS from the Electricity Disaster Fund.

Reid questioned why Marubeni Corporation of Japan and Korea East-West Power, who jointly own 80 per cent shares in JPS, did not provide the capital for the local company to restore power to Jamaica.

He said that asking Jamaicans to provide a US$150-million loan and then to increase rates on the country was “unconscionable”.

“I am calling on Minister Daryl Vaz to tell the nation why we lend JPS US$150 million, and, on top of that, JPS is now going to impose an increase on the nation.”

The OUR said the hurricane resulted in an approximately 30 per cent reduction in sales, which contributed significantly to the increase in the fuel and independent power producer (IPP) rates. Together, these factors could have translated to a big hike in the 2025 November bills, the OUR said.

However, the regulatory body said that to avoid bill shock to customers, JPS, in consultation with the OUR, has opted to defer some of the increase in fuel and IPP costs and recover it by spreading it over the upcoming months.

Williams-Graham said while the OUR and JPS have chosen to spread the adjustment across several months to reduce immediate bill shock, the reality is that any increase in electricity costs during an already-challenging recovery period will place additional pressure on households and small businesses.

She argued that electricity is a core input for almost every business, especially young entrepreneurs who often operate on thin margins, rely heavily on digital tools, refrigeration, machinery, or online services, and do not yet have the financial buffers that more established companies may have. The YEAJ president said even a modest increase can affect cash flow, pricing, profitability, and operational decisions.

editorial@gleanerjm.com

Impact on young entrepreneurs and their businesses

For young entrepreneurs, the impact is likely to be significant in several ways:

Higher operating costs: Electricity is already one of the most expensive inputs in Jamaica. A seven per cent rise means increased monthly expenses for businesses, such as salons, restaurants, bakeries, printing services, cold storage operations, retail shops, digital enterprises, agro-processors, and home-based businesses.

Reduced profit margins: Entrepreneurs who cannot immediately adjust their prices – due to customer sensitivity, competition, or the nature of their industry – may see their already-slim margins shrink even further.

Cash-flow pressure: For startups recovering from Hurricane Melissa or still stabilizing, even small increases in recurring expenses can disrupt cash flow and delay critical purchases or investments.

Increased cost of production: Energy-dependent entrepreneurs (manufacturing, food processing, welding, tailoring, cosmetology, ICT) will need to absorb increased production costs or pass them on to consumers, which could reduce competitiveness.

Slower recovery after the hurricane: Many entrepreneurs in St Elizabeth, Westmoreland, Clarendon, St Mary and other affected areas are still rebuilding. The added cost could slow down their ability to restock, repair equipment, or reinvest in growth.

Shift towards alternative energy: On a positive note, this may accelerate interest in solar solutions, energy-efficient equipment, and other innovations that reduce dependency on the grid over time. And this could be viewed as an opportunity for entrepreneurs.