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OUR to police fuel charges on electricity bills

Published:Wednesday | June 13, 2012 | 12:00 AM

The Office of Utilities Regulation (OUR) wants to audit power providers, including Jamaica Public Service Company (JPS), to ensure that customers are correctly charged for fuel when world oil prices fluctuate.

The audit will result in recommendations made to the OUR to "effectively manage" the fuel accounting systems of JPS and two independent power providers (IPP).

It plans to hire a consultant auditor for this purpose. Bidding for the job closes June 27.

"The OUR intends to engage the services of a qualified, experienced and competent auditor to carry out an audit of Jamaica's power system fuel management policies and practices in order to facilitate regulatory oversight of the fuel cost component of electricity charges to consumers, and to create a database of fuel usage cost and efficiency in the system," stated the OUR in its notice published June 10.

Officials at the regulatory agency were said to be travelling and unavailable for comment.

Fuel represents the largest component on bills and also the bulk of JPS's expenses at US$206.2 million for its March 2012 quarter, up 23 per cent year on year. Even small fluctuations in oil prices will result in large dollar movements on total customer bills.

JPS, the sole power distributor, buys oil at world market prices with some 30 per cent of its power requirements coming from IPPs. It then passes the cost of oil to customers, ostensibly at cost price.

The OUR wants the consultant to determine: whether JPS fuel policies and practices routinely generate accurate fuel charges billed to customers; and if JPS's fuel management is compliant by analysing historical and current fuel procurement, fuel usage and general fuel accounting.

JPS bill subdivisions

JPS bills contain two main subdivisions: meter usage and fuel & IPP charges. The fuel charge on bills covers the cost of the fuel required to produce and deliver each kilowatt hour of electricity, and "some" of the costs of the power JPS buys from IPPs, said JPS on its homepage.

"This figure may change based on the cost of oil on the world market," said JPS.

Currently, fuel and IPP charges are near all time highs at J$21.82 per kilowatt-hour in June 2012 compared with J$8.66 in January 2009, according to JPS statistics on its homepage. Last month, the rate stood at J$24.06 per kilowatt-hour.

JPS needs approximately 20,000 barrels of oil each day to meet the daily electricity demands of customers nationwide. "The company must purchase this oil at world market prices which may vary each month," said JPS on its home page.