Caribbean Utilities' Rate Increasetied to Transparency
At a professionally presented press conference on Wednesday,24 May, the island's provider of electricity services - Officialsof Caribbean Utilities Company (CUC) addressed the Company's reasonsfor a proposed 1.5 percent increase in rates effective 1 August,of this year.
This proposed rate increase - which would add between 91 cents(400kWh) and $2.28 (kWh) to the average homeowner, and $4.57 (2000kWh) and $228 (100,000 kWh) for commercial users' monthly billsmust first be approved by the Government - albeit as a formality,as CUC's 25-year exclusive License of 1986 (since amended in 1989to allow for the liability of import duty) allows for a 15 percentrate of return on the revenue collected from consumers.
Accordingly to a press release issued by the Company, the proposedincrease is well below the current rate of inflation in Cayman'scontinued robust economy which has averaged five percent overthe past five years - including 1999.
Two of the reasons CUC cited for seeking the rate increase itis putting forward in its proposal to Government is because ofits "highest level of capital expenditure US$43.1 millionin the history of the Company, as a result of high growth in electricitydemand, and the continuing cost of staff, administrative and otherdevelopment costs."
A sustained growth in commercial and residential connections resultedin a record peak this April (65.7 MW) - which represents an increaseof 7.5 percent over the 1999 April peak demand.
Commendably - when compared with other providers of electricityin the region, the service provided by CUC has been void of 'brown-outs'- low power - to any area on the island. Their 'Index of Reliability'compares favourable with service provided in the United States,with the average customer being assured of service exceeding 99.96percent .
As one of the two major exclusive providers of utility services- the other being Cable Wireless - the Company demonstrates itspreference for transparency in its operations by publishing itsaccounts for the public's review. This confidence will be furtherillustrated, when CUC posts its agreement with Government on itsInternet website in another few weeks.
It's unaudited accounts for the fiscal year 2000, which ended30 April, showed a healthy 14 percent growth (US$76,469,248) over1999 (US$67.058,423). Earnings were almost US$18 million and $14.5million respectively.
The Company's last increases in consumer rates were one percentin August 1999, two percent in 1997 and one percent in 1995.
Why a rate increase at this time? The company responded in itspress handout and this was amplified upon by Mr. Peter Thompson,CUC's President & CEO; Mr. William Forsythe, Senior Vice Presidentand Financial Officer; and Mr. Richard Hew Vice President underwhom the responsibilities of Transmission and Distribution falls.
Cayman's affluent lifestyle is reflected in the use of electricity.For instance, Barbados with a population of well over 260,000- more than five times that of the Cayman Islands, that countrybills $72 million per annum, while CUC bills $86 million in domesticusage of electricity. In terms of commercial use, Cayman billsapproximately 20 percent more than Barbados.
A new sub-station is now being constructed to serve the SouthSound and surrounding areas of George Town, while another is beingbuilt in the Eastern District in the Frank Sound area to servicethe growth expected in residential and commercial development.It was also confirmed that the Company takes advantage of opportunitieswhen new developments and buildings are approved to arrange forsubmerged transmission lines, as a means to lessen the risk ofexposed wires to the elements.
With an average annual growth of six percent, of new connectionssince 1997, the Company now services 18,500 customers -
"Although committed to fill the needs required by growth,we are quite concerned about the protection of our environment"said Mr. Richard Hew. He was speaking particularly of their decisionto lay cables across the North Sound to complete their transmissionloop around the island.
It was also revealed at the press conference that of the 220 membersof staff only 15 are non-Caymanians, and besides their on-goingwork experience programmes for students, there are two Caymanianspresently on scholarships overseas. Among the permanent staff,a number have also been recipients of scholarships.
With over 60 percent of the Company's shareholders are Caymaniansand residents, Caribbean Utilities Company plans a Customer AppreciationDay in a few months.