Kenny Ryan ERA Chairman

 

By Tad Stoner
tad@caymannetnbews.com

Caribbean Utilities Company (CUC) is proposing a 2.4 percent increase in electricity charges, saying it had not raised rates since August 2002 in the face of expenditures of almost $259 million to boost generation and improve distribution.

Although the Electricity Regulatory Authority (ERA) must approve the proposed increase, a CUC statement did not mention such increase as being conditional upon the Authority’s agreement.

“There will be a 2.4 percent average increase on base rates. This increase will take effect on June 1, 2009, and it will be reflected on bills rendered in June,” the statement said.

“CUC has maintained a high level of service and reliability during this period,” the statement said. To maintain that service and “remain an economically viable company, then CUC has to be able to continue to make investments in equipment and maintenance and offer a fair return” to its stakeholders.

The rise, CUC explained, would add only $2.44 to an average household’s monthly $195 bill for 1,000 kilowatt hours.

ERA Chairman Kenny Ryan acknowledged the CUC application would be the first the board had scrutinised since its 3 April 2008 creation as part of CUC’s new Government contract. He declined to predict what would happen.

“I can’t say. We’ll have to look at the case, at CUC’s justification. We need a full meeting for that,” he said. “Nothing is set in stone, though. It depends on what all the factors are to consider.”

The cost of living and public reaction to the increase would be part of the six-member board’s deliberations, “but if you can’t dispute what CUC says, and CUC is supported by the facts, then we have to look at all those points,” Mr Ryan said.

ERA Managing Director Philip Thomas said the rise was necessary to keep CUC financially viable and able to meet local power demand, pointing out that the company had not raised prices recently. June 2009 bills, he said, compared with January 2008 bills, would register a relative decline of $54, although he conceded they would not actually lower the general cost of living.

CUC’s 21.5-year agreement with Government (signed 3 April last year) allowed the company to seek a rate rise on 1 June, less than two weeks after 20 May national elections.

The contract stipulates an annual review, based on a complex formula involving a percentage of the cost of living -- minus local food and fuel prices -- as measured by the consumer price index (CPI), and includes an element of US inflation.