Long running negotiations between the Government and CUC over renewing its license agreement should be completed within a fortnight, Leader of Government Business Kurt Tibbetts told a Cabinet press briefing Thursday.
‘Within two weeks from today, at a similar press briefing, we anticipate being able to make an announcement that we have come to an agreement, at which point in time the situation with the surcharge will be dealt with as part and parcel of that new arrangement,’ he said.
Mr. Tibbetts indicated the Hurricane Ivan surcharge will fall away under the deal in January 2008 – seven months earlier than had been planned for under the post Ivan deal that the Government and CUC agreed to.
Under the terms of that agreement, CUC was allowed to implements a 4.7 per cent cost recovery surcharge, to recoup losses sustained in Hurricane Ivan. In return, the company promised not to increase its base electricity rate for the duration of the surcharge.
‘While [the surcharge] in itself was not part of the negotiations … they have become [part of negotiations], as a matter of getting rid of them,’ Mr. Tibbetts explained.
Negotiations on a new license agreement initially began in 2004, while the UDP was in power, but they were delayed for 14 months after Hurricane Ivan. The current round of negotiations began in November 2005
Government officials have previously indicated their main priority in negotiating the new license agreement is to secure a decrease in consumer electricity costs, which have risen sharply over the past two years because of rising oil costs.
All of CUC’s electricity is produced by diesel- or gasoline-powered generators. As allowed by its license agreement, CUC passes on to the consumer fuel costs over a specified threshold that is based on the cost of fuel when the agreement was signed in 1986.
CUC hasn’t permanently raised its base electricity rate since 2002. In 2003 it increased rates by three per cent in August, but rolled back the entire rate increase in November after the government of the day pressured it to do so.