New licence for CUC in 2008

It took several years to get there, but 3 April 2008 marked the date that the Caribbean Utilities Company finally signed a new licence to generate and distribute power in Cayman.

The government, under the Democratic United Party, had been in negotiations with CUC in 2004 concerning the non-exclusive renewal of its licence, but Hurricane Ivan forced the power company to pull out of the talks before the final agreement was signed.

When the People’s Progressive Movement took power in May 2005, licence renewal negotiations with CUC resumed. It took more than two years for the government negotiating team, headed by attorney Olivaire Watler, to reach an agreement with the electricity company.

Before the amendments to the new agreement could be made, changes to the Electricity Regulatory Law and the Electricity Law had to be made and additional powers were given to the Electricity Regulatory Authority.

The new 21.5-year licence agreements – an exclusive Electricity Transmission and Distribution Licence and a non-exclusive Electricity Generation Licence for operations in Grand Cayman – were finally signed in April and replaced CUC’s 1986 license agreement, due to expire in 2011.

The new licence eliminated CUC’s previously guaranteed 15 per cent rate of return, implementing a 9 to 11 percent return instead, and opened up the market for other suppliers.

CCU maintained control over the Island’s transmission and distribution infrastructure, but other companies can bid to generate electricity, including those using alternative energy methods.

By September, CUC had to submit to the Electricity Regulatory Authority a plan for how it would buy excess power from consumers who generated their own electricity. Those proposals are still under consideration by the ERA.

Despite introducing a base rate freeze from January and the removal of the Hurricane Ivan surcharge, the summer brought far larger power bills due the increased price of fuel worldwide.

The elevated bills prompted more than 1,500 customers to sign a petition demanding lower power bills.

Fuel charges on CUC bills reached a high this year of $0.27 per kilowatt hour in September, but had fallen to approximately $0.17 per kilowatt hour in December.

The licence mandated CUC work towards better efficiency and greener forms of electricity, including renewable kinds of energy, which might include solar, wind or waste-to-energy.

In July, CUC began seeking partners to create windmills to generate power in Grand Cayman in reaction to the skyrocketing fuel prices.

And in August, the Electricity Regulatory Authority advertised for companies to generate additional electricity to meet increased demand by 2012.

It marked the first time a company other than CUC would have the opportunity to generate electricity commercially on the island.

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