Electricity users will see a 2.4 per cent increase in their June bills, following an increase of the base rate of power charges by the Caribbean Utility Company.
‘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,’ a statement released by CUC on Friday, 1 May, said.
The company said it had not increased its base rates in seven years, since August 2002, but needed to increase the rates now to remain economically viable.
Huge hikes in electricity bills seen last summer were due to increased costs of fuel worldwide.
Philip Thomas, managing director of the Electricity Regulatory Authority, which must verify the calculations upon which the rate increase is based before it can be passed on to customers, said: ‘The scheduled increase will affect only the base rate charge. The fuel factor charge continues to decline as international fuel prices have declined from the highs of 2008.’
He said that once verified and accepted by the ERA, the base rate would remain at that level until 1 June next year.
The utility company said it had invested $258.8 million in transmission and distribution as well as generation equipment, including new generators, substations, poles and transformers.
‘CUC has to be able to continue to make investments in equipment and maintenance and offer a fair return to shareholders and bondholders who finance the company’s growth at rates reflecting that return,’ the statement said.
Over the past seven years, CUC’s annual operating expenses increased from $67.6 million in 2002 to CI$135.1 million at the end of 2008, the company said..
The rate increase was scheduled under the conditions of the utility company’s transmission and distribution licence, signed last year. The calculations on which the rate increase are based must be verified by the ERA, which said on Friday it was considering the submission.
The increase will mean an average residential customer using 1,000 kilowatt hours per month with a bill of $195 will pay an extra $2.44 a month, according to CUC.
The company claimed the increase would help enable it keep pace with the island’s growth demands and allow CUC ‘to continue to provide an efficient and reliable service to all customers and to maintain the level of investment it currently makes in Grand Cayman’.
CUC’s 21.5-year licence agreement with the government, which was signed in April last year, includes a clause which allowed the company to raise rates on 1 June, as well as an annual review based on the consumer price index’s cost of living, minus food and fuel prices.
CUC has also submitted a cost of service study to the ERA, which may mean other changes rates for customers, based on the services they receive.
‘The Company has not conducted such a review since 2003 and this analysis is periodically required to maintain rate equity among classes. However, other than the 2.4 per cent increase, there would be no additional revenue to CUC when these rate reallocations are made,’ stated a press release from CUC.
Mr. Thomas said that rate review could mean ‘increases of more or less than 2.4% or even decreases in the base rate applied to one or more of the different rate classes’.