Premier: Gov’t not at fault for power bills

Taking some heat over the rising cost of electricity, Cayman Islands Premier McKeeva Bush said this week it was unfair for residents to blame the ruling government for high energy bills.  

Mr. Bush told a group of more than 200 people gathered at a public meeting Tuesday night in George Town that a massive recent increase in residential electric bills could not simply be blamed on his government’s decision to raise import duties on fuel by 25 cents per gallon.  

“Nobody can convince me that a 25 cent increase on diesel is causing your bill to be doubled and in some instances more than your mortgage,” Mr. Bush said to the crowd at Mary Miller Hall. “Nobody can convince me that.”  

A private members’ motion debated in the Legislative Assembly last week asked government to consider reducing import duties on both fuel and gasoline to 50 cents per gallon. The motion, brought by North Side MLA Ezzard Miller, was defeated.  

“When Mr. Miller and the opposition gets up and talks that it’s government’s fault, they would love for you to believe that,” Mr. Bush said. “They’re bringing motions that will rile people up.”  

Premier Bush said he wanted to have an outside audit done on Caribbean Utilities Company to see “what the true cost is and where the cost comes from”. He said he wished to get a company from the US or Canada to perform the audit.  

“These are the questions that must be answered,” he said.  

CUC’s 2010 annual report, the most recent year for which data is available, showed significant increases – about US$20 million each overall – in the company’s fuel factor revenues and operating expenses between 2009 and last year.  

“Fuel factor revenues increased due to an increase in the cost of fuel,” the 2010 annual report read.  

According to CUC, the average fuel cost charge rate per kilowatt hour in 2010 was $0.20, an 18 per cent increase from the $0.17 per kilowatt hour rate charged in 2009.  

“CUC passes through 100 per cent of fuel costs without mark up to consumers on a two-month lag basis,” the 2010 report read.  

The company’s average price per imperial gallon of fuel for 2010 increased to $3.45 per gallon compared to $2.77 per gallon the year before. Twenty-five cents of that 78 cent increase – a little less than a third – was due to the increase in government duty, CUC said in its financial statements.  

According to earnings statements produced by CUC for the second quarter of this year, the most recent date for which those were available, the utility provider stated the economic downturn in Cayman had “negatively affected” energy sales.  

Electricity sales for the second quarter (April through June) of 2011 totalled 144.9 kilowatt hours, a decrease of about three percent from the same quarter of 2011.  

“The impact of recent high diesel fuel prices on electricity rates has exacerbated the situation and remains of concern for CUC,” said Richard Hew, company president. “In the short term, we are advising customers to conserve energy and are providing assistance through energy conservation education.”  

Mr. Hew also said CUC had received approval to hedge fuel up to 40 per cent of its annual fuel requirements. Hedging fuel is a strategy that involves buying a certain quantity of fuel to protect against market fluctuations in oil prices. Although power usage decreased in the most recent quarter, total CUC customers as of June 2011 had increased.  

“Despite increases in overall customer numbers, average monthly kilowatt customer consumption for the residential and commercial categories has declined for the first half of 2011,” according to CUC’s second quarter 2011 report. 

 

Government help   

Mr. Bush has proposed an additional annual fee of $1,500 for certain hedge fund ‘master funds’ which would be used to offset the rising costs of fuel.  

However, the Cayman Islands Monetary Authority had not released a timetable for the implementation for new regulations governing the fee and no legislation has been brought before the assembly to approve it.  

The premier was quick to point out his belief that CUC is a top-notch electricity distribution service, despite his call for the audit.  

“Perhaps we got one of the best services in the region in Caribbean Utilities, but a factor in that is that we pay dearly for it,” he said. “We are happy that we have … such a company here. We know that world energy costs are high.” 

McKeeva Bush Cayman Islands

Mr. Bush
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13 COMMENTS

  1. If the Governemnt has to call in foreign analyst to audit CUC to determine the true cost of the higher duty, how did the Government decide on this measure in the first place? Who advised them that there will not be any significant impact. Government is saying that they are not responsible for the high cuc bills and CUC is saying that its not them. Then who is responsible? maybe we should blame the recession, or opposition or expats… this is so sad when you are being ripped off and your leader puts his head in the sand and say, it’s not me. Please defend us, fight for us.. we are bleeding as there is a wolf in sheep’s clothing exploiting us.

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  2. Are you joking me.The government expects us to believe that if you increase the cost of diesel fuel because of taxes then the cost of electricity wont go up. What do you think the plant runs on Mr. Bush, fresh air or cows excretion. I fear theres a lot of the latter on the go here. STOP BLAMING OTHERS AND ACCEPT RESPONSIBILITY FOR WHATS GOING ON IN THE COUNTRY!

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  3. I thought Mr. Arden McLean was a Direcor or somehow affiliated as a big shareholder in CUC maybe he can help us out and answer some question, more so take some action. Why is he so quiet.

    Is there any elected official we can really trust?
    Ezzard where is your take on this?

    Don’t allow these elected officials to lie to us. THEY CAN VERY ELL EGULATE CUC if they want to.

    Maybe govt. is scraping off some taxes from it unknown to us?
    Ezzard use your big mouth to clear this up.

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  4. Never mind all of that – I left Cayman three and a half years ago … having suffered the HUGE rises in utility costs after Hurricane Ivan … so Cayman I feel your pain

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  5. Really now!!!!! Funny how my consumption has stayed the same for the past 4 months, but yet the bill still seems to keep going up!!!! Are you kidding me BIG MAC!!!!

    Guess you saying that cause you can afford your light bill every month, oh, or is it the Govt paying that for you????????????

    CUC needs the competition so that we can start seeing where our money is going….

    2013 can’t come soon enough…. PPM and UDP going soon be left in the cold and the poor house just like the ordinary citizens of this island.

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  6. And they want to sell our water company.. If there is an audit needed, it should be to check the brains of some of these officials.. Along with a big mouth, An IQ test should be a prerequisite to holding office. Post the results for all to see..

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  7. I just dug out my CUC bill from a year ago, and it was 158.

    The bill I got today – same property, same number of people – was for 406.

    Either McKeeva has failed to stop CUC profiteering from us, or else he has caused the increase in costs. One way or the other Mr Premier, this is down to you.

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  8. CUC is a publicly traded company, which means they are in the business of making profit. Of course bills are going to go up while you have stock holders to please. This is what happens when you allow an industry that the nation depends on to be a for profit company AND allow to be a MONOPOLY.
    Did Bush forget that he also helped pass a bill capping the amount of money a person could get for putting Solar energy back into the grid to assure that CUC could still profit?
    For example… lets say the price of energy continues to go up… the cap on solar going back onto the grid is what 37 cents? So you put all of your energy back into the system, your total consumption for the month is net zero, but the price per unit suddenly goes up to 40 cents… that means you used no more energy than you put back into the grid… BUT you still have to PAY IN, because there is now a cap on what you can get paid for your energy. (I know you dont have to choose to opt in to putting / selling your power to the system). This ensures that a for profit company still makes money solely based on a government passed policy.
    How can he suddenly take a stance that the gov has nothing to do with power prices?!
    The one thing this Government seems to strive at is deflection. It would be nice for once it seemed like somebody if anybody wasnt trying to pull the wool over everyones eyes.

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  9. Here is the cost per KWH I have paid for the last 6 years.
    Aug 06 27.8 cents
    Aug 07 25.9
    Aug 08 31.3
    Aug 09 24.0
    Aug 10 27.6
    Aug 11 35.1 this is a 27% increase on the previous year and 46% higher than the year before (2009).

    USA crude oil prices almost doubled from January to August 2009. From 33.07 per barrel to 62.80

    Over the last 6 years there have been mostly increases but some decreases.

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  10. To reduce fuel cost on electricity bills requires alternative energy. Europe, Germany in particular and now the USA have made this a national issue. While the rest of the world progresses towards less of a dependancy on fuel, we continue to see it as a main source of Government revenue. If we remove the government tax on fuel, the cost will still go up in time as fuel companies seek to earn that 0.75 per gallon that the Government is currently earning. So why not take the 0.75 and invest it in alternative energy plants, solar, wind and OTEC.
    Solar: build covers over parking lots, install solar panels on the roofs of the covered lots and buildings and connect them to the grid. this eliminates the need for capital cost for
    land. These covers need not be extravacant, simplify them ensuring that they can bear the weight of the panels. This will immediately provide jobs and increase local consumption resulting in an increase in Government revenue.
    Wind: relocate the EU funded doplar station to the Brac and ask McAlpine to resume with the instillation of the wind turbines they proposed about a year ago. The two cannot operate within close proximity to each other.
    OTEC: a group of Government officials, as a result of a invitation I organized several years ago, visited Baltimore (2006/07 i think) and Sea Solar Power was willing to fund the
    instillation of a 10MW plant here. Go back to them. They also offered scholarships for Caymanians and the marketing of cayman as the test site.
    We should be seeking, over a reasonable time period, to reduce our dependancy on fossil fuels. All forms of alternative energy has higher cost to implement, however, the removal of fossil fuels will bennifit the consumer.

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  11. The ruling party is in denial as usual. They never seem to feel the true pulse of the citizens on any issue. If this government truly cared about it’s citizens they would have been working on a Solar Energy Solution long ago but it seems to me that they are to busy mixing policy with politics and all that does is catch up to you sooner then later and it has. Crime? Blame shift to someone else. They stumble and trip and get up, brush themselves off and move on as if nothing happened. If it has, blame it on someone else.

    There seems to be no deep thinkers in the ruling party.
    Mistakes are easy to make and many have been made but not implementing a solar energy policy is the worst. I feel bad about this.I hope they rectify it.

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  12. Read my post on 10/14/2011 where government denies responsibility for the high CUC fees. I made mention to you that government was getting their piece of the CUC pie in fees. Was I right or wrong?

    The CUC high bills is serving the same purpose as the milllions of x-pats expensive work permits.

    RAKING IN MILLIONS OF DOLLARS FOR GOVERNMENT IN REVENUE ON THE BACKS OF ‘ THE POOR WORKING CLASS

    Its time to camp out in front of the LA Cayman’s Wall Street need to get the message that we are sick and tired. the us and All around the world people are protesting against CORRUPTION IN GOVERNMENT
    Cayman needs to do the same.

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