The Caribbean Utilities Company rate increase will put an additional US$1.2 million per year into the electric company’s coffers, spurring the utility to defend itself against critics and consumers.
The company says the 1.8 per cent rise in its base rate, from 10.46 cents per kilowatt hour to 10.65 cents, will ensure it remains “financially viable”, able to attract sufficient capital to operate a modern electrical network and deliver a reliable service.
Critics are less sure, suggesting the company is less interested in consumers than in boosting profits, pointing to a stalled pursuit of renewable energy, increased costs to customers and a lack of transparency.
Jim Knapp, owner of alternative energy company Endless Energy (Cayman) Ltd., points out that electricity prices are not based on consumer needs, but are indexed to the cost of living, the value of company assets and such regulatory costs as licence fees.
“Rates are not indicative of what people pay, but what CUC makes – and the costs are passed through,” he says. “They are guaranteed a percentage, guaranteed profitability so they can increase their value. CUC equates ‘rate base’ with our cost of electricity. We, who pay the bills, know that we’re paying much more including fuel charges, duty on that fuel charged by government and a guaranteed profit margin.
“CUC shows us how to conserve power but there is no need for CUC to be efficient in their delivery of electricity to us because all charges are passed through to us – the consumers,” Mr.Knapp says.
The company last boosted its base rate on 1 June, 2012, in accordance with its mandated annual review, raising prices 0.7 per cent, from 10.39 cents per KwH to 10.46 cents.
CUC spokeswoman Pat Bynoe-Clarke last week described Wednesday’s rate rise as “marginal”, acknowledging, however, that it came “at a time when there is a global economic downturn.”
However, she said, “the company must ensure that it can meet its obligations to continue to provide a safe and reliable service to all of its customers in the longer term.
“The terms of the new licence ensure that rates are adjusted annually in accordance with a formula, thereby avoiding more significant catch-up increments, which consumers are less likely to be able to adjust to.”
Two weeks ago, the company submitted its annual five-year investment programme, including boosted capacity for public lighting.
While the CUC’s oversight body, the Electricity Regulatory Authority, knocked back some of the public lighting proposals, Managing Director Louis Boucher said customers are likely to see creation of a “smart grid”, a system of sensors, computers, and wireless interfaces that distribute electricity more efficiently and reliably.
The US has 20 million smart meters installed as of 2012, supporting incorporation of such renewable energy sources as wind and solar, managing demand loads from electric cars and reducing emissions.
In 2011, says Ms Bynoe-Clarke, CUC invested US$39.6 million, and another US$30.8 million in 2012, saying the expenditures “are necessary to replace, upgrade and expand on existing infrastructure.”
Mr. Knapp remained sceptical: “We pay for that. I don’t believe the company is reinvesting as much of their profits in ‘infrastructure replacements, upgrades or improvements’ such as smart grid technology as they claim. I believe if you look closely, you’ll probably find that they include their own labour costs; fuel and transportation costs and general maintenance in those numbers. If it’s not, then I don’t believe in their cooked numbers – period.”
Also last year, in an effort to mitigate the effects of high electricity prices, former Premier McKeeva Bush estimated 1,500 local families would qualify under a UK-sponsored programme to supply solar panels to those most in need, enabling them to come off the CUC grid because they could not afford the rates.
While insufficient funding ultimately doomed the programme, a number of families remain in extremity. At 5 April, the Department of Children and Family Services paid electricity bills for 107 families. Throughout 2012, the department paid the bills of 363 families.
CUC offered former Electricity Regulatory Authority Managing Director Joey Ebanks a deal whereby the company would support those families most in need if Mr. Ebanks dropped his demand that CUC turn to net metering to ease utility costs.
Net metering, employed internationally, enables small power producers such as homeowners or businesses with solar panels, for example, to sell unconsumed power back to the national grid, gaining credit for the contributions by making electric metres run in reverse.
“This was in a conversation between [CUC president and CEO] Richard Hew and I,” Mr. Ebanks told the Caymanian Compass. “There was a follow-up email between he and I – [and] also one between ‘Mac’ [Mr. Bush], Cline Glidden and me about it.
“We estimate that there are some 1,500 people in need of assistance to pay their CUC bill every month. That’s seniors, single moms and some families with two parents working (poor),” he said.
Mr. Glidden, former West Bay MLA, and ERA councilor, confirmed the story, saying government had sought seeking reduced energy costs, “and I said we’d provide panels installed for community use and homeowners would get the benefits, encouraging and incentivising the use of renewables.”
In April last year, the LA unanimously passed Mr. Glidden’s private-members motion demanding implementation of international net metering standards and elimination of utility-imposed restrictions on the use of renewable energy systems, pointing toward the cost of electricity as a “significant component of the high cost of living”, which was “placing unbearable hardships” on both citizens and businesses.