The Caribbean Utilities Company announced on Wednesday it would credit consumers with the proceeds of an October insurance settlement, reducing January bills by 2 percent.
In October, the utility, Grand Cayman’s monopoly provider of electricity, received nearly $1 million in a Lloyd’s of London payout for 2011 generating unit problems that forced the company to import less-efficient engines while repairing the damaged units.
“These smaller and less efficient generators utilize more fuel than CUC’s installed generators, thereby resulting in additional fuel costs being charged to consumers over that period,” the company said in a press statement.
“After an extended period of negotiation,” the release said, Lloyd’s of London, though local brokers Aon, “agreed to reimburse the company for additional fuel costs … which will result in a reduction to the January 2014 Fuel Cost Charge to electricity consumers.”
The $950,000 settlement, said CUC spokeswoman Pat Bynoe-Clarke, “was reached in late October and the funds were received in November. The funds were then applied against CUC’s November Fuel Cost Charge calculations which were submitted to the [Electricity Regulatory Authority] for approval in mid-December.”
According to the statement, the move means January fuel costs charges will drop from 22 cents per kilowatt hour to 21.4 cents per kilowatt hour.
“All other things being equal, this lower fuel cost charge will represent a reduction of approximately 2 percent on consumer bills for the month of January 2014,” the release said.
Noting that 2 percent is only a modest decrease, Electricity Regulatory Authority managing director Charles Farrington nonetheless said the move demonstrated the ERA’s regulatory effectiveness, “working to reduce consumers’ costs as envisaged when the current framework was introduced in 2008.”
“On behalf of electricity consumers, we are very pleased that CUC was able to claim this fuel refund from their insurer and look forward to seeing the benefit in January’s electricity bills,” he said.
Mr. Farrington meanwhile moved to correct a misunderstanding in a Tuesday report about Friday’s deadline for statements of qualifications by companies seeking to replace three ageing CUC generators in 2016.
The utility, he said, would not charge consumers for the cost of either its formal bid or construction of new facilities, but, instead, simply include those costs on CUC’s list of assets.