Who really profits from the sale of electricity in the Cayman Islands?
Keep that question in mind for now, while we consider the sound and fury reverberating through our local airwaves and websites this week.
The subject of the public’s ire: Reports that electricity had been cut off to “hundreds” of Cayman Islands households and businesses, with more than 640 living in the dark, so to speak, for three months or longer.
The target of their wrath: Grand Cayman’s sole energy provider Caribbean Utilities Company.
It appears that in this instance — because of ignorance, bias (utility companies have never been on anyone’s “most loved list”), or misinformation — their anger has been misguided, both in terms of its source and its object.
Here are the facts: Yes, according to the Electricity Regulatory Authority, as of Nov. 24 there were 641 “non-voluntary disconnections” — meaning, customers whose electricity had been disconnected by CUC for “non-payment, safety or other reasons.”
That’s a wide net to cast, one that captures people who genuinely couldn’t pay the light bill, but also many other households, businesses and, for that matter, vacant units.
The truth is, no one knows how many people in Cayman are living without electricity because of poverty. Certainly not 640 families; but clearly there are many — and many more who just manage to scrape by from month to month.
Precise numbers aside, however, one entity that should not be blamed for these “non-voluntary disconnections” is CUC — which can, should and must be able to exercise the ability to refuse to provide service to customers who aren’t paying for it.
Although in our experience CUC is generally quite flexible and responsive to people who are experiencing cash-flow issues, the responsibility for keeping a family’s ceiling fan and refrigerator running does not fall at the feet of Cayman’s private energy provider. On an individual basis, CUC’s cutting off a household’s power should trigger an immediate response from the government’s social services agencies, who probably should have already stepped in to assess the situation to determine whether or not assistance is called for.
But that is a limited short-term fix, not a comprehensive long-term solution.
It’s not just the unknown scores of people in darkened households who feel the burden of electricity bills — it’s every man, woman and child on this island.
The most efficient and effective way to reduce energy costs in Cayman, today, is not for people to harangue CUC, but for the government to abolish the 75 cents per gallon tax on diesel fuel imports, nearly all of which is consumed by CUC’s power plant. Doing away with the diesel duty would, according to government’s figures, reduce the average household’s monthly power bill by about 13 percent.
We’ll note that, in January, the government will take almost a half-step in that direction, reducing the 75-cent tax to 50 cents per gallon. It’s a good start, and one that will instantly put cash back in people’s pockets and potentially decrease the cost of retail goods, but it doesn’t go far enough.
But let us return to the question we posed at the beginning of this editorial: Who really profits from the sale of electricity in the Cayman Islands?
The answer is twofold.
First, CUC and its shareholders do. After all, it is a profit-making entity. According to the company’s annual report, in 2013 CUC realized earnings of $20.4 million, an increase over the $17.7 million reported for 2012.
That’s not small change. But it’s less than the roughly $25 million that (guess who?) the Cayman Islands government collects each year in diesel tax revenue, under the rate of 75 cents per gallon.
Finance Minister Marco Archer estimated that the upcoming diesel tax cut will “cost” the government some $4 million (over the six month budget period from January through June), leaving it with $20 million or so in revenue from diesel imports.
A final question: Who do you think would put that $20 million to better use — the sprawling bureaucratic apparatus of the Cayman Islands government, or ordinary people who gulp when the monthly CUC bill arrives? (That is, of course, all of us.)