Residential water rates have been dropping along with energy costs, with energy charges on water bills from both the Water Authority and Cayman Water reduced by 30 percent over the past year.
Cayman Water customers’ bills also were lowered by almost 4.5 percent after the company adjusted its rates at the beginning of the year based on a formula defined under an agreement with the Water Authority. The Water Authority has not changed its rate since 2012, though the public utility’s base rate is about $2 lower than that of Cayman Water.
The energy adjustment factor, an additional charge to water rates, varies monthly with the cost of power. With plunging global oil prices and lower rates for diesel imports, combined with new tax breaks for the Caribbean Utilities Company, lower electricity bills translate to lower bills for water from the island’s power-intensive desalination plants.
Gregory McTaggart, vice president of local operations for Cayman Water, said the energy factor also serves as a cap on how much his company can add to bills to recoup electricity costs. In an email, he noted that this is “an efficiency factor that caps the specific amount of electricity the company can use to produce a gallon of water. If the company exceeds this efficiency factor, it cannot collect back this excess from its customers.”
Cayman Water, which services West Bay and along Seven Mile Beach, has seen its energy surcharge drop from $4.02 per 1,000 U.S. gallons in January 2015 to $2.82 last month.
At the Water Authority, the public utility providing water service for the rest of the island, the surcharge was lowered from about $3.93 to $2.67 per 1,000 gallons over the past year.
The energy adjustments change month to month, but rates are reviewed annually. Cayman Water cut its rates by about 4.4 percent in January to $18.63 per 1,000 U.S. gallons. The Water Authority’s rate of $16.58 has been the same since 2012.
Water Authority communications officer Hannah Reid, responding to questions by email, wrote, “Had the Authority adjusted its rates in 2013, 2014 or 2015, customers would have seen increased rates and the base rates would be 1.69 percent higher than they are currently.
“The Water Authority Board decided to forgo these rate adjustments in view of the fact that a different method for rate adjustment based on the Rate Cap Adjustment Mechanism may be introduced shortly.”
That new rate-setting formula is similar to the way CUC sets power rates based on the consumer price index. The new rate proposal has proven to be a point of contention between the Water Authority and Cayman Water, and negotiations continue.
Mr. McTaggart said, “We are unsure how the rates will change in the future because of the ongoing negotiations we are engaged in with [the Water Authority] for a new license and the fact that WAC is mandating a new rate adjustment mechanism similar to CUC’s.”