Regulators believe they are making progress in bringing down consumer costs for fuel, water and electricity.
OfReg, which is also the consumer watchdog for utilities, just completed the first phase of a fuel market assessment which could eventually lead to price controls at the pump.
Consumer affairs manager Daniel Lee believes the measures the regulator has already taken have started to shift the needle on prices.
OfReg reviews data, including import costs, that determine the price motorists pay at the gas station. It publishes retail prices on its website and benchmarks them regionally.
Cayman drivers currently pay $3.90 a gallon for regular unleaded fuel. While this is significantly more than the US price of $1.98 a gallon, Lee says it is consistent with costs across the region.
“Although we do not have a price control mechanism in place at this time, prices paid by consumers in the Cayman Islands are usually in the median range of prices in comparative jurisdictions,” he said.
He believes pump prices would be higher in Cayman if it were not for OfReg’s monitoring.
“Efforts taken by OfReg to increase the scrutiny of costs which influence pump prices have resulted in prices remaining relatively stable following the height of the lockdown in the Cayman Islands,” Lee said. “These efforts will be further strengthened with the implementation of recommended measures which will be informed by the fuel market assessment.”
The price of fuel has been a common source of complaint from consumers in Cayman. The issue reached a tipping point in early 2016 when protesters took to the streets after the price hit $5-a-gallon.
Electricity and water
Lee said OfReg had also made inroads in controlling electricity and water costs.
“OfReg has been successful in keeping electricity rates as low as reasonably possible,” he said. “CUC is no longer guaranteed a 15% return on assets; the new licensing regime has significantly reduced CUC’s rate of return to reasonable levels.”
He said the power company’s capital plans were also reviewed by the regulator to ensure they did not unnecessarily add to the consumer cost of electricity. Allowing CUC to enter into fuel-hedging contracts has also helped protect against potential spikes in global oil prices, Lee added.
The regulator is still going through the consultation process on a Renewable Energy Auction Scheme.
Once that process is complete, Lee said OfReg believes this framework will provide the most efficient procurement mechanism to ensure the adoption of renewable energy brings down electricity costs.
He said OfReg regularly reviews fuel and other pass-through charges for the electricity and water sectors as part of its statutory role to ensure utilities are fairly priced.
The regulator also conducts periodic investigations and is currently involved in a cost-of-service study to determine if the rates charged by Water Authority-Cayman are appropriate to its cost of doing business.”