Consumers are likely to face higher electricity bills starting this month after Caribbean Utilities Company raised its base rates by 6.6%.
The rate adjustment will result in a total monthly bill increase of approximately $5.26 for a residential customer who uses 500 kilowatt hours (kWh) per month, CUC said in a press release.
The average residential customer in Cayman uses approximately double that amount – about 1,000 kWh – per month.
The base rate adjustment was initially approved by utility regulator OfReg last year and scheduled to take effect on 1 June 2020.
However, due to the COVID-19 pandemic, the rate hike was deferred until 1 Jan. 2021 and will be reflected in February’s bills.
The regulator has approved CUC to recover the lost revenues from the seven-month deferral over the next two years, until the end of 2022.
Using the $5.26 example cited by CUC, the portion representing the 6.6% base rate adjustment is $3.96 and the COVID-19 recovery cost is $1.30. The base rate increase does not impact the fuel-cost charge.
The applicable kWh rate customers will see on their bills is increased from $0.1087 to $0.1159. The monthly facilities charges rise by $0.36 to $5.82.
At the same time, CUC and OfReg have agreed to reduce the current Licence and Regulatory Charge per kWh rate by 59%, from $0.0125 to $0.0051.
Electricity rates are set according to a Rate Cap Adjustment Mechanism that is part of CUC’s transmission and distribution licence.
This formula incorporates independently reported consumer price indices in Cayman and the US that exclude food and fuel prices to determine the prevailing level of inflation.
“During the height of the COVID-19 pandemic, we made the submission to the regulator to delay the rate increase which was due to take effect on June 1, 2020,” CUC president and CEO Richard Hew said in the press release.
“We were well aware of the hardships facing many of our customers at the time. However, it is now critical for the company to recoup these costs in order to maintain the financial stability of the company as well as continue to meet the company’s ongoing obligations to invest in infrastructure and provide a safe, reliable and sustainable electricity service.”
Hew said CUC’s financial health played an important role in keeping electricity rates as low as reasonably possible in subsequent annual rate adjustments.
He noted that in 2019, the company spent US$60.6 million to expand and update infrastructure.
The electricity provider said during the past two years residential rates per kWh had declined by 10% from $0.2391 in January 2019 to $0.2149 in January 2021. This was mainly the result of declining fuel prices and a lower fuel charge for diesel-generated electricity.
Over the same period, CUC said it had invested $144 million in capital infrastructure.