Cayman’s electricity industry regulator has signalled a plan to change how charges are set and adjusted by Sister Islands’ utility Island Energy to make them clearer for consumers.
The Utility Regulation and Competition Office, also known as URCO or OfReg, is in public consultation to gauge opinion on the proposed changes to the company’s transmission and distribution licence, which it says will also make it easier for Island Energy to invest in renewable energy sources.
URCO said, “The proposed amendments are intended to strengthen consumer protection in electricity services for Cayman Brac and Little Cayman.
“The draft determination establishes clear rules how electricity charges are set and adjusted, providing consumers with greater transparency and predictability, while ensuring the licensee can maintain reliable service delivery and improve efficiencies in energy production.”
URCO added, “Importantly, the proposed regulatory framework will provide Island Energy Limited with the clarity needed to move forward with planned investments in renewable energy infrastructure.
“By establishing a transparent and sustainable rate-setting mechanism, URCO aims to facilitate the transition toward cleaner energy sources while protecting consumers from unpredictable price fluctuations.”
Changes welcomed
Simon Watson, the vice-president for business operations at Dart, the parent company of Island Energy, formerly Cayman Brac Power and Light, said the firm “welcomes the proposals to amend our current licence in conjunction with the Utility Regulation and Competition Office”.
He added, “Providing a clear billing mechanism for our customers has been a key aim of the company following the acquisition of Cayman Brac Power and Light’s assets in 2023 and is supported by the recently introduced email billing and future smart meter initiatives.
“We look forward to a productive consultation period, as we are eager to further invest in our infrastructure and to introduce renewable energy generation to the Sister Islands.”
Proposed changes include alterations to the rate cap and adjustment mechanism, RCAM, which would mean annual rate adjustments would need URCO approval if required and link them to inflation and productivity.
The RCAM change would also include “safeguards based on the licensee’s allowed return on rate base”.
Base rates would be defined and restructured to exclude fuel costs and government or regulatory charges, which would be shown as separate items, improving transparency for customers.
URCO said, “Customers will be able exactly what portion of their bill reflects the cost of electricity delivery versus pass-through costs beyond the utility’s control.”
More reporting rules
Stricter reporting obligations were also proposed, including quarterly operational reporting and cost-of-service studies, alongside a five-year review of RCAM and rate design.
URCO said, “These measures strengthen URCO’s ability to monitor the utility’s performance and protect consumer interests through evidence-based regulation.”
A spokesperson for Caribbean Utilities Company, which supplies electricity in Grand Cayman, said, “We have only recently received the draft determination which we will be reviewing.
“It appears that CUC’s transmission and distribution licence, which can be found on CUC’s website, includes many of the subjects outlined in the URCO press release.”
The consultation period, which opened at the start of the month, will run until 5pm on 16 Feb.
The draft determination and supporting documents are available on URCO’s website.
Editor’s Note: The Cayman Compass is a subsidiary of Dart Media and Entertainment.
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