Cayman’s Leader of the Opposition want answers about the decision to allow increased electricity prices.
People’s Progressive Movement leader Joey Hew said the central question was what options had been explored before regulator OfReg, also known as URCO, gave the Caribbean Utilities Company the go-head for price hikes as families struggled with the cost of living.
“If scheduled CUC base-rate increases were deferred in 2020 and again in 2022 to provide consumers with temporary relief during periods of economic hardship, why was a similar approach not pursued in 2026?” Hew asked.
He said his previous ministerial experience had given him clear insights into the power industry and its regulation, as well as the National Energy Policy.
“They were also informed by what I see every day; the growing pressure that rising costs place on my constituents and people and small businesses across our islands,” he said.
Hew highlighted that the COVID-19 pandemic meant a scheduled increase was delayed for seven months and a 2022 hike was deferred as households battled a double whammy of rising inflation and a jump in fuel costs.
URCO has said CUC’s transmission and distribution licence, granted in 2008, included a legally binding rate cap and adjustment mechanism.
The licence included an automatic formula for annual base rate adjustments based on movements in inflation, calculated through a mix of the Cayman and US Consumer Price Indexes, excluding food and fuel.
URCO said, “It was negotiated and agreed between the government of the day and CUC, and has been applied every year since the licence came into force.”
Long-standing contract
The regulator added that “the framework that produces these annual adjustments is not something devised by the current administration or by URCO. It is a long‑standing contractual arrangement, embedded in a licence granted almost two decades ago”.
But Hew said the precedents for deferral of increases showed that the issue is not about whether the licence should be disregarded.
“The issue is whether there was scope within the existing framework to seek a temporary delay during a period of significant financial pressure,” he said, adding that Cayman deserved answers to questions on whether a deferral similar to those given in 2020 and 2022 had been discussed and, if so, what the outcome was.
He said people also wanted to know when the government was informed of the proposed increases and what action had been taken to protect consumers.
“These are legitimate public policy questions,” Hew said. “While URCO can explain the regulatory process, the questions concerning what the government knew, considered and did are principally questions for the government to answer.”
He said, “The Opposition recognises that CUC has rights under its licence and that URCO has statutory responsibilities. We also know that there are documented precedents for providing consumers with temporary relief by deferring scheduled increases.”
Increases announced earlier in July
CUC announced earlier this month that, based on last year’s power consumption of 1,158 kilowatt hours (kWh) a month for the average residential customer, bills sent out in July will be $50.36 higher.
The increase is made up of $3.27 in CUC energy and facility charges and $1.06 in licence and regulatory fees, as well as an increase of $63.46 to cover a jump in the cost of fuel.
But CUC said the government’s fuel cost relief programme would knock $17.43 off the increase.
General commercial users will see a $38.45 monthly facilities charge and an energy charge per kWh of $0.1550.
The cost of power for large commercial customers will be $201.64 per customer account in facilities charges and an energy charge per kWh of $0.0448.
Big commercial consumers will also pay a monthly demand charge of $10.74 per kWh and an additional capacity charge of $25.97 per kWh.
The licence and regulatory fee will go up to $0.0076 per kWh for consumption over 1,000 kWh.
Related Videos
