OUR to determine JPS rate increase by August
JPS will be installing 100,000 smart meters islandwide in 2018. Photo via jpsco.com
The Jamaica Public Service Company (JPS) is proposing a two per cent average increase in the non-fuel bill component, assuming there will be no change in current fuel prices.
JPS’s submission, which was received on May 3, includes a request for an Extraordinary Rate Review in relation to debt refinancing.
If the proposal is accepted by the Office of Utilities Regulation (OUR), the increase will have a total average bill impact (including Fuel and IPP charges) of approximately one per cent increase for customers.
However, the OUR will have to undertake its own analysis and verification to determine whether or not the actual adjustments are to be approved.
In a press release on Monday, the OUR said it will make a decision on JPS’ 2018 Annual Review of its rates by Thursday, August 2.
While the time allowed for the Annual Review is 60 days, owing to the extraordinary component in the application, the OUR has sought and received JPS’s agreement for a 90- day review period which will result in the issuing of the OUR’s Determination on August 2.
With respect to JPS’s Extraordinary Rate Review application, the company is proposing to refinance US$179.1M ($22,925M) of its existing long term debt that is based on an interest rate of 11 per cent per annum, with an equivalent quantum of debt at approximately eight per cent per annum.
JPS states that this refinancing would translate into savings of US$5.37M ($687M) per annum for the remaining three years of the life of the bond or US$16.11M ($2,062M) in total.
JPS is also proposing a Z-factor adjustment for accelerated depreciation and separation costs, which it anticipates will result from the pending decommissioning of the old base load plants at the Old Harbour and Hunts Bay locations. The proposed accelerated depreciation and separation costs, which are to be recovered over a year period, is US$1.89M ($242M).
This is the third annual review that is being sought under the new Electricity Licence, 2016. In addition to annual reviews, the licence also makes provision for the conduct of extraordinary rate reviews owing to exceptional circumstances that have a significant impact on the electricity sector and/or JPS.