JPS proposes massive residential rate increase!

As some of you may already know, JPS has made an application to the OUR for an increase in its non-fuel tariff rates. This was done in accordance with their exclusive all-island electricity licence, which stipulates that JPS must submit a filing with the OUR to obtain new rates at the end of every five year period. The licence also allows for a monthly adjustment due to foreign exchange changes and an annual adjustment to cater for inflation.

Data obtain from the MSTEM showed that over the last period 2009 to 2013, JPS has increased its rates on average by 15% annually for each class of customer, as shown in the chart above. In its recent submission for the period2014-19, while acknowledging that Jamaica and by extension its customers are experiencing an economic contraction, JPS proposes a massive 21% increase in the average residential customers electricity bill. The average commercial customer will also see an increase of 15%, while the average industrial customer will see a small 1.5% reduction.

Be that as it may, the proposed 21% hike in residential electricity bill has definitely sparked my interest. It did so to the point that I decided to take a quick glance through their application document (feel free to take a look). As a result, I decided to present some of information that I think will give you’ll a heads up on what your bill might look like if the OUR approves the proposal as is (and for simplicity I focused only on the residential class, since that affects all of us).

The following table shows the proposed rates in addition to the current ones in US dollars ($1 US = $112 JM). Note that the residential customer class is divided into three tiers, as shown in the left column.

table1

A a network access charge is now being proposed to replace the customer charge. This change brings with it a hefty increase, up to 372%. Is this ridiculous or not?

The next table shows the percentage increase to be expected on average per tier. It also showed that the average consumption per tier is 54, 196 and 927 kWh (this is the unit used to measure you electricity usage) and the monthly expected increase is 17, 21 and 23% respectively. So that’s where the 21% stated above and in the print media came from.

To put this into prospective, say for example that you are the average customer in the second tier (100-500kWh) with monthly energy consumption of 196kWh, you current bill would be $7,891.00 per month. However, after the increase you new bill would be $9,567.00 per month. This plus the bill impact of the other tiers are shown in the following table:

table3

The document is a detailed and lengthy one and though I did not get the time to digest the content in its entirety, I can’t help but feeling that JPS is shifting too much of the burden unto the residential and small commercial customers while at the same time lowering the cost to large commercial and industrial customers. This they say is in a bid to “provide an attractive tariff to the largest industrial customers to encourage economic growth and development for the country.”

However, my gut feeling is telling me that this a trap engendered to keep customers connected to the grid. How? Firstly, the lowering of the tariff for large commercial and industrial customers will be a disincentive to the utilization of the wheeling/net-billing policies, since this will affect the economics gains of these options. And secondly, smaller customers are less likely to afford to go off the grid or put another way the economic gains are negligible.

What are your thought? Feel free to comment below or inbox me via the about page.

Thanks for reading!

CP.

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