Electricity bills will continue at their lower-than-normal rate for the remainder of the year.
Power company, Caribbean Utilities Company (CUC) and OfReg, the energy and utilities regulator, have reached agreement on keeping electricity rates at their current reduced level.
Under its licence CUC was allowed to increase its base rates by 6.6% from June 1st but that has been deferred due to the economic circumstances caused by the COVID-19 pandemic.
CUC said the agreement to defer the rate increase and recovery of related lost revenues until January 2021 means that customers will continue to see low electricity rates through 2020.8.20
Customers will see “only a marginal increase in the energy charge component of their bills for their January 2021 electricity consumption which is billed in early February 202,” the electricity provider said in a press release.
According to CUC, with their July billings (distributed in early August), customers would have experienced a 37% reduction in the Fuel Cost Charge since the beginning of the year.
That represents a $48.60 or 20% monthly bill reduction on the average residential consumption of 1,000 kiloWatt hours (kWh), it explained.
The company said “the COVID-19 shelter-in-place order has had, and continues to have, a significant impact on the Grand Cayman economy and the related decreased energy demand has affected CUC’s financial performance as reflected in the recently released second-quarter financial results.
Electricity sales for Q2 2020 were 4% lower than sales for the same period in 2019.
This impacted CUC’s earnings which were down by 43% or $3.4 million lower when compared to the same period in 2019.
However, CUC says for the six months up to the end of June it invested US$30 million in capital expenditures to ensure the reliability of the electricity distribution network.
President and CEO of CUC, Mr. Richard Hew, said: “CUC is well aware that if effected in accordance with our Licences, an increase of base rates in June may have been difficult for many of our customers to bear, thus the submission to OfReg to delay the implementation date.”
Mr Hew also said that CUC’s ability to absorb lost revenues while facing increasing costs speaks to the financial stability of the Company at the outset of this pandemic.
However, he noted that “the ability to recover revenues in the future is necessary to maintain that financial stability and to meet the Company’s ongoing obligations to invest in infrastructure and provide a safe, reliable and sustainable electricity service.”
CUC said will continue to assist customers with reducing their bills through energy conservation and by offering extended payment plan options to those in need until the end of next month.
Meanwhile, OfReg has said that while the June 1, 2020 rate adjustment of 6.6% is allowed under CUC’s licence, consideration was given to assist customers experiencing financial hardships from the economic effects of COVID-19.
It said it was for those reasons that it agreed with CUC to defer the increase in rates until January 2021.
OfReg also said that it “does not take lightly its decision to authorise CUC to raise its base rates but we are bound by law and CUC’s T&D Licence to issue a decision now.”
The regulator added that “the impact will be softened by deferring the increase until January 2021 and customers will see a marginal increase only in the energy portion of their electricity bill come February 2021.”
According to OfReg, the average residential consumer who consumes 1000 kWh/month should expect to see an average increase of CI$2.10 on their monthly bills effective January 2021 as a result of the deferral.
This may vary slightly depending on any reduction in the base rate increase recovery through the end of the year.