JPS Bills Likely to Increase in July
The likelihood that Jamaica Public Service (JPS) customers will have to dig a little deeper to pay their electricity bills beginning in July appears to be quite strong.
The Office of Utilities Regulation (OUR) recently revealed that it has approved the company’s extraordinary rate review application.
According to a release from the OUR, JPS claims that the shortening of its asset lives has resulted in asset impairment expenses and increased depreciation costs which will amount to US$28.5 million over the period 2016-2028.
The OUR also revealed that it had concluded that the power company should recover losses for 2016, as requested in the immediate application, via the Z-Factor mechanism.
According to the OUR, the decisions will not result in any adjustment to customers’ bills at this time. However, the impact on consumers’ bills could be felt in July following the annual Rate Review application. This is because the OUR has assessed JPS’ claim and has determined that it should recover the $13.4 M through the Z-Factor mechanism in the revenue cap formula starting 2017 July 1, when the OUR’s decision on JPS’ Annual Review application will take effect.
The OUR also provided some details regarding the Z-Factor mechanism stating:
The Z-Factor mechanism allows for adjustments to JPS’ electricity rates outside the scheduled Five-year Rate Review to facilitate the recovery of expenses that:
a) Materially affect the company’s costs;
b) Are not due to managerial decisions;
c) Amount to more than J$50M; and
d) Are not included in the existing tariff mechanism.
JPS’ Electricity Licence, 2016 makes provision for alterations to the tariff using the Z-Factor mechanism within the framework of the annual rate adjustment exercise.
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