OUR Makes Decisions on JPS 2019-2024 Tariff Application

OUR release

(KINGSTON, Jamaica; 2021 January 29): The Office of Utilities Regulation (OUR) has issued its decision on the Jamaica Public Service Company Limited’s (JPS’) 2019-2024 Tariff Application, which is the first five-year review to be undertaken under the revenue cap regulatory regime.  

The OUR’s decisions, captured in its Determination Notice dated 2020 December 24, shows an average overall decrease of 3.2% in electricity rates based on the estimated Independent Power Purchase (IPP) costs presented in the Tariff Application. However, the application of the current actual IPP costs as indicated in an Addendum to the Determination Notice dated 2021 January 29, shows an overall increase of approximately 0.8%.  With this marginal increase, customers will see significant variation in actual rate changes within and across customer classes, depending on such factors as the customer’s consumption pattern and demand profile. The OUR approved rates, as shown in the Table below, became effective 2020 December 28 and is expected to be reflected in bills payable in 2021 February for consumption in 2021 January. 

The OUR Approved Average Rates by Customer Categories:

(Adjusted for Inflation and Exchange Rate Movements)

The revenue cap regulatory regime which was introduced in the Electricity Licence, 2016, allows for, among other things, the funding of initiatives, which are proposed in JPS’ forward -looking Five (5) Year Business Plan, while seeking to ensure that the company’s customers are not overcharged for the services used.

The rate review exercise and the OUR’s decision, which were due in 2019, did not take place because JPS’ 2019 July application was deemed to be deficient, to the extent that it would not have allowed for a complete evaluation of the application. 

Therefore, the adjustments that would have been due in 2019, including those for inflation and exchange rate movement, are reflected in the OUR’s decisions.  

Among the components considered in the review of JPS’ tariff application were: JPS’ revenue requirement for the 2019 – 2024 review period, efficiency (heat rate) targets for JPS’ thermal plants, system losses targets, Quality of Service Standards, the 2019 Annual Non-Fuel 

Revenue Adjustment against preset targets, and overall bill impact per rate category. The OUR also took into account the views and submissions from stakeholders, including those who participated in the public consultations and/or submitted written comments, and the issues raised by JPS in its response to the draft Determination Notice.

JPS’ detailed application included several proposals, with the company seeking approval for an annual average revenue requirement of J$62.1 billion over the five-year period. The OUR approved an annual average revenue requirement of just over J$58 billion. 

The OUR, in recognizing the impact of the Covid pandemic, also analyzed JPS’ pre-COVID pandemic demand forecast and gave due recognition to the impact of the pandemic on the demand trajectory. Given the uncertainties associated with forecasting demand in light of the Covid-19 pandemic, the OUR intends to revisit the demand forecast in the 2021 Annual Review with a view to fine-tuning the projections as deemed necessary.

OUR's full release is available here.