(CMR) Caribbean Utilities Company (CUC) has announced that there will be a base rate increase of 6.6% effective for bills from January 1, 2021.
“Commencing from the January 2021 electricity consumption cycle, which is billed to customers in early February 2021, customers can expect to see a marginal increase in the energy charge component of their bills compared to the rates seen in 2020,” the Company said in a release on Wednesday.
The base rate adjustment of 6.6% was initially approved and scheduled to go into effect on June 1, 2020; however, due to the COVID-19 pandemic, the Company and the Cayman Islands Utility Regulation and Competition Office (OfReg) agreed to defer the rate increase and the collection of the incremental 6.6% revenue until January 1, 2021.
President and CEO of CUC, Richard Hew, said, “During the height of the COVID-19 pandemic, we made the submission to the regulator to delay the rate increase which was due to take effect on June 1, 2020. We were well aware of the hardships facing many of our customers at the time. However, it is now critical for the Company to recoup these costs in order to maintain the financial stability of the Company as well as continue to meet the Company’s ongoing obligations to invest in infrastructure and provide a safe, reliable and sustainable electricity service.”
Hew explained that CUC’s financial health plays an important role in keeping electricity rates as low as reasonably possible in subsequent annual rate adjustments.
According to CUC, the Base Rate adjustment will result in a total monthly bill increase of approximately $5.26 for the residential customer who uses approximately 500 kilowatt-hours (kWh) per month. This means that the 6.6 % base rate adjustment is $3.96, and the COVID-19 recovery cost is $1.30.
The Base Rate increase does not impact the Fuel Cost Charge, the company said.
The recovery of related lost revenues from June 2020 through December 2020, and other approved direct COVID-19 related costs, will be recovered within two years from January 1, 2021, to December 31, 2022, the Company said.
CUC and OfReg have also agreed to reduce the current Licence and Regulatory Charge per kWh rate by 59% from $0.0125 to $0.0051.
An informational insert detailing how these changes will affect the various Consumer Classes will be included in CUC’s billings that will be mailed in early February 2021.
The base rate increase is in accordance with the Rate Cap Adjustment Mechanism (“RCAM”) contained in the Company’s Transmission & Distribution (T&D) Licence issued by the Cayman Islands Government in April 2008.
In addition to deferring the increase, CUC said it also ceased disconnections and waived payments during the height of the COVID-19 pandemic and has continued to assist customers struggling to pay their bills by offering extended payment plans and pre-payment options.