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(CNS): Residents across Grand Cayman can expect to see a significant increase in their electricity bills next month when CUC’s base rate hike, deferred from the summer, and the fuel increase, which was also delayed, are rolled out and the power provider starts to recoup the missing earnings since the deferrals. The 5.4% increase to the base rate was calculated and approved by OfReg when inflation was at around 12%, compared to the estimated 9% at present, and comes just as the government’s subsidy on domestic bills comes to an end.
CUC, which just announced a dividend of 70 cents for shareholders for 2022, said the hike had been intended to be effective for consumption from 1 June last year, but with fuel prices through the roof, the regulator approve a postponement. However, OfReg has approved not just the implementation of the hike at the rate calculated early last year but is also allowing CUC to recoup the missing six months.
George Ebanks, the chair of OfReg’s new Consumer Council, told CNS that he has some concerns about the rollout of the increase. “Recent bank loan interest rate increases and other global inflationary pressures make this retroactive CUC rate hike increase one of its largest, if not the largest, ever seen in these islands. It is unjustified and unreasonable,” he said, adding that the council has plans to look closely at long-held public concerns about the cost of electricity.
In a press release announcing the increase to the base rate and deferred costs, CUC said it will increase bills for the average residential customer using 1,000 kilowatt-hours of electricity per month by around CI$5.31. The recovery of the fuel costs from the last three months of 2022 will also be added to the bills throughout the year, adding $0.0075 per kWh used.
President and CEO of CUC, Richard Hew, said that CUC, like most businesses in Grand Cayman and across the world, was facing increasing costs of goods and services. But the company’s anticipated annual results, given the dividend and results as of 30 September, where earnings were already up for CUC on 2021 by 10%, are expected to be favourable. Hew said that while CUC was able to defer increases in its rates to customers over the past six months, “a rate increase is now necessary for CUC to meet its obligations to serve the public safely and reliably”.
As the clock ticks on the government’s National Energy Policy target that calls for 70% of electricity to be generated from renewables within the next 14 years, a goal it looks increasingly unlikely, CUC said it continues to advocate for more utility-scale renewable energy on the grid as it will mean more competitive and stable rates when compared to the cost of diesel.
For more information about the terms of the CUC licence, the rate cap adjustment mechanism, and the Energy Smart programme, visit the CUC website or the OfReg website
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