INCREASES to the
The Office of Utilities Regulation (OUR) wants to audit power providers, including Jamaica Public Service Company (JPS), to ensure that customers are correctly charged for fuel when world oil prices fluctuate.
The audit will result in recommendations made to the OUR to “effectively manage” the fuel accounting systems of JPS and two independent power providers (IPP).
It plans to hire a consultant auditor for this purpose. Bidding for the job closes June 27.
“The OUR intends to engage the services of a qualified, experienced and competent auditor to carry out an audit of Jamaica’s power system fuel management policies and practices in order to facilitate regulatory oversight of the fuel cost component of electricity charges to consumers, and to create a database of fuel usage cost and efficiency in the system,” stated the OUR in its notice published June 10.
Officials at the regulatory agency were said to be travelling and unavailable for comment.
Fuel represents the largest component on bills and also the bulk of JPS’s expenses at US$206.2 million for its March 2012 quarter, up 23 per cent year on year. Even small fluctuations in oil prices will result in large dollar movements on total customer bills.
JPS, the sole power distributor, buys oil at world market prices with some 30 per cent of its power requirements coming from IPPs. It then passes the cost of oil to customers, ostensibly at cost price.
The OUR wants the consultant to determine: whether JPS fuel policies and practices routinely generate accurate fuel charges billed to customers; and if JPS’s fuel management is compliant by analysing historical and current fuel procurement, fuel usage and general fuel accounting.
JPS bill subdivisions
JPS bills contain two main subdivisions: meter usage and fuel & IPP charges. The fuel charge on bills covers the cost of the fuel required to produce and deliver each kilowatt hour of electricity, and “some” of the costs of the power JPS buys from IPPs, said JPS on its homepage.
“This figure may change based on the cost of oil on the world market,” said JPS.
Currently, fuel and IPP charges are near all time highs at J$21.82 per kilowatt-hour in June 2012 compared with J$8.66 in January 2009, according to JPS statistics on its homepage. Last month, the rate stood at J$24.06 per kilowatt-hour.
JPS needs approximately 20,000 barrels of oil each day to meet the daily electricity demands of customers nationwide. “The company must purchase this oil at world market prices which may vary each month,” said JPS on its home page.
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A JPS technician at work. – File
The Office of Utilities Regulation (OUR) last Wednesday slashed in half the period in which power provider Jamaica Public Service Company Limited (JPS) can back-bill customers.
Under the JPS Revised Back Billing Policy, the company can now back-bill for two billing periods, equivalent to two months, down from four periods. But there are instances in which the utility will also be able to collect for electricity usage extending back six years.
The two-month measure mainly allows JPS to rectify incorrect or under billing or to collect in instances where bills were not generated due to internal system faults.
Importantly back-billing for meter tampering and fraud remains at six years, while corrections to overbilling arising from a JPS error or omission also remain at six years.
“This is not to be described as a victory for anyone because it is the means by which the regulator is bringing balance and fair play to a system which had been out of step with international norms,” said Michael Bryce, director of consumer & public affairs at the OUR.
“In terms of cost, it is not about how much it will cost but about how much can be recovered. This cannot be quantified until each case is completed and judged according to merit,” he said.
Revised policy
The revised policy is supposed to align with best practices in the United States and United Kingdom, and protect both JPS and its customers.
Queries to JPS on the impact of the revision on its operations went unanswered up to press time. The power company‘s annual revenues now tops US$1.15 billion or J$99.9 billion.
Last year, the OUR directed JPS to revise its back-billing policy and procedures in accordance with recommendations contained in the reportInvestigation of the JPS Billing and Metering System for Electricity Consumption.
The independent investigator and former OUR director general, J. Paul Morgan, concluded that JPS’s back-billing policies did not accord with “best practices” and did not sufficiently protect the rights of customers.
“Under the revised policy, there is now a reduction in the maximum period – from four to two – for which an account can be back-billed in several instances,” said the OUR in a release explaining the measure.
JPS is now required to issue the Revised Back Billing Policy as a Code of Practice and make it publicly available in accordance with Condition 16 of the Amended and Restated All-Island Electric Licence of 2011.
Unauthorised benefit
Last year, JPS recorded US$105 million (J$9b) in unbilled revenue, which represents estimates of the heat rate, system losses rate, fuel rate and Independent Power Provider or IPP charges, other non fuel rates and unbilled quantity. Unbilled revenues rose 19 per cent above 2010 levels.
“In cases where the account is not registered in the JPS Customer Information System or the meter is not included in the JPS meter database – dummy meter – and therefore was never billed, and the non-registration in either case is not due to an error or failure by JPS, the account shall be back-billed or adjusted for the period for which the customer/user received the unauthorised benefit but not exceeding six years. In such a case, the customer shall have the responsibility of providing the evidence of the date of installation of the dummy meter, if a period of less than six years is to be applied in the circumstances,” said the OUR in its determination notice dated May 2012 but released last week.
“Where an account has been overbilled or subject to excess charges, because of an error or omission by JPS, or a condition of the meter or service installation infrastructure, JPS shall adjust or back-bill, as appropriate, the account for a period not exceeding six years or for the exact period for the overbilling occurred, whichever is less.”
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Increase in Tax Free Threshold for Residential Customers
The Government has increased the tax free threshold for residential customers who pay GCT, from 200 kWh to 300 kWh. According to JPS this means that a smaller percentage of residential customers – just over 10 percent – will now pay GCT on their electricity bills.
Increase in GCT from 10% to 16.5%
The GCT that is applied to electricity usage will move up from 10% to 16.5%. All business customers will pay GCT at the new rate.
The following miscellaneous charges that previously attracted 10% GCT, will now attract GCT of 16.5%:
JAMAICA Public Service Company (JPS) and National Water Commission (NWC) continue to report high levels of breaches of the guaranteed standards that are supposed to guide the quality of service that they deliver to customers, according to the Office of Utilities Regulations (OUR).
In 2010, JPS reported 83,000 breaches, which would have cost the company $140 million if they had to fully compensate customers. Only $9 million of that amount was paid.