The Private Sector Organisation of Jamaica, PSOJ, says it’s disappointed with aspects of the Office of Utilities Regulation, OUR’s ruling on the JPS’s recent rate review request.
In a statement today, the PSOJ says it believes some parts of the ruling are unfair to JPS.
It says it believes the OUR’s treatment of the monopoly light and power company could send ‘the wrong signal’ to the international investment community.
The PSOJ’s statement might be surprising to some people given its consistent outcry about the crippling effect of high electricity costs on businesses.
In a five-page statement this morning, the PSOJ highlights three main points with which it’s disappointed.
Among them is the OUR’s decision to reduce the JPS’s targeted Rate of Return.
In simple financial terms, that’s the profit earned on an investment.
The PSOJ says it’s ‘difficult’ to understand the OUR’s ruling to reduce JPS’s target return from the 16-percent it was allowed in 2009 to just over 12-percent now.
The Private Sector Organisation says this is ‘particularly curious’ given economic developments since 2009 that have increased the risks of operating in Jamaica.
It’s also taking issue with the OUR’s denial of a provision of revenue allowances to offset JPS’s foreign exchange losses.
The PSOJ says those losses arise from a settlement risk, in circumstances where JPS pays Petrojam for fuel in US dollars but bills its customers in Jamaican dollars.
It says this is compounded by the fact that the government operates what it terms ‘significant arrears’ to JPS, running into billions of dollars.
It says that determination will mean ‘significant continuing financial losses’ estimated in excess of 30-million US dollars being imposed on JPS.
This, arising from what it characterises as the OUR’s position that JPS should absorb the cost of fuel consumed.
And which the company is unable to recover because of high levels of electricity theft in the country.
The PSOJ says it’s extremely concerned about the implications of this ruling for the overall health of the electricity sector in the country.
It says it’s likely to send the wrong signals to foreign investors, and Jamaica’s ability to provide a consistent, predictable legal and regulatory environment for their operations.
It says it would be tragic if the small reduction in the non-fuel portion of current electricity bills, were to have the effect of denying consumers the benefit of far more meaningful reductions in energy cost over the medium to long term.
The PSOJ says it’s calling on the government to take immediate steps to ensure the achievement of the longer term objective for energy cost reduction is not threatened.