The Jamaica Public Service Company (JPS) is seeking an almost 23 per cent average increase on the non-fuel charge of electricity bills.

Under the proposal submitted to the Office of Utilities Regulation (OUR), JPS customers would see their bills increasing from a low of 4.3 per cent for small residential customers to a high of 26.8 per cent for commercial customers.

The company has also asked the OUR for permission to hike the reconnection fee for customers disconnected for non-payment of bills by 41 per cent, which would move it from $1,441 to $2,036.

This increase would take effect on July 1 in line with any tariff increase.

In addition, the JPS wants the OUR to allow it to recover the cost of damage caused by incidents over which it has no control, such as hurricanes and the more than $2.3 billion dollars it paid out to its workers based on a job reclassification exercise.

Z-factor charge

According to sources, the JPS is claiming that the Z-factor charge should be fair to shareholders by including risks outside its managerial control.

That is just one of numerous arguments put forward by the JPS as it sought to encourage the OUR to allow the proposed increases.

In the document, which is still confidential, the JPS argues that though they are understanding of the difficult times the country faces, the increases are necessary if the company is to survive.

The JPS last received an increase in its non-fuel tariff rates effective June 1, 2004, but this is set to expire on May 31.

Under its operating licence, the company is to submit its application five years after its last application, while giving the OUR 90 days to complete its consultation and arrive at a determination.

At the time of its 2004 submission the JPS said that the increase was to lead to a further improvement in customer service, provide the correct set of incentives for it to operate efficiently, provide a fair return to its investors and to ensure that the company could pass on costs outside its managerial control to customers.

In its present submission, the JPS claims that while the first two aims were mostly met, it failed to achieve a fair return on its investment.

J$2.6 billion profit

For the 2004-08 tariff period for which audited financials are available JPS made an accumulated profit of J$2.6 billion with losses in three years.

The company added that it spent US$143 million over the past five years to improve its operation and plans to splash out a further US$130 million this time around.

According to the JPS, this will include the introduction of at least two other types of fuel (coal, compressed natural gas or petcoke) to its generation and continued improvement in its reliability.

It is now up to the OUR to review the JPS application and make a determination on the level of increase to be granted to the company.

The OUR has already indicated that it will be holding public consultations in at least four parishes before arriving at a decision.