By McPherse Thompson,
Senior Financial Reporter
SOME of Jamaica's largest companies could see a reduction in their electricity bills in the months ahead, even though the Jamaica Public Service Company (JPSCo.) has announced a rate increase for all its customers.
The benefit will accrue to large commercial and industrial customers designated rates 40 and 50, although the impact on their bills will largely depend on how effectively they use energy, the JPSCo said this week.
Responding to queries about the impact of the new rates on businesses, the JPSCo said some rate 40 and rate 50 customers will see increases in their bills, while others will see decreases.
"Customers with high demand and low energy usage ... will see increases because of the inherent inefficiencies in their usage pattern," the JPSCo. said. "On the other hand, customers with high energy usage relative to their demand ... will experience decreases in their bills because the supply is being used efficiently," a JPSCo spokesperson said. JPSCo has also created an interim rate 40A category to give inefficient businesses in the large commercial group an opportunity to improve their use of electricity.
The new category, targeted to existing customers with an average monthly consumption of 30,000 kilowatt hours during last year, will be established for two years and will run until the end of January 2003. After that, all customers in that category will be transferred to the regular rate 40 service.
Increases in electricity rates, announced by the Office of Utilities Regulation (OUR) a week ago to take effect on February 1, averaged between 1.4 per cent and 5.9 per cent for large commercial and industrial customers, while residential customers will pay a 9.8 per cent increase.
Jamaica Chamber of Commerce president, Anthony Chang, said members of the business lobby were "very concerned about the latest increase in electricity rates," given the fact that there were already significant increases arising from the foreign exchange adjustment and the fuel clauses of the electricity bill.
"We wished not to have had an increase at this time," said Mr. Chang, noting that JPSCo.'s rates were not as competitive as those of the island's major trading partners, and that the 9.8 per cent increase to residential customers was above the inflation rate.
President of the Jamaica Manufacturers' Association (JMA), Clarence Clarke, said earlier this week that they had not yet fully analysed the impact of the electricity rate increases, but surmised that it would affect especially the larger manufacturers.
However, both Desnoes & Geddes (D&G) and Jamaica Broilers said the increase would not affect the price of their products at this time because of the way in which the new rates have been structured.
Earlier this week, Jamaica Broilers announced a $20-$25 increase in the price of chicken meat, attributable in part to increases in utility costs as well as the devaluation of the local currency. But, vice-president in charge of operations at Jamaica Broilers, Christopher Levy, said the latest hike in electricity rates would not result in a further price increase at this time because they felt the utility costs would remain "fairly stable."
D&G's director in charge of external affairs, Noel DaCosta, said in fact that the electricity rate increase would be beneficial to the company because of an incentive programme initiated by the JPSCo. in which larger companies benefit from using electricity more efficiently.
He said D&G has realised some $15 million in savings under the JPSCo.'s Economic Development Incentive (EDI) scheme since its inception in November 1998, and the new rates would translate into lower costs if the company continued to operate as efficiently.
Mr. DaCosta explained that D&G normally paid US 11 cents per kilowatt hour for electricity. However, with the EDI, under which the company was able to re-organise so that it operated outside the peak period, the company was able to pay US 10.4 cents per kilowatt hour for electricity, and with the new rates, they might be able to get it at US 10 cents per kilowatt hour.
With the new rate structure, the JPSCo. is replacing the EDI, which benefited just four companies, with a time of use option which will be applicable to all of the 1,200 or so industrial and commercial companies in rates 40 and 50.
However, individual companies will have to apply for the time of use service, and have appropriate meters installed for that purpose, the JPSCo.'s public relations manager, Winsome Callum said this week.
Under the new rate structure, the time of use option is organised into three periods - partial peak, which covers the period 6 a.m. to 6 p.m.; peak, which runs from 6 p.m. to 10 p.m., and off-peak which covers the period 10 p.m. to 6 a.m.
For rates 40 and 50 customers, electricity rates during the partial peak period will be lower than usual, cheapest in the off-peak period, and most expensive in the peak period.
According to the JPSCo., the time of use option will make it easier for large customers to change their operations in order to use more electricity during off-peak periods, thereby significantly reducing the cost to them.
Miss Callum explained that it did not mean companies would necessarily have to operate during the nights to benefit from lower rates. Contrary to that, she said, companies will be able to benefit from lower rates being offered in the partial peak period even if they do not change the time of their operations, as long as they apply for the time of use option.
