THE EDITOR, Sir:
THIS IS our response to the letter written by Dr. Shoucair and published in The Sunday Gleaner of September 04, 2005, regarding the amount of money the Jamaica Public Service Company was allowed to recover through the tariff for losses suffered during Hurricane Ivan.
Some erroneous statements made by Dr. Shoucair are as follows:
The tariff charged to recover the $457 million of hurricane approved is 7.29 cents/kWh and not $0.5 per month (units not stated)
The Self Insurance Fund targets an inflow of J$125 million or US$2 million per year to raise US$10 million over five years. At the time of the claim the fund had less than a year's inflow so it was insufficient to cover the claim of J$1.5 billion or the allowed J$457 million. In addition, a target of US$30-$40 million would be more appropriate to cover a major hurricane strike.
Now to the questions posed by Dr. Shoucair:
1. "Why was the amount granted by the OUR not ordered to be paid out of the accumulated (self) insurance fund?
The operation of the fund only commenced with the June 2004 tariff. Hurricane Ivan struck in September just two months later. The amount of funds accumulated to date was minuscule in comparison to the claim submitted. It was also felt that the fund should be allowed to grow as the target of US$10 million was itself not adequate to cover major damage from a hurricane.
2. "Is the two per cent tariff for the insurance fund to be continued now that it has exceeded the US$10 million dollar limit?"
There is no two per cent tariff for insurance. The charge in the tariffs amounts to Jamaican four cents/kWh. Compared with a tariff in the region of JS$10-13.
The fund has not reached anywhere near the 10 million U.S. dollar limit. It is expected that the fund would reach that level at the end of the current tariff regime in 2009.
I am, etc.,
DAVID GEDDES
Director Consumer
& Public Affairs.
Office of
Utilities Regulation
