The Guyana Power and Light (GPL) has announced that come January 2008 electricity tariffs will be increased by six per cent to 20 per cent for varying categories of consumers, as high fuel prices rip apart the company’s finances.
Furthermore, the company is expecting to record a loss of more than $1 billion for 2007.
Speaking at a hastily summoned press conference at the company’s Middle Street complex last evening, Chairman of the company Winston Brassington, in a prepared statement, said that residential customers consuming up to 75kWh per month will see a six per cent increase in electricity rates.
He stated that residential customers consuming more than 75kWh per month will see a nine per cent increase in electricity rates; commercial and industrial customers and street lighting will see a 15 per cent increase and customers classified as government agencies will face a 20 per cent increase.
According to Brassington, residential customers account for 90 per cent of the total customers and consist of ‘lifeline’ and other residential customers. He explained that the lifeline customers are being redefined from 100 kWh per month to 75kWh per month. “As a result of this, from 2008 the 65,000 lifeline customers will only receive a six per cent increase,” Brassington pointed out.
The company last had an increase in July 2005, some two and a half years ago. The new increases have been cleared by the Government, Brassington said.
“The current increase in electricity rates is considerably less than the increasing costs faced by GPL. [The company] is now paying an average of US$95 per barrel for November/December 2007 – this is a 57 per cent increase in its 2007 budgeted fuel price of US$60,” Brassington said.
He said that the company has maintained tariffs at less than the calculated tariff rate obtained under its licence. “Additionally, since 2005 the Government as sole shareholders has lowered the return on equity from 23 per cent to eight per cent for purposes of the licence. Since 2003, GPL has accumulated forgone revenue of over $7 billion,” he said. He explained that forgone revenue is the difference between what GPL charges the customer and what GPL is allowed to charge the customer as per its licence.
“GPL will continue to maintain rates at less than that allowed under its licence,” Brassington stated.
But he warned that if fuel price increases continue, the company may be forced to invoke the fuel surcharge and rebate clause in its licence.
He said that in 2008, the company will be moving to rationalise costs and ensure that revenue collection and efficiencies are maximised. GPL’s 2006 audited accounts showed a loss of over $1 billion, he said. “In 2008, this figure will be higher.”
Brassington said that when GPL prepared its budget for 2008 based on the current level of fuel prices, an initial increase of 25 per cent on the 2007 rates was calculated as necessary. “Under the circumstances, the increases that will be actually introduced by GPL can be considered to be very moderate and are only possible as a result of the extensive support by the Government to cushion the impact of GPL’s rising costs of operation,” Brassington said.
He explained that the losses that the company recorded for 2006 comprise bad debt, depreciation and the escalating oil prices. Brassington said that losses for 2006 were reduced by three percent.
He said that as a result of these factors, the company was forced to curtail expenditure and enforce collection.
“We are looking at achieving a very high level of collections and reduction of technical and commercial losses. We will carefully review and implement measures to ensure collection,” he said, adding that the company is aiming at a 98.2 collection rate. He said that the company is examining a number of measures, other than disconnection and payment reconnection fees, to ‘encourage’ payment of bills in a timely manner. These include charging interest on late bills and the payment of a security deposit. He said that these measures are outlined in the company’s licence.
Customers can expect the increases to be reflected on their January bills.
