The Public Utilities Commission (PUC) has approved the power company’s application to increase tariffs, while chastising it for being “unreasonable and unfair” to announce the hike without giving adequate notice to consumers.
In an order issued by the PUC on Wednesday granting approval to the Guyana Power and Light (GPL) Incorporated for increased rates, the PUC said: “The commission recommends that three months is not an unreasonable period of time for consumers to be notified in order that they make the necessary adjustment in the use of electricity, and that in the future you will give such adequate notice.”
Last Friday, GPL announced price hikes of between 6% and 20% for the various categories of consumers. The company said most residential consumers will only have to pay a 6% increase. In a statement, the company said that based on the current level of fuel prices, it intends to maintain the announced increase as the applicable rates for this year.
The order – PUC 1/2008 – said that in terms of Paragraph 12 of the First Schedule of the Electricity Sector Reform Act (ESRA) No. 11 of 1999, “we hereby grant approval of the rates as specified in Appendix iv of your letter.”
The order said the increases are to take effect for consumption of electricity from the first of this month so that the increases are reflected “in bills produced from February 2008.”
The PUC further ordered: “We direct you to publish immediately, the new tariff increases, along with the relevant billing period.”
The PUC said that it was not unmindful of the consequences the increases will have on indigent consumers, and the increases in certain goods and services. “We urge accordingly that strenuous, vigorous and concerted efforts be made by GPL to ensure the reduction of losses which may lead to a review and reduction of the tariff.
“We note your commitment to reduce cost and to improve efficiency without burdening the tariff base. Your target is to reduce system losses by seven per cent in 2008 and we trust this goal/target will be achieved.”
The PUC doesn’t have any control over rate setting for the electricity utility, according to clause 18 of the Second Schedule of the ESRA. But GPL is still required to submit the set rates for approval by the PUC.
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.
Chairman of GPL Winston Brassington had stated that the rates had been passed to the PUC and the government. At the press conference announcing the new rates, Brassington said the company has maintained tariffs at less than the calculated tariff rate obtained under its licence.
He said that 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. He said too that since 2003, GPL has accumulated forgone revenue of over $7 billion. 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.
During the announcement of the increases, Brassington had said that residential customers account for 90 per cent of the total number of customers and comprise `lifeline’ and other residential customers.
He said that lifeline customers are being redefined from 100kWh per month to 75 kWh and as a result from next year the 65,000 lifeline customers would only face an increase of 6%. This figure was 85,000 before the redefinition.
GPL said that the government’s role in the company has had a significant impact on lowering rates and this role would be further expanded next year.
The current increases are the absolute minimum to allow GPL to be financially sustainable in 2008, the release asserted.
The company said that all private consumers are benefiting from the increased burden that government is taking in allowing a larger rate of increase for government agencies and the discount on calculated tariffs that GPL will continue to pursue in favour of all customers, the release said.
