Higher consumption drove hike in electricity bills – OUR

The Office of Utilities Regulation (OUR) says higher consumption influenced by the stay-at-home order contributed to Jamaica Public Service Company (JPS) customers experiencing hikes in their electricity bills during the high of the COVID-19 crisis.

The OUR says between April and May, increases in average electricity bills and consumption were recorded primarily for residential accounts.

Jamaica recorded its first case of the virus in March.

Residential customers in Portmore, St Catherine, Kingston and St Andrew, and St James experienced the largest monthly bill increases averaging $2,001.74, $1,960.55 and $1,493.97 respectively, the OUR noted.

This was among the findings of an investigation by the OUR into its complaints from customers about high electricity bills.

“Higher consumption was found to be a significant explanatory factor for bill increases. This was not unexpected as more persons were staying at home, including children, as schools were ordered closed. However, other potential causal factors for bill increases were investigated,” said the OUR.

The regulator also highlighted that billed fuel & IPP rate and foreign exchange adjustment were found to be higher on average between April and May and that this would have contributed to increases in electricity bills of some residential and small commercial customers.

​The following are the findings, inter alia, for the period April – May 2020 when compared to the  January – March 2020 quarter:

•  Increases in average electricity bills and consumption were recorded primarily for residential (Rate 10) accounts, while small commercial (Rate 20) accounts, on average, experienced a reduction.

•  Residential (Rate 10) accounts experienced an average increase of 24.23% in electricity bills, with small commercial (Rate 20) accounts experiencing an average decrease of 2.69%.

• Residential (Rate 10) customers in Portmore, St Catherine, Kingston and St Andrew and St James experienced the largest monthly bill increases averaging $2,001.74, $1,960.55 and $1,493.97 respectively. Conversely, customers in Manchester and St. Ann experienced the lowest level of average monthly bill increases of $655.63 and $641.65 respectively. The findings for Portmore appear to align with the expectation regarding the effect of a “Stay at Home Order” that was issued for the parish during the period.

• Higher consumption was found to be a significant explanatory factor for bill increases. This was not unexpected as more persons were staying at home, including children, as schools were ordered closed. However, other potential causal factors for bill increases were investigated.

• Two important billing parameters, billed Fuel & IPP rate and foreign exchange Adjustment, were found to be higher on average during the 2020 April – May period than between 2020 January and March. As such, these parameters would have contributed to increases in electricity bills of some residential (Rate 10) and small commercial (Rate 20) customers.

• The billing parameter which accounted for the highest proportion of the change in average electricity bills, however, was the Fuel & IPP charge. Notably, this component of the bill would have been driven by both an increase in average electricity consumption and an increase in the Fuel & IPP Rate. An additional driver was the increase in the Energy Charge for consumption greater than 100 kWh which was reflective of the increased consumption by consumers at this energy charge tier.

•  An examination of JPS’ billing accuracy revealed that the company’s billing calculations were largely compliant with the terms of the 2018 – 2019 JPS Rate Schedule. With respect to residential (Rate 10) accounts, 99.73% of accounts were found to have accurately calculated bills for the months of 2020 January to May. With respect to small commercial (Rate 20) accounts, this figure was found to be 99.95% accurate.

• There were several anomalies in JPS’ billing but these did not significantly impact the increases in the bills. Notwithstanding, JPS will be asked to provide clarification on these anomalies as part of a further investigation.

The investigation also revealed that JPS, in some instances, did not comply with the OUR’s Directives pertaining to the number of billing days permitted and notification to customers when their meter readings fall outside +/- 30% of average previous consumption for residential customers (Exceptions Criteria).

In light of the general findings, the OUR has determined that an independent audit of JPS’ billing system is not needed at this point. However, as a further extension to its investigation, the OUR will be proceeding to address a number of outlier issues identified in its investigation. The OUR will also further engage JPS regarding the company’s failure to comply with the regulator’s Directives pertaining to the number of billing days permitted and the lack of notification to customers when their meter readings fall outside +/- 30% of average previous consumption for residential customers (Exceptions Criteria).

JPS has already been notified that it will be required to submit a quarterly exceptions report to include data on the number of Exceptions and confirmation of the method/s used to notify customers whenever there is a significant variance in consumption.

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