CUC defers proposed base rate hike of 5.4%

| 01/08/2022 | 32 Comments

(CNS): There will be no increase in the base rate that the Caribbean Utilities Company charges customers this summer as Grand Cayman’s power provider has deferred its annual increase until January. CUC said it took the decision not to increase the base rate, which was expected to have been around 5.4%, because of the “increasing financial challenges which some customers are facing as a result of costs related to fuel prices and other goods and services”. CUC will also freeze disconnection fees and finance charges for bills issued from August through October.

According to the CUC’s licence, the company can increase the rate it charges each year based on a formula relating to inflation or the price level index. This consists of a weighted average of 60% of the change in the Cayman Islands consumer price index and 40% of the change in the CPI in the US. CUC said that for 2022 the calculation led to a 5.4% increase, which would have come into effect on 1 June, assuming that the Utility Regulation and Competition Office (OfReg) would have cleared this substantial hike.

However, CUC said it had proposed to OfReg to defer the rate increase and the recovery of related revenues until January, and OfReg has agreed. CUC President and CEO Richard Hew said this would ease the burden on residents and businesses at a time when they need it most.

“CUC is committed to providing ongoing support to its customers and it was important that we reach an agreement with OfReg to defer rate increases in relation to the energy charge component of customers’ bills until 2023. CUC is well aware that if the increase was implemented in accordance with our Licences, an increase of base rates in June 2022 may have been difficult for many of our customers to bear,” he said. “The ability to recover revenues in the future is necessary to maintain that financial stability and to meet the Company’s ongoing obligations to invest in infrastructure and provide a safe, reliable and sustainable electricity service.”

CUC revealed its unaudited financial accounts for the first six months of 2022 last week, which showed an increase in earnings so far this year when compared to 2021 of almost $2 million. Given the volatility in fuel costs, customers paid on average 7 cents more per kWh due to the fuel factor compared to last year, and even higher bills are expected in the hot summer months.

While the government is subsidising fuel costs on residential bills in July, August and September for homes using less than 2,000kWh per month, customers will have to pay the full fuel factor in October and can expect another significant increase in bills in the New Year.

CUC said it would help customers to reduce their bills through energy conservation programmes. The company is also anticipating additional long-term customer relief with the implementation of large-scale renewable energy on its grid in the near future.

Meanwhile, an outage on Sunday morning cut power to around 11,000 homes. CUC has not yet stated the cause but power was restored to everyone by Sunday afternoon.

See full CUC press release below:


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Category: Business, utilities

Comments (32)

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  1. Anonymous says:

    Sorry CUC, send me the bill forthwith. There is no one to bail me out come January when I get hit with a whooping CUC bill.

  2. Anonymous says:

    Clever marketing .
    In the end we pay for the profits, which go to the shareholders.
    The shareholders are the politicians that SHOULD protect us from greed.

  3. Anonymous says:

    Till when? 6 pm tonight…lol

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  4. Anon says:

    the irony of course is that the cost of living meter that is used to hike base rate is being massively impacted by energy! And raising rates/pay in response to inflation furthers inflationary pressures. If CUC would respond here and now with cost cutting measures, it would be positive to the current cycle.

    • Anonymous says:

      Fuel costs are excluded from the CPI indices in the formula, so as not to create any cyclical relationship. Interestingly, so is food.

  5. Anonymous says:

    why all the numerical jargons – its so the little man doesn’t understand. I’ll elaborate for you, your elected officials consistently sign License agreements for CUC that allows them to increase there fees year over year no matter the cost of oil/gasoline. so never ever expect a reduction in your CUC bill! Just ask your elected officials! So all you simps jumping up to thank CUC lets see what happens 6 months to a year from now. 70K people on this island and this company makes profits of around 20 Million a year! their already at 5.5 million for the first Quarter of 2022

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    • Anonymous says:

      The CUC monopoly continues. Is anyone really surprised? They could hike the rates as much as they want, people will pay it because there is no other choice.

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  6. Anonymous says:

    I don’t care what most people think but CUC is one of the best companies in Cayman. Yes, we pay a premium for electricity here; we pay a premium for everything! Importation has it’s price!

    But CUC’s service and reliability are par none. I don’t mind paying the energy costs (which I can control by my own usage) and getting the excellent service that CUC provides.

    Thank you CUC!

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  7. Anonymous says:

    Thank you CUC!
    Now maybe the government owned Water Authority will set their due date for payment to the end of the month, instead of than the 20th. Then they charge penalty fees for late payment because people have to receive their salaries before they can pay! How many receive their salary on the 20th of the month? Also, note this, if you happen to pay your bill through their website on a Friday, and receive a receipt, they still charge you a penalty fee because it does not go through to their account until Monday! How is that fair? Government needs to stop Water Authority from robbing us!
    Never thought I would be saying thank you CUC and shame on you Water Authority!

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    • Anonymous says:

      I don’t mean to sound harsh, but there are other ways of looking at this. Posting at 4:20am it is safe to assume that you are at home with internet service and a computer and/or smartphone.

      Without taking sides, there is one significant difference between CUC, the Water Utilities, and every other business in Cayman, and that is you pay the bill AFTER you enjoyed the service.

      The phone companies make you pay for their service one month in advance. Your car license, your business license, car and house insurance, the food you cooked at home this week, any beer you may have in the fridge, etc. are all paid for BEFORE you enjoy them.

      Again, I don’t mean to be harsh, but everyone should work towards being in a position to pay for whatever goods and services they have already enjoyed when payment is due. We all go through hard patches, but I never take my car in for repairs or service, or call anyone to my house to fix anything unless I’m sure that I have the money to pay them when the job is done. But that might be just me.

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      • Anonymous says:

        No 9:01 a.m.I have to work night shifts and was on my 15 minute break when I posted. The cushy life you described sounds great and might be yours but that is hardly my reality. Obviously you must make a good salary and can afford to live different from me and that’s good. Your choice of the word harsh is interesting because, yes, you were being harsh and not at all understanding or compassionate. I work hard and I pay all of my bills, on time, except for my Water Authority bill which must be paid on the 20th of the month when I do not get my salary until the 30th. I try to budget to pay it on the due date but having 3 little children to feed and care for makes it difficult sometimes and I get penalized whenever I’m a bit late. You may say, “oh it is only a couple of dollars.” Well that couple of dollars could help buy some healthy food for my children! However I don’t expect you to understand the harshness of what the Water Authority is doing and how it affects people like me. And by the way, all of the other companies you named, whose services are post paid, have their due dates set nearer to the end of the month and provide a grace period for payment. That is reasonable and compassionate. The Water Authority needs to do the same! I do not abuse that kindness and have never been charged a penalty or had my service disconnected. The only company that charges me a penalty is Water Authority. You can defend as much as you like but being a government entity the Water Authority’s payment requirements and penalty practice is unreasonable and, yes, to use your word, “harsh”.

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        • Anonymous says:

          Well said! I’m there with you as this has also been my experience with the Water Authority as well.No government agency should be allowed to do this, especially at this time.

          • Anonymous says:

            Water in these islands are the highest price of anywhere in the world, because of so.many people employed with high wages doing nothing. 5 dollars a month for the meter is out ragous too high, thats 60 $ p year. A drivers license only costs 56.25 for 3 years.

        • Anonymous says:

          Maybe you shouldn’t have had 3 kids if you couldn’t afford them.
          Just a thought.

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  8. Anonymous says:

    Well done, CUC.

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    • Anonymous says:

      Well done? This like coming home from school and mummeh telling you that she na ga beat yass till you go shower and do your homework.

      “to defer the rate increase and the recovery of related revenues until January”

      So if times are good in January, we get lick twice with not only the increase but their recovery of revenue.

      If times are bad in January, we get lick three times with both of the above, plus a worsened economy.

      This is more to look good than benefit the consumer.

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  9. BETTER DEAL NEEDED says:

    That agreement with CIG guarantees a monopoly for CUC. Cayman needs competition in this sector. CUC want to pursue LGN which means the public will be forced to pay for that massive infrastructure project throughout the island. Mr. Hew and board are not doing us any favors it’s about the long game for them. Remember when the public paid for the repair of light poles after Ivan that CUC own. Never forget how they operate. The PPM screwed us again when they agreed to this instead of seeking competitive bids.

    This one sided agreement is another part of the PPM legacy they guaranteed CUC what they want to satisfy some heavyweight shareholders and directors that defend the party colors. OfREG do not regulate CUC the management team take instructions from CUC.
    Now CUC acting like they did use a favor! Give us a real break instead of this token gesture.

    Cayman needs competition in the provision of utilities and OfREG need to act like a regulator especially Mr. Vanguard Anderson and management. This is another example of lodge looking out for lodge brothers at our expense.

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    • Anonymous says:

      Multiple electricity providers is a bad idea, and you won’t find anyone to invest. What you need is a real regulator instead of the amateurs you’ve got.

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    • Anonymous says:

      Utility companies everywhere are necessarily monopolies. Is another company going to build another generation plant and then erect another complete set of power poles and lines across the island? In economics terms, it is considered a “natural monopoly” (see extract below).

      The solution everywhere is that these are either government owned or rate-regulated private companies such as in Cayman.

      “Understanding Natural Monopolies

      Natural monopolies can also arise when one firm is much more efficient than multiple firms in providing the good or service to the market. A good example of this is in the business of electricity transmission where once a grid is set up to deliver electric power to all of the homes in a community, putting in a second, redundant grid to compete makes little sense. In fact, competition in this case would lead to significantly higher average costs to consumers”

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    • Anonymous says:

      For the umpteenth time – CUC does not have a monopoly on power generation. Supply yes but not generation. If they did, how do you explain the solar farm in BT, the many buildings with solar panels, and the recent request for interest bids for an even larger solar farm plus the proposed waste to energy plant?

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      • Anonymous says:

        To 7:32 – why do they make their customers pay for their solar farm in Bodden Town? I don’t have solar panels and they charge me a fee every month for renewable energy.

        It’s time CUC be able to do something without their customers having to pay for it! After all, they make a profit every year!

        Government need to have more control with this company.

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        • Anonymous says:

          The solar farm is not CUC’s, which was a key point in the comment you responded to.

          What do you suggest be done with the energy produced by other generators? That CUC buys it and then gives it away to you for free? Next time you walk into a store, please go and ask them to give you the items they bought and stocked to you for free, because you don’t want to pay for it.

  10. Ja says:

    CUC Bombo LOL 😆

  11. Anonymous says:

    There should be genuinely 2 utility providers on island. If so then watch the prices come down. Who are the large shareholders of CUC?

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    • Anonymous says:

      Wrong. Look up the term “natural monopolies” and you will understand why monopolies exist in the electricity transmission industry everywhere. You expect costs to go lower if another company builds an incredibly expensive generation plant and erects a whole new parallel grid?

      CUC’s return on equity is about 4.5%.

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    • Anonymous says:

      Should there be two distribution systems? You know, those unsightly and expensive lines of pole and wires everywhere, that are expensive to maintain and make no money…

      Just askin.

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      • Rick says:

        Generation, transmission and distribution are different entities. Generation and distribution need to be competitive. The T. Grid can remain a monopoly with government regulation of prices to include 5-year reviews of contracts. And, we should be able to use solar and other renewables without CUC having such a huge influence on it. But with all the influential people in Cayman benefitting from CUC, we will never see improvement in my lifetime. All the politicians speak about this over the years and then go quiet when they get into office. Those in office that discuss it merely use the debate as an excuse to make it worse.

  12. Anonymous says:

    Thank you CUC, but while you’re at the Goodwill effort, please don’t try to compensate by hitting us with the “…even higher bills are expected in the hot summer months” part.

    Thank you again.

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