No such thing as a “free” lunch; utility rate increases are coming Loop Cayman Islands

Black Immigrant Daily News

Members of the public would have noticed that, on a number of occasions, rate increases by utility service providers were deferred after being approved by The Utility Regulation and Competition Office (OfReg). While some consumers may have interpreted such “deferrals” as meaning that the relevant rate increase will not happen, this could not be farther from the truth, as unearthed from the financial statements of utility service providers.

For example, as part of its COVID-19 Customer Relief Programme, OfReg approved CUC’s deferral of the 6.6 per cent rate base increase effective June 1, 2020 to January 1, 2021.

Regarding this, it was expected that total deferred revenue, amounting to $3.5 million, would be recovered within two years from January 1, 2021.

According to CUC’s accounts, “During the first nine months of 2022, $1.3 million was recovered from customers for the base rate increase deferral (2021: $0.8 million), bringing the total amount recovered to $3.1 million as at September 30, 2022.”

In relation to CUC’s submissions to OfReg in 2022, CUC’s accounts show that it applied for a rate increase of 5.4 per cent, effective June 1, 2022, however, this increase was deferred until January 1, 2023.

As mentioned above, this does not mean that the amount will not be collected by CUC, but, instead, CUC will track the difference between billed revenues and revenues that would have been billed from the required rate increase as deferred revenue (in relation to the deferred revenue position as at September 30, 2022, the amount recorded by CUC was $1.6 million).

Regarding the 2022 deferred amounts, it is expected that CUC will recover these during 2023, meaning that, ultimately, there is no “free” lunch although it may have been seen that way initially when the relevant rate increase was deferred.

NewsAmericasNow.com