The Jamaica Public Service Company (JPS) has announced that it will be appealing the directive from the Office of Utilities Regulation (OUR) to repay funds collected from customers in 2013 and paid over to Petrojam for fuel used to generate electricity.

"This appeal is not about JPS," said Kelly Tomblin, JPS president and CEO. "It's about ensuring that the company is in a position to lower costs sustainably over the long-term and to continue improving service to our customers. When the company is not able to recover legitimate business costs, it thwarts our ability to improve our operations, and achieve the fuel diversity that lowers cost and support the nation's growth agenda."

estimated amounts

The OUR, in the recent directive, instructed JPS to repay $973 million that allegedly represents amounts that were inappropriately included in charges for fuel supplied by Petrojam. The $973 million is the difference between the estimated amounts for which JPS was billed in Jamaican dollar terms, and the actual amount that the company paid to Petrojam. The escalation was due primarily to the impact of the ongoing devaluation of the Jamaican dollar.

"The J$973 million represents a part of the bigger issue of what constitutes legitimate cost recovery. It is clear that the OUR and JPS have a fundamental difference regarding what prudently incurred costs include. That's one of the main principles on which we are asking an independent panel to arbitrate in our appeal of the recent rate determination. We believe that the issue of legitimate cost recovery needs to be fully reviewed, as it has far-reaching implications for Jamaica, the energy sector and for our customers," she explained.

The JPS president & CEO said the cost of fuel is one area in which JPS is particularly exposed, because of the time lapse between when the company is billed by Petrojam and the time it actually collects from customers. The J$973 million accounts for just over one per cent of the total fuel cost the approximately $73 billion paid by JPS to Petrojam in 2013.