A jolt to the system

PUBLIC SERVANTS might be getting back pay for Christmas, but they may also be unplugging their Christmas trees too. If so, they will not be alone.

If implemented, the substantial electricity-rate hike recommended on Thursday by the Regulated Industries Commission (RIC) will affect citizens across the board. The TT Electricity Commission (T&TEC) has more than 500,000 customers, about 90 per cent of whom are residential customers, as opposed to businesses.

Given that it has been almost two decades since the last rate review, it was not entirely unexpected that the RIC would come to the determination that it has. Despite the strong concerns raised at public consultations, it was always going to be the case that either the regulator would maintain the status quo or increase prices, with the latter being the likelier possibility.

Still, Thursday’s announcement was, if not a shock, a jolt to the system.

On paper, the increase for residential customers, between 15 per cent and 64 per cent depending on consumption levels, is a dose of bitter medicine. This steep rate could be justifiable, given how much time has passed without an increase.

Harder to swallow is the recommendation for an increase in the fixed “customer charge,” which has more than doubled. This item will not only be paid monthly instead of bi-monthly, but it has moved from $6 to $7.50.

In a situation in which customers still experience outages that result in economic loss and inconvenience, increasing this customer charge is hard to explain. The latest RIC review of T&TEC’s operations suggested while outages are declining, with customers experiencing fewer than four per year, this was still far worse than what pertains in Caribbean countries like St Lucia and Dominica (and certainly worse than in North America).

Further, with almost ten per cent of electricity purchased by T&TEC wasted annually through systems losses in its grid and theft, it should be asked why the focus is not on tightening the utility’s wastage instead of passing on nominal charges to customers.

What the steep increase clearly signals, however, is the need for annual, incremental increases, long recommended by the RIC. This would reduce the likelihood of sudden, nasty shocks. Even with the required 21-day notice period factored in, the timing of this jolt is bad. Not only will it dampen consumer spending for Christmas, but it comes amid renewed concern about inflation globally.

Policymakers tend to note TT’s utility rates are relatively low, while our per-capita consumption is higher. However, much of our consumption relates to big business and industry.

In any event, consumption is on the decline, according to the RIC. These steep increases will drive it down even further.