MORGAN. the adjustment is automatic

Jamaica Public Service Company (JPS) customers will have to pay increased electricity rates as of July 1, while bus fares are expected to go up later in the year.

There is no indication of the level of increase to be imposed by the JPS and the company's communications manager, Winsome Callum, said Friday that she would not speculate on the final figure, which will have to be confirmed by the Office of Utilities Regulation (OUR). However, she noted that similar increases, under the annual inflation adjustment, since 2001 have been approximately two per cent.

This annual inflation adjustment is based on cost of living increases in Jamaica as well as the United States. It became part of the overall tariff structure in 2001. There were inflation adjustments in 2002 and 2003, as well. In 2004, there was an overall tariff adjustment, or a comprehensive rate increase, which included the inflation adjustment. It was agreed then that the inflation adjustment will remain in force, at least until 2009 when another overall adjustment becomes due.

OUR executive director J Paul Morgan confirmed that the adjustment is automatic and relates to increased costs both here and abroad, as well the effect of Hurricane Ivan.

He said that it will be done via a formula of calculating the effect of last year's 13 per cent inflation in Jamaica, as well as the inflation rate in the United States, minus a 2.7 per cent productivity factor which was introduced into the calculations last year.

The OUR has already received the necessary information from the JPS on which it will make its calculations, but did not wish to state a figure either.

In terms of the Jamaica Urban Transit Company (JUTC), while the situation there is less clear, it is obvious that bus fares will be increased sometime this year.

Morgan confirmed to the Observer that his office has already received information from the JUTC to assist it in looking at the company's fare structure and the possibility of an increase. However, the OUR does not have the legal authority to adjust bus fares, unless it is requested to do so by the minister of transport and works, Robert Pickersgill.

"We act in an advisory capacity and we cannot do anything until we have had directions from the minister," Morgan said.
Last Friday, Pickersgill would only admit that "the process is ongoing". He would not say if and when the fares would be increased.

However, JUTC president Patrick McIntosh did tell Parliament's Public Accounts Committee (PAC) in February that the fares charged on the buses were not adequate to run the service. He said that revenues from fares covered 69 per cent of the company's costs. The other 31 per cent comes from government subsidy.

The JUTC lost $600 million last year and is considered one of the Government's most indebted companies. Its debts include some $1.5 billion in unpaid statutory deductions owed to the Ministry of Finance.

Last year's loss was nearly half of the $1 billion lost the previous year, but this was primarily due to a fare increase as well as government subsidy.

However, the recent amendments to the Transport Authority and Road Traffic acts in Parliament gives the Authority additional powers in dealing with the competition, including illegal route taxis or "robots", and should impact on any fare increase that is decided.

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