National Water Commission (NWC) customers will be paying more for the precious commodity, starting this month, as the Office of Utilities Regulations has approved a small increase in the Annual Price Adjustment Mechanism (ANPAM).
The Office of Utilities Regulation (OUR) announcement in a statement yesterday (May 2) that after verifying information presented by NWC, a rate adjustment of 5.11 per cent is applicable to its base rates. In accordance with NWC’s request, no adjustment will be made to miscellaneous/reconnection fees.
The OUR is seeking to set the records straight, explaining that “the ANPAM change is not a rate increase to NWC. It is simply an adjustment to NWC’s base tariff which reduces the level of monthly PAM adjustments customers see on their bills.”
Method of calculating ANPAM
The annual reset of the Price Adjustment Mechanism (PAM), called ANPAM, is the process by which the OUR verifies and confirms the monthly PAM adjustments over the preceding period and rolls the cumulative PAM adjustments since the last reset, into the base rates approved for each of the three indices– Foreign Exchange Rate, Consumer Price Index and Electricity Charge. This effectively updates the base rates making them reflective of current costs.
With the monthly application of the PAM, customers’ bills are already reflective of current rates and movements in each of the three indices. ANPAM, therefore, is merely a ‘true up’ mechanism to ensure that the approved base rates for the indices going into the next year catch up with and are more reflective of, the rates already being applied to customer billing.
The new base indices for the PAM are as follows:
Foreign Exchange Rate: JM$154.89 to US$1.00;
Consumer Price Index: 127.80
Electricity Charge: $55.92/kWh.
These revised base rates are to remain in effect until the next programmed reset of the ANPAM in 2024 April, or if new rates, by way of a five-year tariff review are decided earlier. The OUR also examined NWC’s request for a realignment of its PAM structure.
In its request, NWC argued that it had witnessed a significant increase in the cost of electricity, an expense that is outside of its control but the current PAM structure did not allow for the full recovery of these costs. Even though the current PAM structure has been in effect since 2019, the OUR takes the view that any realignment should be done at the utility provider’s next five-year tariff submission, when a comprehensive analysis can be done.
Furthermore, the OUR’s initial assessment suggests that a new structure would likely have a negligible effect on NWC’s revenues. Consequently, the OUR took the decision that the existing PAM structure would remain intact.