This is the second annual tariff adjustment under the current price cap control mechanism which was implemented on June 1, 2004 in compliance with Schedule 3 of the Jamaica Public Service Company Limited (JPS) All-Island Electricity Licence (‘the Licence") (OUR document Ele 2004/2.1). In that Tariff Determination, the Office set the average non-fuel rate at J$5.627/kWh. It also established that the price cap be applied on a global basis. Specifically, the annual adjustment resulting from changes in the inflation offset index including efficiency gains and changes in quality of service is to be applied to the tariff basket instead of the individual tariffs. JPS is allowed to adjust the tariffs for each rate class on such a basis that the weighted average increase of the tariff basket does not exceed the price adjustment.

The annual adjustment calculates the movement in the base rates charged by JPS. The company is allowed to make interim monthly adjustment to take into account movements in the foreign exchange rate.

In addition at the previous adjustment determination, the Office approved an adjustment of 6.43% effective June 1, 2005. The adjustment was not implemented until August 1 however and was therefore "trued up" to 7.72% (to reflect recovery over 10 months) due to ongoing considerations of a hurricane claim that was submitted with the annual adjustment and consideration of which could not have been completed in time for implementation in June.

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