CNO’s annual price adjustment mechanism is not a price increase – OUR | News
The Office of Utilities Regulation (OUR) has decided to shed some light on the Price Adjustment Mechanism (PAM) on National Water Commission (NWC) bills.
He explains that the recent annual adjustment and reset of the base tariffs and indices used to determine PAM does not represent OUR’s approval of a further increase in water company tariffs and will not have any new impact. on monthly customer bills.
PAM is a rate applied to the monthly billing of customers for water and sanitation services that captures the effects of movements in inflation as measured by the consumer price index, the dollar exchange rate Jamaican against the US dollar and electricity prices.
Base rates for each of these indices are approved by OUR when setting NWC’s tariff for water and sewerage services.
The utility regulator explains that adjusting tariffs monthly using the PAM ensures that NWC’s revenues are preserved in real terms by compensating monthly for movements in input costs over which it has no control.
The NWC announced last week that starting in May there will be an increase in water, sewerage and utility rates and miscellaneous fees charged by the company.
Rates will increase by 11.7%.
But, OUR explains that the annual PAM reset, called ANPAM, is the process by which it verifies and confirms the monthly PAM adjustments over the previous period and incorporates the cumulative PAM adjustments since the last reset into the rates. basis approved for each of the three indices.
This effectively updates base rates, making them representative of current costs, the OUR noted.
Going forward, the monthly PAM shown on invoices will then reflect the differential between the newly reset base rates and the actual rates for the three indices at the time of invoicing.
The OUR noted that in its NWC 2022 Annual Price Adjustment Mechanism Adjustment Rate Notice of Determination, dated 25 April 2022, it approved an ANPAM rate of 11.7% following the submission usual from the water company for an annual adjustment.
He said this figure reflects the cumulative PAM adjustment that has been applied to NWC bills over the previous 12 months and the percentage change to be made to the base rates of the three indices, which will then be applicable for the period from April 1, 2022 to March 31, 2023.
OUR said that with WFP’s monthly application, customer bills already reflect the current rates and movements of each of the three indices.
ANPAM is therefore only a “tune-in” mechanism to ensure that base rates approved for indices entering next year catch up and better reflect rates already applied to customer billing, said the OUR. .