CUC denies benefitting from rising fuel costs

| 11/07/2011

(CNS): The local power company has said that its profits do not increase when the fuel factor goes up as a result of global oil prices. In a statement released Monday morning, President and CEO of the power firm, Richard Hew, denied that CUC gained in any way as he urged people to conserve energy. He said that the fuel factor adjustments on bills takes place over a two-month period when the prices are reviewed and approved by the Electricity Regulatory Authority. The total cost of fuel to CUC in April, including government duty of 75 cents per gallon, was applied to customers’ bills in June and the cost of fuel in May will be applied to customers’ bills in July. (Photo Dennie Warren Jr)

“CUCdoes not benefit in any way from high fuel costs as only actual fuel costs are recovered without markup,” Hew said. “While we always encourage customers to use electricity efficiently, with fuel costs rising to the highest levels since 2008, coupled with warmer temperatures, we are encouraging customers to be especially vigilant of their electricity consumption during the summer period.”

He said that when there is a reduction in the price of fuel, customers will also see a decrease in fuel costs on their bills.  “CUC’s per kilowatt hour base (non-fuel) rates (kWh) have remained unchanged at an average of CI$0.1039 for the past two years, and are in fact lower today than they were in 2002,” Hew added.  

CUC purchases fuel through a competitive bid process using long term contracts based on world fuel prices, the power company stated in the release as it explained that fuel costs, driven by world fuel prices, are at their highest levels since summer 2008.

“Customers receiving their June bill would have seen a spike in the fuel cost line item related to fuel purchased by CUC in April when the cost was CI $4.00 per imperial gallon. This translated to a calculated fuel cost factor of 25 cents per kWh. In March fuel costs were at CI $3.78 per imperial gallon which translated to a calculated fuel factor of 23 cents per kWh.  The calculated fuel cost factor for July is also 25 cents per kWh,” CUC said.

The high cost of fuel was compounded over the last year through a combination of the international price of oil and the removal by government of the rebate on bills that was put in place by the previous administration. Last year the government also increased the fuel duty by another 25 cents adding to the cost of CUC bills, fuel at the pump and a knock on effect to the price of most consumer goods. In this year’s budget delivered last month the premier said that he would be setting aside $4.5 million from a new hedge fund regulatory fee to subsidise residential fuel bills. The ERA said last week that it was in the process of working out how the money would be allocated to help reduce customer’s bills

The graph supplied by CUC shows the fluctuation in the fuel cost factor compared to the stability of the CUC base rates between June 2008 and June 2011.


 

Category: Local Business

Comments (55)

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  1. Knot S Smart says:

    Wow! I just got my CUC bill and off I go to the Bank to try and get a second mortgage before the bill's due date.

  2. Anonymous says:

    CUC bill increased by 65 cents.  Don't know if this makes sense in light of the many comments posted on this article.  While it is still higher than I would like it to be, I got my cuc bill only yesterday and it had increased by only 65 cents! (I hope this isn't a mistake, and I get hit next month, but there it is!)  My usage decreased by 21 cents; my fuel factor increased by $1.10 and my Govt fuel duty decreased by 24 cents = net increase of 65 cents.  I do try to conserve in every way I can – wash only a full load of clothes; wash in cold water (there are detergents that work as well in cold water as in warm or hot); we don't need to shower for 20 minutes and use an entire tank of hot water – you should be able to get a least three showers from a tank of hot water; I do not run a/c 24 hours and when I do, I have it at a comfortable temperature and use my ceiling fans; at night, I do not have the a/c set so low that I have to use a blanket, but just a light cover; my water heater is on only when needed, like when I am using the diswasher.  I know It is more difficult  for families with children to conserve but you have to do what you can and explain the importance of this to the children.  Don't worry about CUC making a profit from the fuel prices – they don't.  They make their profit from your usage.                       

  3. Anonymous says:

    No matter what CUC says, they are a rip-off. They are a monoply and could care less about all the complaints we write because we have no other alternative than to turn off our electricity and a/c. That's all there is to it.

  4. The Lone Haranguer says:

    People please stop whinning about CUC, they do a good job at providing reliable power, they employ a lot of Caymanians in good paying highly skilled jobs, they did a masterfull job after Ivan in rebuilding the infastructure, the deal they have is fair, is the goverment was running it, the bills would be way higher the service would suck and we would still be rebuilding after Ivan.

    What the goverment needs to do is to put conditions in place that will encourage the private sector, without subsidising anyone, re-newable cheaper energy sources.

    Hmmmmmmm are not the Chinese the leading providers of Wind turbines and solar panels.

    Roy sign me up for that Course, I need to take some of the boys from CHEC to lunch to see what contacts they have in China.

  5. Anonymous says:

    CUC has to learn new ways of doing business. Mr. Hews will you like if you go to burger king and they charge you a dollar extra because CUC has gone up? Thats the kind of business you are promoting. Your community efforts are a JOKE!!! compared to the money you are ripping off from the same people. Trim your heavy overheads otherwise your doomsday is soon to come. 

    • Just Me says:

      "Your community efforts are a JOKE!!!  It's one thing to complain about the high fees but for God's sake try to remain objective. SHow me another company in the Cayman Islands that spends more on community efforts? Then I also challenge you to show me one that has spent more on educating and promoting Caymanians? The fees are high, I totally agree but just look at your bill and you will see that it is the oil companies that we should be taking to task!

  6. Anonymous says:

    When are people going to start demanding answers from the local oil companies? Why haven't the prices dropped at the pumps yet? Prices have been dropping for weeks in the US. WTI Crude Oil is at $94.99 per barrel today and has been in the mid to high $90 range for weeks now. So why are we still paying ridiculous prices here (prices that are associated with oil when it's at $120 per barrel)? At the pump in the US the prices have fallen on average by about 40 cents per gallon. Why haven't they fallen here? Surely, we can't still be using gas and diesel from the April shipment? Do we fail to realize that CUC buys its fuel from these same XXX companies? Am I the only person that is noticing this? I want answers! CNS: Can you please ask oil exec's in Cayman for answers? Interview them? Demand a press release? Something. This has been going on for too long.

    • Anonymous says:

      I completely agree with this post.  Why is it taking so long for the gas companies to drop their prices?  Greed, that's why.  Wonder if the supermarkets will start reducing their prices – I very much doubt it.  And yes, why isn't the media reporting on this demanding answers.

  7. T.L. Haranguer says:

    CUC needs to be offered a deal that will make it profitable for them to invest in renewable power that will bring down the cost of electricity while employing locals and adding value here on the island.

    We cannot continue to be sending 110 $ million dollars a year of the island to pay for CUC diesel.

    • Anonymous says:

      What sort of deal did you have in mind? Why does it have to be CUC? It is open to any person who has a source of renewable energy to enter into a power purchasing agreement with CUC and obtain a generating licence. I don't see anyone rushing to do this. Why do you think that is so?  

  8. Anonymous says:

    I  dnt believe Mr Hew,  CUC is ripping us off here, competition is badly needed, kinda like what cable and wireless useto do to us, then as soon as competition came here then all of a sudden prices drop, so why cldnt you do it all along. I am sure they can do better at CUC but, their "big life" is more important than givin us a good deal.

  9. Anonymous says:

    CUC denies benefitting from fuel costs…now that's a joke?

    CUC benefitted from all the "Ivan Recovery" though? Now Joey answer that question. 

    The life is being sucked from us who live here and it cannot go on for much longer, we will soon have to get "small personal loans" to pay our CUC bills if this continues. 

  10. Anon says:

    The problem is your property & usage.

    My June bill was $370 for a 3900 sq. ft. house with zoned a/c running every day & night. An increase of about $40 from May.

    Not saying that it would not be good for the costs to come down, but a lot of bill is in our control.

    • Anonymous says:

      SPEAK WHAT YOU KNOW! What would YOU know about my usage?! You obviously are either never at home then, or must live by kerosine lamps and generator. There are many other people in much smaller homes than mine with bills bigger than mine and no reasonable explanation.

      XXXX

      • Anonymous says:

        Something is obviously wrong. Remember, people don't use electricity, appliances do. Something is clearly wrong with your appliances. When last have you had your A/C serviced? How often do you change your A/C filters? What's the SEER rating on your A/C (anything below 14 is going to pull massive amounts of energy). Is your water heater old? Is it on a timer? If you can't afford a timer, turn it off at the breaker (that's what I do religiously). Do you have proper insulation in your ceiling? Are your windows and doors properly caulked? These are the things you need to check out. It is blatently obvious that some of your appliances (most likely you A/C) is inefficient, old or not properly maintained. So even if you use it sparingly it still pulls tons of electricity when you do turn it on. Maybe you need an energy audit. CUC will do one for free. Just a suggestion.

      • Anon says:

        You are correct, I do not KNOW anything about your usage and neither do you know about mine. But I gave you a comparison to attempt to show you that there is waste occurring somewhere. It is up to you to find & fix it. Same for the other folks you mention.

        By the way, there is someone in my home almost 24×7, so at least one a/c zone is always operating. No lamps or generator. Savings can be made but it is really up to the consumer to do that rather than take the easy route of blaming someone else. However, I agree with you that it would be good if the costs came down, but by eliminating waste the savings would be more.

    • Dred says:

      One word. BULL.

      There is no way in hell you have a 3,900 SF place and actually use it with AC and only spend $370.

      Even with the most efficient system in the world you couldn't do that.

      I don't even think you would use fans to keep it cool and only spend $370 for that type of area.

      • Anon says:

        Actually I use ceiling fans as well while the a/c is running! Granted some of the space quoted is not air conditioned (garage, etc.). So let's say 3000. The amount is what I paid on my last bill. I do use a propane stove, water heater, & clothes dryer. Add $40 monthly. I'd prove it to you if I had a way. NO BULL TODAY.

        • Anonymous says:

          So basically you only use electricity to run your A/C and lights, as you state you use propane for all the major burners and that alone has your bill at C$370. I’m happy that you lucked your with your planning of being able to use propane. In a condo, I do not have this option so guess what type of appliances I have no choice to use, electricity. Most people I know are in this position either live in condos or unable to upgrade because they have to pay to CUC every month what it cost to buy a new appliance. So before you make claims of how you're bill is so low, think what it would be if you were in my position unable to upgrade to propane and everything needing CUC to operate. Your tune would be different because I can guarantee your bill would exceed CI$700.

          • Anonymous says:

            The A/C is the major electricity consumer in any accomodation so I think your guarantee is meaningless. I've lived in other homes & apartments with all electric appliances and never, ever, paid $700. But as I said I am very careful and cost conscious about how & what I use. I suggest you review the many other comments in this area where persons are indicating ways to reduce bills. The chief among them being to get a FREE energy audit done. You might be surprised.

            • Anonymous says:

              My A/C is set to 85 when it’s on. Off during the day goes on in the evening. I have my a/c serviced regularly. Things that heat will pull a lot, stove, dryer, iron (clothes, flat 🙂 I’m a woman). CUC states the a water heater can be up to 20 cents on the dollar hence the timer recommendation so I turned that off completely. So when I run every thing you don’t on electricity, and when I limit my AC my bill is $350 normally, now cause fuel increase the past 3 months it’s 475 to 550 with reletively the same usage which is just about 1400KW a month. Let me re-word my statment. If I ran my A/C like you plus the things I do need to that you don’t…MY bill would be over CI$700, why do I know this? Cause I’ve seen it almost that high the last time fuel went up and stopped using my AC that’s when it dropped below CI$400. The whole long and short is the fuel is what drives the bill up with being almost 2/3 of the bill and you pay more once you exceed 1000 KW. I will try out the audit though. Thanks.

  11. B. B. L. Brown says:

    As to the questions of, "What is their incentive to be efficient?" and "Why doesn't CUC look for lower cost fuel?"  There is no incentive to do either when CUC has the only game in town!  As long as they can pass the cost on to the consumer there's "NO PROBLEM"!

    • Anonymous says:

      CUC is killing Cayman Islands, but the saying is TIME LONGER THAN ROPE.

    • Anonymous says:

      CUC – explain to me how my light bill went from $448.00 last month to $590.00 this month when I was away for 2 weeks (no1 home). My co-worker is complaining about her increse by over $200?? This company is sucking the life out of people.

  12. Anonymous says:

    All I have to say is — CI$1000 for a utility bill in a 1600 square foot home with average usage is highway robbery no matter where in the world you are or what explanation you try to give, bo bo.

    Please don't talk crap about the fuel prices – CUC have been milking this country's economy long before fuel went to $5+ a gallon. XXXX

    • Anonymous says:

      I own a 4 bedroom, 3,800 sq foot home with a pool and my bill was $650.

      And yes I run a/c.

       

    • Cucumber says:

      Get a decent AC system installed.  Yours is a joke unless you are living at 58 degrees.

  13. Anonymous says:

    Their profit doesn't go up, but it doesn't go down either.  In a competitive industry an increase in costs means profit margins fall because you can't afford to pass it straight on to your customers.

    Since they can just pass the cost on to us, what incentive is there for CUC to really try and minimise their fuel costs? Maybe if the amount they paid for fuel was linked to their own bottom line they would use trading strategies to minimise exposure to the inevitable spikes in the spot price.

    • Anonymous says:

      "what incentive is there for CUC to really try and minimise their fuel costs?".

      CUC gains nothing from rising fuel costs but instead loses in terms of lower consumer demand. Some people do cut back when their bills skyrocket rather than come on CNS and moan and complain that they can't continue to run their AC 24/7 at 70 degrees.  

      Please get the 'competition will lower prices' mantra out of your system. It is simply not feasible to have competition in T&D of electricity  and it would not decrease costs but instead increase them.

  14. Anon says:

    Please stop making comments about "allowing competition in electricity production". Their current license does NOT give CUC the exclusive right to electricity production. Any other company with the financial & technical ability can compete for required electricity production. The ERA controls the bidding for production. This was put into place when the previous administration negotiated the current license. Consumers can also produce their own electricity and either use it or sell it to CUC.

    Transmission & distribution of electricity is exclusive to CUC as they own the poles & wires. So it is mandatory that they buy any electricity produced by a winning bidder (hopefully the lowest cost bidder) and sell it to the consumer.

  15. nauticalone says:

    It seems both the Govt. (current and past) and CUC are XXX us….and smiling all the way to the bank. For shortsighetd profits.

    Some have recently said that building an Oil Refinery here will result in lower fuel costs. And used Jamaica and Venezuela as examples.

    And further went on to compare/justify that Cayman buys from USA market. Why?

    Why doesn't Cayman (inclusive of CUC) buy directly from Jamaica since it's so much cheaper there, and so close to Cayman. And at the same time ensure no local negative environmental effects of an Oil Refinery here….why?….(Read between the lines). Who benefits most? Currently it is Govt. and CUC….bring in an Oil Refinery and we simply add another.

    We need to be investing in purchasing lower cost fuel (in the short term) and moving towards clean renewable energy like wind and solar (in the long term)!

    CNS: I've XXX'd out the word "raping" where you mean merely "taking advantage of us", which is how it is being used increasingly in the comments. Rape is a violent sexual act and the word should not be identified with getting a higher bill than you'd like. In trying to emphasise how you feel in this context you are watering down its actual meaning. Sorry if it seems like I'm picking on you – new rule.

  16. Anonymous says:

    My family and I moved here last year and we are moving back to the States next month before school starts.

    What we thought would be an incredible experience in your country has turned out to be a horrible nightmare. We thought the heavy taxation and costs of doing business in the States was ridiculous.

    Electricty is just one of those costs that just seems to keep going through the roof. We owned a 4 bedroom 3300 square foot house in North Carolina and with three children in and out of the house our electricity bill was always between $80 and $100.  In Cayman, we have a smaller three bedroom1900 square feet condo and we pay almost $1200.00 per month. Folks that is Cayman dollars not US dollars. Something is clearly wrong here, you are getting ripped off.

    My family and I wanted to live and invest our money here but to live here would mean that we would lose everything we worked for so hard over the years.

    We are headed back to the States and will be happy to pay the "high" taxes inflicted on us by the US government. They are a lot less expensive that what we have to pay here.

    By the way other than the high cost of living, we love Cayman but until you can get your house in order, we won't be back!

     

     

     

    • Anon says:

      That is your right. You do hopefully realise that if we paid direct taxes our electricity would also be less since the duty on fuel could be dropped. Maybe to zero. However, unlike direct taxes, I can control my electricity costs by regulating my usage. I cannot do that with direct taxes.

      As an FYI, the monthly bill for my 3900 sq. ft. home is around $400 during these summer months with efficient zoned a/c running every day. So I would suggest that the problem is not really the cost of the electricity but the efficiency of the property (systems, insulation, etc.) and the usage.

      Many commentators should really take a close look at their usage to find the real reason for their bills.

      • Jack N Meoph says:

        Post a solution – I have 4000 feet and hit $2000 last month… Any suggestions???

        • Anonymous says:

          Get an energy audit.

        • Anonymous says:

          What temperature do you run your a/c at?

        • Anonymous says:

          I have a similar sized house, and from November to April we open the windows at night and my electricity usage is between 500 and 600 kilowatt hours. That's sometimes less than $200 per month! Here is how that is achieved.

          1. Insulation. It is far easier and cheaper to keep heat out than it is to remove it. Insulate roof and walls. I have insulation everywhere. The more the better. My roof is white to reflect heat as well.

          2. Double-glazed windows. Besides keeping out the heat, they also keep out sound. One of my better investments. Not cheap, but still looking good after 20 years. From November to April they are open at night, and usually closed in the morning to trap the cooler air inside the house during the day. In the summer the windows remain closed both day and night.

          3. Solar. My hotwater is solar. I purchased the entire system for $1000 and installed it myself four-and-a-half years ago. It has already paid for itself, and I expect many more years of free hot water.

          4. Propane. We have a Jenn-Aire propane stove with electric start. A 100lb cylinder of propane lasts more than a year. Comparatively, the 25lb cyliner on the bar-b-que grill is changed every couple of months.

          5. Sun. Besides heating the water, we use it to dry clothes on a line.

          6. CFL bulbs. There are no incandescent bulbs anywhere in the house. LED would be better, but the prices on those are still high.

          7. Ceiling fans. By using ceiling fans to move the air we can set the thermostat on the A/C to around 80 degrees at night and still sleep comfortably.

          8. Efficient and regularly serviced A/C. We do not have that. Our A/C uses R12 refrigerant and it is more than 15 years old! It is around 10 or maybe 12 SEER, but I cannot justify replacing an entire system that isn't broken just to get a slightly lower electricity bill. So in the summer months our usage is around 1000 kilowatt hours and that can be entirely attributed to the inefficient A/C that we run at night., and sometimes during the day.

          9. Turn OFF anything NOT is use! The easiest way to do this is using multi-strip outlets to plug everything into and then switch it off at night or whenever it is not in use. We don't watch a lot of TV and prefer reading, but the TV boxes and those big plasma TVs are energy hogs.

          Hope I was able to give you some ideas on where you can make some savings.

      • Dred says:

        I believe this to be full of crap. Sorry too much space for such a small bill. You must cook on a camp fire outside. If you said $700 I might say okay but $400 is crap. sry.

        • Anon says:

          I answered your other post as well. I use propane for water heating (tankless), cooking, & clothes drying. Cost about $40 per month total. My total conditioned space maybe more like 3000 (removed garage, etc.). A/C split into 4 zones. Double glazed windows. Excellent roof insulation. Programmable electronic thermostats with moderate temperature settings, e.g. daytime 83 when outside is 95. Costs can be controlled. Sorry to disappoint you.

    • Anonymous says:

      "In Cayman, we have a smaller three bedroom1900 square feet condo and we pay almost $1200.00 per month".

      That is pretty incredible. What do you do – turn down to AC to 70 degrees and open the doors and windows?

      I have a four bedroom 6,500 square feet house and it only reaches $1,200 when the summer coincides with high oil prices. In January my bill was about $650.      

    • Anonymous says:

      $1200 a month?!?!? Are you growing pot??

  17. Anonymous says:

    Until we have compettition like in the telecoms market, we will continue to pay CUC's high prices.

    Suck it up cayman! There is not a damn thing we can do without legislative changes and a government with the cajones to say, "enough all ready!"

    What's the use in complaining if no one hears or cares. There is not a government past or future that is going to mess with the revenue they get from CUC because they know they won't get elected again.

    We're screwed and it's getting damn hot again. Oh well, I will just try to get a third job so that my few sleeping hours will be in an airconditioned room.

    • Anonymous says:

      The legislative changes came in 2008. Competition (for generation only) is welcome to come to Cayman. Haven't you read the new licence? I love when people get on CNS and so proudly and boldly talk about stuff they have no clue about. Get the facts first and then post your comment. And just so you know, the reason that competition hasn't flocked into the Cayman market is because of how capital intensive the electric utility industry is. You can't start up an electricity company using a CI$15,000 fixed deposit….gonna need a little more than that. Hence, the barriers to entry are extremely high. Further, there is absolutely no guarantee that competition will reduce prices here in Cayman. None.

      • Anonymous says:

        Thank God there are at least a few posters on here that actually know what they're talking about.  

  18. Dred says:
    12 Month Average for Self Serve Regular in US Markets
     
    State's Graph
     
    So why is the US graph so different from CUC?
    Source:
     
     
    • Anonymous says:

      Am, it's called government duty plus vendor mark-up. But you do know that the CUC chart isn't showing average price per gallon right? So how can you compare two graphs that are displaying completely different information? Further, how can you compare anything in Cayman to anything in the USA? A box of Corn Flakes costs US$1.75 in Super Walmart and costs CI$4.50 in Foster's. Countries that have to import everything (Cayman) will always be more expensive than countries that  grow and produce/manufacture their own products and benefit from economies of scale amongst other things.

  19. Anonymous says:

    with your 3rd world way of generating power…..cayman deserves everything it gets

  20. Anonymous says:

    what about efficiencies within cuc?…..what is their incentive to be efficient when they just add on the fuel factor anyway…..

  21. Anonymous says:

    I bet we would see a differnt graph if the government would allow and promote competition in the electricty production market.

  22. Anonymous says:

    Why doesn't CUC look for lower cost fuel rather than buying it from the local suppliers who are charging and arm and a leg? Surely a company of their size can source fuel out of Venezuela for a lot less.

    • Anonymous says:

      Oh yes, get into bed with Chavez. The savings there are illusory. Just ask the Eastern Caribbean countries that have dealt with him.