Hedging not the problem

| 14/10/2011

(CNS): Following comments made by the premier at a public meeting this week and those in the Legislative Assembly last month about high electricity bills, Grand Cayman’s power supplier has issued an extensive statement about how its clients' bills are calculated. In response to the premier’s question over whether the high fuel bills are down to duty increases or CUC having hedged and lost, the power firm made it clear that it was duty not hedging that was the problem. The cost of hedging was less than a half cent per kilowatt-hour while duty, which has increased 150% since September 2009, is 75 cents on every gallon used.

CUC said Thursday that government will collect CI$24 million on the fuel CUC uses to generate electricity and the hedging was done at the request of the body which regulates electricity generation.

In the face of a private member's motion asking government to reduce duty diesel because of the negative impact it has on the cost of living across the board, the premier has hit out at the sole power supplier on Grand Cayman, stating that he wanted to look at the licence agreement and audit the power company.

At a public meeting this week Bush said that when people had power bills more than their mortgage payments it could not be because of the 25 cent duty increase per gallon, and he accused CUC of losing money when it hedged.

In its statement CUC said that it was the Electricity Regulatory Authority, appointed by the government, that had requested CUC hedge on fuel prices. It proposed a hedge of 40% of its fuel volume consisting of call options, which in return for a fixed premium would cap the costs at a pre-determined level that was approved by the ERA in March 2011.

“CUC purchased call options to cap the cost of fuel purchased on the US Gulf Coast at US$3.55 per gallon. In September 2008 the price of diesel purchased in the US reached over US$3.79 per gallon before falling to under US$1.50 per gallon in late 2009. Since late 2010 the price has risen to a recent peak of approximately US$3.00 per gallon, which remains below the price cap,” the firm said in a statement. “The premium for this price cap is CI $1.7 million dollars per annum which currently represents CI 0.35 cents less than half a cent per kilowatt-hour for the total annual generation of electricity.”

In the face of the premier’s criticism and the increasingly ‘heated’ political debate about how much of an impact the fuel duty increase plus the removal of the rebate has had on bills, CUC said that before September 2009 the duty on fuel was 30 cents per gallon because of the duty rebate programme and is now more than double that.

“In September 2009, the present government abandoned the rebate programme which restored the rate of duty to 50 cents per IG. In June 2010 the rate of duty was further increased by another 25 cents for a total of 75 cents per gallon or an overall increase in the rate of duty of 150%” it said in a statement.

The increase is an additional CI$ 2.65 cents per kWh or CI$14.4 million dollars per year for government duty compared to the one time premium of CI$1.7 million for hedging, CUC pointed out.

The power supplier said that the present one-year hedge will expire in March next year and no further premium will be payable unless the ERA requests it to hedge again.

Acknowledging the high cost of power CUC said the rate it pays for diesel is very competitive amongst electric utilities in the region. But the duty rate of 75 cents is by far the highest.

On a monthly basis CUC submits information regarding fuel costs and calculations to the ERA to be reviewed before it sends out the bills. “The fuel costs are recovered from electricity consumers two months in arrears in order to allow for a thorough review,” the firm said, adding that there have been no changes to the base rates in the past two years which is lower today than in 2002.

It said the cumulative impact of the rate freezes, rate reductions, and shrinking consumer demand due to the poor economy has translated to a fall in the firm’s return, which has fallen to less than 8% before expenses. But the company has invested US$64 million in electricity infrastructure, training and technology over the past two years to meet its obligations under the licences

“Without this investment the current levels of continuity of service that exceeds 99.9%, and is comparable to North American utilities, could not be maintained,” the company said.

Maintenance issues with a number of generators this year had resulted in a number of significant power outages and CUC said previously that it anticipated that the continuity of service would fall during 2011 but it has not revealed any figures relating to the blackouts in its latest statement, posted in full below.

Given the deal the firm has with government, the firm claimed it will not recover its investments for many years but invests with the expectation that government will honour its commitments under the licences.

“CUC has a fiduciary duty to its investors to ensure that its rights under the Licences are protected and upheld,” CUC stated. “Without the ongoing support of its shareholders and lenders, CUC would not be able to make the required investment in its infrastructure to maintain reliability of service.”

CUC pointed out that the high cost of fuel negatively impacts many small islands around the world that rely on diesel because they are not sufficient in size to install power plants that use cheaper fuel.

Pointing the finger squarely at the duty levels the firm stated: “Cayman is unique in the high level of import duties placed on diesel used for electricity and this exacerbates the issue,” the firm said, adding that it was making every effort to operate efficiently and find practical alternative energy sources.

CUC also gave advice on how consumers can reduce their own costs by maintaining and managing air-conditioning which accounts for up to 70% of bills.

A breakdown of the monthly residential electricity bills for August revealed that more than a third of residential customers had bills of under $200 and three quarters had bills of less than $500. CUC said that the ten percent of customers with bills over $700 if they are living in a home that is less than 3000sqft are missing opportunities to significantly reduce those bills and advised them to take advantage of the free audit.

Category: Business

Comments (78)

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  1. Anonymous says:

    Several years ago I invested 1/4 million in CUC at USD12.25. Since then I lost 1 dividend because of Hurricane Ivan and rebuilding the system.  A few years ago CUC asked me to invest a further $40,000 in a rights issue, which I did, buying new shares at c. 11.oo each.  Again I thought, safe investment.  The share  $ value is about the same as the amount i have received in dividends since I made the initial investment.  Is this fair and reasonable when, worldwide, 'utilities' are said to be one of the safest current investments, for these times?  I'm particularly disturbed that a private company that employs almost 100% Caymanians, is villified to the extent that the share price has plummeted from 9.64 to 9.26 in a matter of days, on the news, broadcast on the net worldwide, from the Toronto Stock Exchange, that the Cayman Government is more or less on a hate mission against CUC. I'm surethere are many Cayman residents and Caymanians invested in this share, assisting in the purchase of future generators and other multi-million dollar equipment – that the government could not possibly supply – but there are also major overseas investors who might also be 'turned off' by negative news to the extent they'll reinvest elsewhere and leave the company to mixed fortunes.

  2. Anonymous says:

    facility – a building or place that provides a particular service or is used for a particular industry

    Can someone please tell me why CUC is applying charges to light bills for their  FACILITY???  CUC do you expect the people of Cayman to PAY ALL YOUR BILLS?  Enough is enough……pay your own bills for the upkeep of your buildings and equipment. 

    example of bill rec'd:

    Facilities charge            5.12

    Energy Charge          151.17

    Lic & Reg Fees              2.28

    Fuel Cost                    281.66

    Govt. Fuel Duty             62.58

    Total Electric              502.81

     

    CUC and Govt. is killing the people, they are so stressed from bills.

     

    XXXX

     

  3. Anonymous says:

     

    Blame it on rising oil prices?  FYI – Oil was selling for over $110 a barrel in May and as of today a barrel of oil was going for $86.  So explain to me why the cost of energy is still the same here?  Considering an approx. 22% decrease in oil prices.  My power bill has went from  $0.3536 per kwh in May, to $0.3508 per kwh now in October, a less than 1 % decrease.  Let's forget government duty charges, that is only 12% of my entire bill, I can live with that! Let's talk about this fuel charge, that's 56.9% of my entire bill, and has been all year, although oil prices are dropping.  

     

  4. Anonymous - Can't afford it says:

    I like CUC's were your Dollar went..because it also shows who benefits.

    43 cents – Fuel and Oil ( So 2 local companies make money Esso and Texaco…I wonder what their Mark up is ? assuming they are like every other company in regards to local participation  we must have a very rich Caymanian (s)..how many people do they hire ?)

    12 cents – Duty ( so that local too, and surely a few Cayman jobs)

    1 cents – Licence & Regulatory Fees ( local too…a few Cayman jobs)

    10 cents – Labour and Material ( It's kind of mixing apples with oranges, but there is CUC's staff and a few local suppliers and foreign suppliers…advantage local)

    1 cent – Insurance ( I assume that is local, but CUC might be self insured)

    13 cents – Loans and Interests ( My guess is that there are few local lawyers making money out of this, perhaps an opportunity for the country to make some money too, if these loans are from else where someone should jump on this if the government don't want it…buy why would they ?)

    11 cents – Capital expenditure ( so the equipment is bought from a foreign Supplier, but once aquired, there is some benefits in terms of extra duty and labour when they extend the life of the equipment i.e. capitalization.)

    9 cents – Divdends ( small precentage of local owners, put prior to the sale Joe owned most of it , and he has definately reinvested back in Cayman.

    All in All I have to say may be

    25 cents – makes it out of Cayman…

    The Government should look to benefit from CUC operations rather than attack it.

    It you can afford it…don't use it.

     

     

     

     

  5. Loopy Lou says:

    You do all know that air conditioning is not a basic human right?  You can switch it off.

  6. Anonymous says:

    If you have an issue with the government, then take it out on them. how can you pay a bill for $700 last month and come back and pay the same for this month… does that make sense? the people are frustrated and someone needs to take drastic actions.

  7. Anonymous says:

    This is a political football for the Government, they know the average person at no fault of their own do not understand the workings of utility providers so they continue to play with our thinking process hoping to gain an advantage and continue their wastefulness.

    Remember C & W, the compotation entered the Caribbean by the rulings of the courts in London and not by local politicians but they take credit for it.

    The facts are with your house insulated correctly and doors opening and closing, are shut as you enter and exit, timer on your W.H. (timer costs $20 – $75 depending weather using 110 or 240v ) you and friends can install the insulation. You can reduce your bill at least 20%.

    I could go on and on, but will recommend you follow CUC recommendation of,

    "USE WHAT YOU NEED BUT NEED WHAT YOU USE" .

    I know of people with 3ooo sq. ft. + homes who have bills around $450 to $575 monthly.

    Insulation and a timer should pay for itself in 1 year if done correctly and you put on your overalls, mask,  gloves and do some work yourselves. HELP EACH OTHER AND STOP THE COMPLAINING.

    Remember when we used sea gravel (rock) that we backed from the beach to put into our concrete to build homes and kept the cost down, and guess what most older homes fared better than the new ones in IVAN.

    The Government needs to set up a information call center, staffed with current employees knowledgable of energy efficency and advise people how to lower their bills since most wont adhere to CUC recomendations.  ONCE AGAIN COMPLAINING TO GOVERNMENT WILL GET US NOWHERE, seek out the information you need, pass on the information to one another          and BUST A SWEAT!!!!!!!!!!!

  8. OccupyCUC says:

    We should all go to the CUC Headquarters at Noon on Wednesday 19 October and "Occupy CUC". By that I mean pack the waiting area and demand the big guys come out and address the people. Call it a forced town hall meeting if you will. As a large group we could ask questions and most importantly demand answers! Someone who is good with Facebook, Twitter, and sending the BBM messages around the island should get on this!

    Occupy CUC!

    Main Headquarters

    Noon Wednesday 19 October

    Show the power company that the people have power also! Come to ask questions and demand answers!

     

    Not a bad idea huh? Worth a shot at least. Who says we can't learn some ideas from these demonstrators in New York!

    • Anonymous says:

      Did I miss something? Isn’t that what this article and the attachment did? Answer questions? It answered my questions. And did you not hear Mr. Hew on Rooster last week or the week before? He called in to address people’s questions (yep, he was not a scheduled guest. He actually called in from his office to address callers concerns). Do you think he’s afraid to answer your questions? He’s not. It’s just that residents aren’t willing to accept what he says. Unless of course he says “free electricity for all”. That would make you happy huh? CUC answers questions all the time it’s just that locals can’t handle the reality of what they’re saying. So go, occupy CUC, and get the answers that won’t help you to sleep better at night.

    • Anonymous says:

      All I see in this article is answers……..are you reading the same story?

  9. MER says:

    OOOhhh!!! I get it!!! THIS is the $25 million surplus for Government Mac has been raving about! All at the expense of many people throughout Cayman suffering from the cost of their bill! If McKeeva wants to help us so bad with these bills it seems he needs to recheck how much pressure he is putting on the electricity company too..

  10. Anonymous says:

    I don't begrudge the government for charging duty on the fuel. The bills have to be paid and funding has to come from somewhere. California charges 66 cents per gallon in gas taxes vs the US average of 48 cents…this is at the pump taxes.The issue of how they spend their revenues is what concerns me more.

    That said, the one thing that jumps out at me from the CUC letter is their all-in cost of $4 per gallon for diesel fuel. Compare that to the pump price of $5.70+ and that is where we are all getting taken for a ride. Irecall a report from several months ago which stated the gas stations made well in excess of $1 per gallon of fuel sold. Look to the US and Canada where the profit margins at retail are pennies per gallon. When oil was $150 per barrel gas cost us the same as it does now, when oil is around $85 per gallon. We should be furious with the local retailers but we don't seem to get mad at Esso and Texaco. Why is that?

    • Anonymous says:

      It’s not Esso’s and Texaco’s prices to the private gas station owners to be blamed – it is the markup after the fuel is delivered to the gas stations. Do you wonder why there are so many gas stations everywhere?
      Go figure.

    • Anonymous says:

      In addition to the outrageous retail markup on fuel by Esso & Texaco, I believe the government is taking advantage in the following way. Cayman's debt is over half a billion dollars. We used to make ends meet with a 30 cent per gallon tax on CUC diesel. Now government is getting 75 cents per gallon and what do they do? Do they pay down the debt? NO. Do they give millions to churches? YES. Do they pay private citizens mortgages? YES. Among other ways they spend our money, they have proven to be irresponsible with our cash. I propose that all money gained by government from fuel taxes be spent on outfitting all government buildings with solar panels for starters. If we don't free ourselves NOW of total dependence on oil we are doomed financially.

       

      The socialist democratic model being used here is not working. Even Fidel Castro recently announced that he is examining the implementation of a national income tax in Cuba and they have natural resources like sugar, tobacco and coffee. We have nothing here. Our current policies are going to come crashing down on our heads before long if something isn't done to plan for the bleak future of skyrocketing oil prices.

       

      Here's where some of our money goes: I read that the new Government Admin Building uses about CI$18,000.00 per month. This picuture will worsen with time.

       

    • Anonymous says:

      It would be interesting to know who owns the Esso and Texaco business and their connection to the political elite.

    • Lazarus says:

      Why ?  Because no one has the guts to publish how much gas costs at point of import, and how much the gas is sold for, to the retailers.  We just don't know how much we are being gouged.  If this info was in the public interest, shouldn't it have been released by now, unless of course, someone in politics is getting their cut too…

      I don't begrudge importer & retailer getting their mark-up, but it has to remain reasonable.

      Maybe CNS can fimd out the details ?

    • Biggest Whopper says:

      Of course you are right “nation building fund” money has to come from somewhere…..plants palm to face…

  11. Anonymous - Can't afford it says:

    This won't be the first time it's said but it's worth saying again. The country make just as much as CUC does from CUC's operation . It is the duty from the fuel that is a signifcant source of the country's  income…might be the single most consistent source of income for the country.

    The last time the government got involve with CUC claiming to help the people all they did was reduce the money available to the country….and if you think about you should see that your electric bill is a really good way to raise revenue proportionally to the benefit received from using fuel.

    Businesses pay more than home owners since they are using it to make money , and rich people with big home would pay more than small home owners (…well that might not be entirely true since rich people homes are better built and therefore better insulated and they can invest in more energy efficent appliances etc.)

    Either way AC  is a choice and so is hot water…so is driving a $40,000 dollar car on a $36,000 a year salary…possible but not very smart.

    We get value for our money with CUC… We just can't afford it.  We  just have to start having the right values…living in our means and to the government…stop spending the money that CUC contributes to the country's revenue ….we can't afford it !!!!

  12. Anonymous says:

    Ok I can't believe this, I just got my monthly dreaded  CUC bill in the mail and it has gone up  by $80.00.

    Listen to this folks, I was gone for ten days out the billing period. I decided this time to turn off everything in the house even cleaned out my refrigerator and turned it off. There was not one thing plugged in  in my house and I switched off all the breakers in the breaker box just to make sure.. I went outside to look at the meter before I left the house and it did not appear to be moving ..I say appear because it must have come to life while I was gone and used all this electricity.

    I give up! you might as just well live comfortably and don't worry about your  CUC bill because it will be whatever CUC decides for that month..

    Now they will tell me I have faulty appliances or not the best ac unit or something stupid like that. Everything i have is in good condition and serviced regulalrly.

     

    This madness with CUC never ceases to amaze me.

    • Anonymous says:

      Your helper must have come alive while you were gone!

    • Truthseeker says:

      You went to all that trouble, but don;t seem to have recorded your meter reading before leaving and on your return?  Check your KWH usage versus the comparable time last year. If they are approximately the same, then the difference is in the higher cost of fuel, and the Govt. tax on fuel. Don't let manipulative politicians turn your dismay over high utility costs into anger towards CUC. 

    • Anonymous says:

      CUC is full of ……and they think the people of the cayman islands are idiots.  How can they justify the electric bill to an average person, living in an average size house being over CI$600-CI$800 monthly??? When in the states (say Florida) a 3000 sq foot house, ac running all day (or heat in the winter), appliances, etc US$250-US$400.

      Remember after Ivan CUC tacked on their loses to the people., and we are suppose to be sympathetic to them??? Even today I don't understand how they were able to get away with that when so many people lost their homes and belongings…they were the only entity that gained after the hurricane. 

      • Anonymous says:

        Wholesale power in the US is bought by utilities at around 5 cents per kWh produced by coal and nuclear plants. Fuel cost alone is 25 cents a kWh in Cayman. That is the major difference today.

      • Anonymous says:

        Your arguments have been addressed many times on this news website. Rather than mindlessly repeating them try reading some of these threads before you post.

        Briefly, Cayman is not Florida which has access to relatively cheap sources of power – nuclear, coal and hydro, e.g. and benefits from the economies of scale of a large population.

        The average consumer's bill is not CI$600-CI$800 monthly. Some 78% of consumers' bills are less than CI$500.

        As for CUC "tacking on their losses to the people" here are the facts:

        1. Following Hurricane Ivan CUC was contractually ENTITLED to a 9.5% increase in rates. If the previous govt. had allowed them to impose this it would permanently have been imbedded in rates. Instead of such a permanent increase the previous govt. negotiated with CUC to have a TEMPORARY SURCHARGE of 4.7% until it collected the sum of $13m. In other words nothing was "given" to CUC, but instead they received a great deal less than they were entitled to under their licence at the time.

        2. Instead of $13m the sum of $11.2m was collected when the govt. again negotiated the remainder away in order for CUC to be granted a new licence.

        3. The reason the govt. was motivated to allow any surcharge at all is that (a) CUC had certain T&D assets which were destroyed and since Hurricane Andrew in 1992 such assets have been uninsurable; and (b) it is the practice within the electricity supply industry to permit natural disaster surcharges. Such surcharges were made by Florida Power and Light and by Jamaica Public Service for hurricane damage, for example. In other words there was no double recovery for destroyed assets as Mr. Bush suggests, and it was not possible for CUC to have insured such assets. Of course if it had been possible to insure them (at huge premiums) the public would have been paying for those premiums all along.
          
         

         

        • Anonymous says:

          to 09:49

          You are appear to be the CUC expert..to all who believe the crap you spew out,.I have a bunch of swamp land I need to sell on Seven Mile Beach at $1.00 per acre.

          If CUC couldn't get insurance on something they could have self insured themselves with some of the huge profits they were already getting..There is simply no excuse for the abuse no matter how you paint it.

           

          • Anonymous says:

            I am simply supplying some much needed information on the topic. Can you please show how any statement in my post was incorrect or "crap" as you so delicately put it?…. I thought not. To the contrary here is an article that directly confirms what I am saying:

            http://tdworld.com/news/FPL-Storm-costs/

            A person who prefers emotional outbursts to facts and reasoning is the ideal play-thing of manipulative politicians. As for "self insurance" obviously that would have been funded by consumers BEFORE the event, and if that "self insurance fund" fell short of the actual damage costs how would the remainder have been met? You keep expecting a free lunch.  There is no such thing. There was no "abuse".

          • Anonymous says:

            The only thing worse than ignorance is belligerent ignorance.

  13. Anonymous says:

    Paying for green energy alternatives is like a free lunch after the initial cost is recouped. CUC spent 1.7 million dollars as a hedge against higher fuel prices which never materialized. That is 1.7 million that will be lost by next March if the price of fuel remains low.

     

    The tragic part is that 1.7 million dollars could have been spent on solar panels or wind turbines etc which would have eventually paid for themselves and lowered the demand for diesel. This would have benefitted the customers and the CUC shareholders.

     

    Some people claim there is not enough land to do a proper solar farm. We have the rooftops of buildings and a shallow North Sound next to CUC where pilings could be erected  to house a solar farm.

     

    Cayman has ocean currents, wave power, sun and wind. All can be used to offset the use of diesel. Wave power is especially cost effective and has the potential to meet 100% of our power needs both day and night.

    People say that if government removes theduty on diesel it will have a shortfall of 24 million dollars.

    This is true. And it is also true that the 24 million dollars will end up in the consumer's pockets which means government won't need as much money for social programs since the population will be financially better off.

     

    An immediate remedy to this situation is to convert the existing generators at CUC to run on natural gas. It is far cheaper than diesel and runs much cleaner. It is more efficient which also results in lower bills and bigger profits for CUC shareholders. Any costs involved in converting to natural gas would be paid back in less than a year at our current billing rates.

     

    The US Department of Energy released a report in September showing that the cost of power produced using solar PV panels is down 18% since 2009. The cost per watt of solar is now about 3 dollars per watt. This too would pay for itself in a jiffy.

     

    It's time to get off the diesel and get with the program Cayman. REMOVE ALL FUEL TAXES NOW!

     

    • Anonymous says:

      13.28 You seem to have the answer, but I am curious why you seem to be still dependent on CUC? If not you may wish to go into the business of providing these alternatives.

    • Anonymous says:

      You said: "An immediate remedy to this situation is to convert the existing generators at CUC to run on natural gas. It is far cheaper than diesel and runs much cleaner. It is more efficient which also results in lower bills and bigger profits for CUC shareholders. Any costs involved in converting to natural gas would be paid back in less than a year at our current billing rates".

      At the time of signing the new licences in 2008  CUC President Mr Hew also said they were looking at the possibility of running CUC’s generators on biodiesel but said liquid petroleum gas (LPG) was currently ruled out by the storage costs. Would the same argument not apply to natural gas and have you have taken this into account? Have you considered that compressed natural gas is also much more explosive? Had the explosion at the CUC plant involved natural gas there would probably have been fatalities and larger scale property damage.

  14. Anonymous says:

    I can tell you that I leave my AC off during the day, no hot water heater except for 20 minutes a day, air dry clothes, no dishwasher (wash by hand), run one load of laundry a week and all lights are energy saving bulbs and guess what, my bill is still $450 a month for each of the last two months. Oh and I shut off EVERY breaker except for refrigerator (set at warmest setting)

     

    What else can I do?  Nothing, I mean, literally nothing else I can do.  Advice CUC?

    • Anonymous says:

      It is generally accepted that dishwashers are greener (more energy efficient?) than manual washing – if not done with ridiculously small loads.

    • Anonymous says:

      There is something you can do. If you have central air conditioning and you turn it off when you are away, it takes more energy to cool the house down when you restart it.  You would save money by just putting the thermostat up to around 80 degrees and let the system run occasionally throughout the day so the A/C doesn't have to work so hard to cool your hot house down. It takes less time and cost to cool down from 80 degrees than it does from 90 degrees.

      • Anonymous says:

        Putting it up to 80 degrees???  I keep it at 81 when I'm trying to COOL the house.  At 80 degrees, my bill would go up.

      • Anonymous says:

        not true. it would cost you more to keep your house at 80 than to bring down again. why? keeping it at 80 you are still paying for your cooling loses when you don't need it, simple physics my friend. spend some money on better insulation, high efficiency ac, best return for your money right now. if you rent, this is a great time to find that more economical place with lower cuc bills. (hint to land lords: this might be the way to get your place rented again)

        • Anonymous says:

          Yeh that junk about setting your A/C to 80 degrees when not at home is definitely wrong!  That does work in the U.S. and Canada and it makes complete logical sense that it would be more efficient , but not here for some odd reason.  I speak from personal experience, my bill doubled in the Caymans after trying that, as I was accustomed to that practice before moving here.  Then I had the free audit from CUC, where the technician advised to use the air only when at home – at night time and to turn off completely during the day, this caused my power bill drop by almost 40%.  its still over $500 monthly but still much better than the previous 900 – $1000.  

  15. Knal Domp says:

    Girls

    Your reporting is confusing and doesn't make cents- do you mean CI$ as dollars, as cents, or what?

    K

    • Flipper says:

      Ummh yeah, actually it makes perfect "cents", so please stop the jealousy.  Verstehst? 

      • Anonymous says:

        Actually, I am not the original poster but I wasn't sure what this meant: "CI$ 2.65 cents". Is it 2.65 cents or is it CI$2.65?

  16. Dred says:

    Let me say what I take away from all of this….

    CUC Fuel cost are still very high because it accounts for 40+% of each dollar. I believe far more resources should be placed towards finding alternative energy sources that are being provided. We are a country in the Caribbean with relatively low rainfall totals meaning we have a lot of sun annually. This is money being wasted. CUC should be involved in some sort of solar/wind farming exercise not today but 5 to 10 years ago and this shabby excuse of a location being taken away is pathetic at the very lease. You mean there was only ONE spot you could find in all of Cayman to do this?? Really?? How stupid do you make us out to be?

    Fuel Duty represents 12% of the cost of our bills. While this would help lower our bills it would only represent $12 of every hundred dollars of utility bill of savings. While that would help I believe CUC misses the point in striving also to lower it's usage of diesel fuel. I do respect it's environmental position but we need to lower the cost of fuel to consumers. That represents $43 dollars on ever hundred or $215 out of every $500.

    I believe this to be a combined effort that is needed. CIG needs to lower some of its fuel duties but only with a conserted effort by CUC to get some sort of  alternative energy system in place.

    You know that 12million on Nation Building would have done nice for CIG to make itself more energy efficient or invest in kick backs to people who want to strive to be energy efficient. Maybe as a duty concession on Alternative energy products.

    • Anonymous says:

      Keep in mind that you will have to pay for whatever alternative energy scheme you want them to do.

    • Anonymous says:

      You will have to pay for the alternative energy system. There is no free lunch.

      • Dred says:

        There's one thing to talk about a free lunch and a next thing to be dining at the Ritz.

        Everyone knows there is no free lunch but there's no reason we can't be eating economically.

  17. Anonymous says:

    Why did CUC wait for regulators to force it to hedge? If it really cared about protecting customers it would have made a proactive decision to hedge in 08 when oil wasat historic lows…and paid the premium out of operating costs…

    • Nostradamus says:

      Hindsight is 20/20.

      • Anonymous says:

        Doesn't apply in this case. It should have been obvious to anyone that oil would not remain at $40 a barrel for long and having come down from $140 a barrel it was easy to see the potential for increase.  The fact is that oil reserves are being depleted – they do not increase – and the Middle East is an inherently unstable region.     

  18. Anonymous says:

    Mac has been caught out making unwarranted, baseless accusations, again. But he doesn't like it when people justifiably criticise him!

  19. Profound Reality! says:

    How about some insight on your long term plans in respect to alternate energy?Clearly fossil fuel cost and environmental cons outweigh its benefits.

    Its time we take our position as pioneers and do the right thing for ourselves and country.

  20. Anonymous says:

    How about running an undersea cable from Jamaica?

    • Anonymous says:

      …because we know how reliable power supply is in Jamaica.

      FYI, CUC delivers superior performance to Jamaica Public Service.  

      • Anonymous says:

        So your point is, you get what you pay for?

        • Anonymous says:

          That it would be a very bad idea to rely on power supply from an undersea cable from Jamaica, and yes you do get what you pay for.      

      • Anonymous says:

        Jamaica charges 25.13 US cents/1kwh and according to CUC statement our charges are .35   C.I per 1KWH, that would equat to about 43.75 US kwh for rates here, if the Government tax is taken away we would still be paying 14.12 US cents per KWH than Jamaica.

        I do agree that CUC provides a very high standard sevice But I wonder how effiient are they. The perception is that consumers are trying all of their advice on being more effient but they are not seeing it in their bills.

         

             

        • Anonymous says:

          You are comparing apples with oranges. The JPS 25 US cents/kWh charge is simply for the Fuel and IPP charges whereas CUC's 35 CI cents/kWh is the TOTAL cost. CUC's Fuel Costs are 20 CI cents/kWh. When you take into account that there is an oil refinery in Jamaica and therefore the cost of diesel should be significantly cheaper it seems that CUC is more cost efficient.   

          Some customers are seeing great reductions in their bills as a result of focussed efficient use of electricity. Mind you I have not been so diligent in that regard.  

  21. Anonymous says:

    Statistics are only good if they can be auditied. I find it hard to believe that one third of residential customers pay less than $200.00 per month for electricity. If that was the case there wouldn't be this many complaints.

    • Anonymous says:

      Actually, given the amount of apartments and small homes in Grand Cayman, i can see how this could be the case. Not everyone has a mansion to cool. When i was living in my 1300sqft apartment and running ac 16 hours a day, my bill was around $200 per month. when i moved to my 3300sqft house the bill jumped to an average of $550 per month BEFORE the duty increases. now the average for my house is $650 per month and trust me, i'm sweating in there too – shutting off the ac if i leave a room for more than 15mins.

      • MonkeyBiz says:

        You are very lucky!

         

        I'm in a 2,300 sq ft house and our bill bounces between $700+ and $1,000.  No A/C all day.  No dryer.  Energy star appliances. Squiggly lights. Good insulation.  A/C on 78 @ night only.

        • Anonymous says:

          There is no way a 2,300 Sq ft. house should be that much even at CUC rates. Something is wrong with your energy consumption.

      • Anonymous says:

        My apartment is 1000 sq ft yet bill is 600 a  month, I have compained time and time again as it MUST be wrong, but they do not want to know. I too sweat rather than run the A/C all the time. My meter leaks 200 bucks a month even when I was off island for the full month and turned everything off.  They point blank refuse to investigate and the offer of a free audit is BS.

      • Anonymous says:

        So I guess the solution is to all  move someplace smaller…boy you make a lot  sense..what a fool  fool person you is…lol

  22. Anonymous says:

    Macaroni will never say it's his fault!!

  23. Anonymous says:

    In related news the Office of the Premier has announced a significant cost saving measure. A single stock answer has been developed  for all queries and a printed form will now be issued in response to everything and anything asked. It says "It wasn't me".

  24. Anonymous says:

    "CUC said Thursday, that government will collect CI$24 million on the fuel CUC uses to generate electricity"

    "In June 2010 the rate of duty was further increased by another 25 cents for a total of 75 cents per gallon or an overall increase in the rate of duty of 150%” it said in a statement.The increase is an additional CI$ 2.65 cents per kWh or CI$14.4 million dollars per year"

    How can a 33% increase = 14.4 million if the total is 24 million?

    "It said the cumulative impact of the rate freezes, rate reductions, and shrinking consumer demand due to the poor economy has translated to a fall in the firm’s return which has fallen to less than 8% before expenses"

    Yet the pie chart shows 9cents (9%) of the dollar going to shareholders?

    "A breakdown of the monthly residential electricity bills for August revealed that more than a third of residential customers had bills of under $200 and three quarters had bills of less than $500"

    That means 1 in 4 has a bill over 500!!! Love how the chart groups the price ranges – why not show for every 100 dollar range?

     

    • Anonymous says:

      I am not sure where you got 33% from. The Article clearly says 150%. In 2008 the PPM Govt. reduced the duty on fuel from $0.50 to $0.30. It is currently $0.75. $0.30 * 250% = $0.75. Obviously the dollar amount of duty collected depends upon usage (kWh) as well the rate of duty.  If you are referring to the dollar amount per KWh then an increase of $0.0265 (or 143%) has brought it to the $0.045 that it is currently.  

      "A breakdown ofthe monthly residential electricity bills for August revealed that more than a third of residential customers had bills of under $200 and three quarters had bills of less than $500"
      That means 1 in 4 has a bill over 500!!!".

      Bravo! Go to the head of the class!

      Turning to the article itself: "[CUC] proposed a hedge of 40% of its fuel volume consisting of call options, which in return for a fixed premium would cap the costs at a pre-determined level that was approved by the ERA in March 2011.

      “CUC purchased call options to cap the cost of fuel purchased on the US Gulf Coast at US$3.55 per gallon. In September 2008 the price of diesel purchased in the US reached over US$3.79 per gallon before falling to under US$1.50 per gallon in late 2009. Since late 2010 the price has risen to a recent peak of approximately US$3.00 per gallon, which remains below the price cap,” the firm said in a statement. “The premium for this price cap is CI $1.7 million dollars per annum…".

      If I understand this statement correctly for the year March 2011 to March 2012 CUC is paying CI$1.7 million (which is passed on to consumers) to ensure that its price per gallon of diesel does not exceed US$3.55 but in fact it has not come near reaching the cap in the period so far. It sounds like CI$1.7 million wasted to me. If CUC had not messed around in 2009 it could have  hedged diesel when oil was at $40 a barrel when the cap could have been much lower.       

    • Anonymous says:

      Actually if you do the maths they are 100% correcton the duties payable to government.
      If they pay $24M today @ 75c/IG that translates to 32M IG.
      A 45c increase in duty means 32M x .45 = $14.4M.
      Otherwise referred to as a 150% increase in duties since 2009.
      I believe you are confusing the concepts of profit & return as well, with profit being the difference between sales & cost, while a return is normally considered to be a return on an investment for example. But I’ll leave that to someone more qualified than I am to comment on.

  25. N.Fa-RAGE says:

    My electric bill went up after Mckeeva got in power. His stupid policies are affecting our daily lives and he is so damned arrogant to get up infront of us and say we have to tell him otherwise because he is not convinced he messed up by increasing fuel duty? Not to mention the way he barates his own people in public and in the press!

    Can we as a people collectively sue him for damages to our businesses, emotional and undue stress as well as defamation of the peoples’ character? He and his government need to be held accountable for all of the horrible decisions and dealings they havemade that are a detriment to the nation and a disservice to the people!

    IT IS YOUR FUALT MCKEEVA, YOU ARE NOT RESPECTED OR WANTED ANYMORE OR EVER AGAIN!

    We don’t want you! We don’t like you! The sooner you’re put out to grass, the better!

  26. Kent McTaggart says:

    Well given the recent spree of Big Mac law suits, I would think it only appropriate that CUC hire Steve McField and sue Big Mac for pretty much everything he is suing CNS and Aunt Sookie for.  What’s good for the goose is good for the gander. 

    All the money from all these suits should definately stimulate the economy through the trickle down effect. 

    • Anonymous says:

      There is a little thing called conflict of interest which might bind Mr. McField from undertaking instructions to sue Mr. Bush.

  27. Anonymous says:

    So… the Minister of Finance gets the answer to a question on finance wrong… again.

     

  28. Anonymous says:

    Macmadman needs to reduce the duty…plain and simple….no audit is necessary….but he has to again place blame somehwere other than on his governments inadequacy.  Loser.