National Irrigation Commission Rate Determination Notice, 2006 December 11

National Irrigation Commission Rate Determination Notice, 2006 December 11

This outlines the Office’s determination on the economic and recovery rates to be charged by the NIC to its customers.

EXECUTIVE SUMMARY

  1. The National Irrigation Commission (NIC) is incorporated under the Companies Act and produces and distributes irrigation water to two categories of customers – agricultural and non-agricultural customers.
  2. The NIC periodically submits applications to the Office requesting a review of its economic costs, with a view to determine the price that non-agricultural customers should pay for the service it provides. In addition, the NIC also requests that the Office makes a determination on the recovery rate – which is the rate that should be charged to agricultural customers to recover NIC’s operation and maintenance costs. The difference between the two rates arises from the inclusion of a rate of
    return on capital in the economic rate.
  3. The NIC was incorporated primarily to provide service to the agricultural communities, and in this regard the Government of Jamaica (GOJ) provides capital support. As such a rate of return on investment is not included in the determination of the recovery rate. Non-agricultural customers, however, are required to pay a return on capital as they should not benefit from the subsidy given to farmers. The economic rate determined by the Office is the true cost of providing the service.

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