This report presents Castalia LLC’s analysis and conclusions on an appropriate X-Factor to be applied to the Jamaica Public Service Company Ltd. as part of the Performance Based Rate Making for the 2014–2019 tariff period. The report is the independent expert opinion of Castalia LLC. The analysis was carried out by David Ehrhardt and John Miller of Castalia.
Data was sourced from JPS’ audited financial statements and, for data on independent power producer (IPP) costs, directly from JPS staff. For comparative efficiency analysis we sourced data on Caribbean and New Zealand utilities from our proprietary data (based on audited financial statements and regulatory reports), and for United States utilities from audited financial statements and FERC Form 1 data.1 To calculate economy-wide Total Factor Productivity growth (an input to the X-Factor calculation) we used data from the United States Bureau of Labor Statistics and the Penn World Table.
Data was analysed using techniques that have been approved by the Office of Utilities Regulation (OUR) in the past. For comparative efficiency analysis purposes we used the same techniques used by two of the leading price-cap based regulators in the world: Ofgem (the UK’s energy regulatory agency) and the Australian Energy Regulator