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