Special Audit of the Caribbean Utilities Company (CUC)

Client: Cayman Islands Government.

The Audit Office was instructed by Government to carry out an audit to provide information on CUCs operations. This was in order to: assess whether the current electricity supply licensing agreement was appropriate; determine if CUCs capital investment decisions followed normal commercial and industrial rationale; and assess whether the rate of return on capital stipulated in the Licence was appropriate in the current operating environment.

Description of Services Provided:

PPA provided specific technical and economic advice and overall oversight to the project. The services included fieldwork to obtain information on CUCs assets and current operations; analysis of the generation plant margin; evaluation of CUCs investment decisions in terms of need and cost; transmission and distribution reliability assessment; and benchmarking of the performance of CUC against other utilities in the Caribbean region. PPA also provided preliminary advice to the Government on incentive regulatory mechanisms that might be applied in Grand Cayman (e.g. price cap mechanism) and have been retained as technical advisors to the committee advising the Minister on renewal of the Licence. future development and appropriate tariff levels.