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CUC Rate Base Approval

The Board of the Electricity Regulatory Authority (ERA) has approved a CUC Rate Base increase of 1.8% effective June 1, 2013.

On April 2, 2013, CUC submitted an application to the ERA to review and approve a 1.8% Rate Base Increase effective June 1, 2013 in accordance with the Rate Cap and Adjustment Mechanism (RCAM) described in Condition 25 of the CUC Transmission and Distribution Licence (the T&D Licence).

As per Condition 25 of the T&D Licence, the RCAM is based on a formula that incorporates readily available external data to determine the Price Level Index. The Price Level Index is adjusted by an appropriate factor, which may provide for a rate increase less than, equal to, or greater than the Price Level Index, or for no increase. The RCAM is calculated using the most recent CUC audited financial statements to calculate CUCís permitted Return on Rate Base and a weighted average consisting of 60% of the Cayman Islands Consumer Price Index (CI CPI) and 40% of the United States of America Consumer Price Index (US CPI), (both indices adjusted to remove the effects of prices of food and fuel) as reported by independent authorities for the most recent calendar year.

Upon review and confirmation of the CUC audited financial reports, the CI and US CPI reports, the 2012 CUC Return on Rate Base and June 2013 Base Rate Adjustment calculations, the ERA approved the CUC 1.8% Rate Base increase on May 10, 2013 which, as a result of 2012 inflation in both the Cayman Islands and the USA, CI CPI and US CPI of 1.0% and 1.9% respectively (both excluding food and fuel), the Required Rate Adjustment as per Condition 25 of the CUC T&D Licence equates to 1.8%.

It is important for Consumers to comprehend that this increase applies only to the CUC Base Rate which is being increased from 10.46 to 10.65 cents CI per kWh. Since the Base Rate equates to approximately 1/3 of the typical monthly CUC Consumer Bill, the overall increase of the typical monthly Consumer Bill will equate to approximately 0.5% of the total Bill.

As per ERA Law, one of the main functions of the ERA is to monitor and regulate all licensees in a manner that promotes sustainable competitive practices; provides an opportunity for a fair and reasonable return to licensees; and protects the economic interests and well being of consumers by keeping tariffs and rate structures as low as can reasonably be achieved.

An informational insert detailing how this change will affect the various Consumer Classes has been included in CUC June 2013 Billings.

For more information about the CUC T&D Licence, the Rate Cap Adjustment Mechanism or the ERA, please visit the CUC or the ERA websites at www.cuc-cayman.com or www.caymanera.ky

For further information contact: Suzette Ebanks