The agricultural development initiative in the Caracol Industrial Park (CIP) began in 2012, with the Caracol Power Utility (CPU) providing electric energy to subscribers. However, the CPU extended its service area beyond the CIP boundaries to serve mainly residential customers in various communes. This expansion was due to factors such as underutilization of power infrastructure and an underserved market.
The CPU’s costs per kilowatt-hour (kWh) calculated in this report are not intended to represent minimum levels. The costs are based on 2015 data, when the CPU’s capacity utilization was far below its potential. The high costs per kWh support the need for the CPU to utilize more of its unused capacity by adding additional customers in the CIP and other areas served.
The CPU’s revenue requirement is determined by performing the following steps:
1. Establish the revenue requirement by determining the total revenue the CPU must collect to serve its customers, maintain its debt obligations, and invest in its service.
2. Classify costs within functional areas, including demand, energy, and customer components.
3. Allocate costs to individual customer classifications based on the CPU’s adjusted test year revenue requirements.
The CPU’s revenue requirement is calculated as follows:
Revenue Requirement = Expenses + Return on Rate Base
Expenses = Adjusted Expenses + Return on Rate Base
Return on Rate Base = Utility’s Cost of Capital x Rate Base
The CPU’s weighted cost of capital is estimated at 9.9%, with a tax rate of 30%. The revenue requirement is $11,013,948.73.
The CPU’s expenses include labor costs, operation and maintenance costs, and capital investments. The CPU’s revenue deficiency is $8,428,080.97, which is adjusted for income taxes.
The CPU’s allowed rate of return is 9.9%, and its return deficiency is $8,428,080.97. The CPU’s income tax adjustment is $0, as its net income is negative.
The CPU’s adjusted test period expenses are $9,060,688.75, and its revenue requirement is $11,013,948.73.
The CPU’s cost of service analysis is based on the following steps:
1. Establish the revenue requirement by determining the total revenue the CPU must collect to serve its customers