POWER STRUGGLE

With the cost of electricity for Jamaican households being ranked among the top five globally, industry experts believe that the country’s sole provider, the Jamaica Public Service Company (JPS), can do more to reduce losses to ease the burden on customers.

At the end of last year, Statista’s worldwide gauge of household electricity prices saw Jamaica, with an estimated cost of US$0.29 per kWh, trailing behind Ireland, Belgium, Denmark, and Germany – which leads at US$0.37 per kWH – on the global index.

A similar ranking up to March this year at GlobalPetrolPrices.com puts the price for Jamaica even higher – in fourth place globally – at US$0.313, more than double the average cost in the United States, which hovered around US$0.15 per kWh.

What’s more, the country seems to have gone in reverse with respect to efforts to lower the cost to rate payers, former Energy Minister Phillip Paulwell told The Sunday Gleaner.

Jamaica’s high electricity cost hinges on several factors, one of which is the failure of the JPS to upgrade its infrastructure to reduce dissipation of power during transmission and distribution, industry experts say.

The phenomenon, known as technical losses, is natural during the process and according to the Office of Utilities Regulation (OUR), it is internationally accepted that the cost is factored into the non-fuel rate charges to customers.

But “the JPS has not spent the resources to deal with the technical problems ...”, argued Paulwell. “The aim has to be for the company to contain line losses, which happen with excessive heat and just bad transmission wiring. If they were to cut this in half, we could save another US$0.03 per kWh.”

Jamaica Energy Partners Chief Technical Officer Cecil Gordon agreed although he believes that analysing the price to produce power in Jamaica is a far better measure of the overall cost of energy.

“The idea is to put the generator where the load is so the power does not have to travel long distances,” Gordon told The Sunday Gleaner.

“For example, if you are producing the power in Montego Bay and you have to send it to Kingston, during that transmission from Montego Bay, you are losing some of it through the heating of the wiring,” he explained.

The JPS also needs to build out more lines to carry the power it generates to heavy-load areas such as Kingston, St Andrew and St Catherine, which, Gordon said, account for more than half of the country’s electricity load.

It would also benefit consumers if the JPS were to look at cheaper operational options of supporting the load of these large areas, he further reasoned, noting that the cost to run these more expensive options are “passed through to customers”.

The JPS has four main power plants at Rockfort and Hunts Bay in the Corporate Area as well as at Old Harbour Bay in St Catherine and Bogue in St James.

Utilities regulator OUR allows the power company to pass on 21 per cent of its losses to its customers although it agreed that the JPS needs to do more to reduce system losses.

“In Jamaica, high levels of system losses contribute to elevated prices experienced,” the OUR said in emailed responses to The Sunday Gleaner.

Based on annual adjustment for 2019, the JPS passes on eight per cent of technical losses and 13.3 per cent non-technical losses to paying customers as provided for its 2016 electricity license.

The JPS has not responded to questions sent by The Sunday Gleaner weeks ago.

Power theft, LNG chokehold

None of this is of any comfort to 80-year-old St Andrew resident Lucille James. Although she admitted that she did not understand the technicalities, she was not pleased that her light bill seems to be a moving target.

“If dem want me to join the bridge light crew, I will join it because I see dem send me a bill for $15,000 that I just fling down because I don’t know how it gonna pay,” the frustrated senior citizen told The Sunday Gleaner.

She said that although her granddaughter has been staying with her for a short time, she mostly lives alone, and despite efforts to conserve, her electricity bill keeps fluctuating.

“If I get a bill for one month that is not too bad, by the next month, it gone up. At nights, all I use is one light in the kitchen until I am going to my bed at 10 p.m. Since the virus (pandemic) start, I don’t even know what my clothes iron look like because I’m not going anywhere,” she said.

Sixty-year-old Kington resident Norma Clayton, who used to pay “like, $10,000 in 2018” for her monthly electricity bill, is also concerned about the movements in the charges.

Recently, her bills have been averaging $20,000, and she contends that her consumption pattern has not changed.

“I have the same things in my house. I don’t have nothing new,” the former domestic helper told The Sunday Gleaner.

“I don’t seh they not to raise it, but like fi poor people like me that live in the ghetto and trying not to thief dem light, it’s too much for the little things you have for your comfort like your little fan, the fridge, and those things,” the Kingston 20 resident said.

Corporate Area power theft

But like many other Jamaicans, the senior citizens may be paying for those who steal electricity in their communities. The JPS has reported that it has been hit hardest by electricity theft in the Corporate Area communities, with losses of US$61 million for the 12-month period ending December 2020 in Kingston and St Andrew North alone.

This is another factor that the experts agree must be addressed in order to reduce the cost of electricity to consumers.

“Seventeen point five per cent of every bill that customers pay constitutes usage that they did not use. It is for the theft by the over 200,000 people who steal electricity. This is a significant amount of your bill,” Paulwell said.

“A fifth of the power that is produced from the plant does not reach the customers’ meters. I think that is one of the biggest issues we have now. Non-technical losses must be reduced,” Gordon agreed.

He pointed to the nature of the exclusive power-purchase agreement which the JPS has with the nation’s sole supplier of liquefied natural gas (LNG), New Fortress South Power Holdings Limited, as another likely factor adding to high production cost.

“The natural gas contracts that we have in Jamaica are executed on take-or-pay arrangements, so what happens is that you have to pay for the gas even if you don’t use it,” Gordon explained.

“For example, when the pandemic broke out last year, the cost of heavy fuel oil was almost at zero, so it was cheaper than gas,” he continued, noting that the country could have saved US$16 million monthly on production cost. “But the country didn’t benefit because you had to burn the LNG. So it doesn’t matter if a cheaper fuel exits, which could reduce the light bill. You have to use the gas because the contract forces you to use it.”

Recent sittings of the Joint Select Committee on the Electricity Act (2015) also saw members of the Opposition and stakeholders questioning the benefit of the JPS-New Fortress power-purchase agreement to Jamaicans and the economy.

Neither the JPS nor New Fortress responded to questions on the agreement, which is a private contractual bond and not open to public scrutiny.

For Paulwell, “this monopoly on LNG has been extremely detrimental to the sector”.

“The real benefits of LNG have not materialised to the extent that they ought to. JPS customers paid for all the infrastructure installation that the LNG plant needed to be established and it was agreed that as the private company got new customers, those customers would contribute to the cost of the establishment of the plants,” the former energy minister said. “But I have not seen any proof of that. If this had materialised, we would see a sizeable amount of money going back to compensate Jamaicans, who paid for that plant.”

Divorcing the JPS

Jamaica’s integrated resource plan (IRP) to see US$7.3 billion of investment in the electricity sector by 2037 is, therefore, critical to cost-reduction efforts.

Similar to its Caribbean counterparts, Jamaica’s energy sector depends heavily on imported fossil fuels such as petroleum – a significant portion of the ultimate cost of electricity to consumers. The energy sector accounts for 29 per cent of fossil fuel consumption, data from the Inter-American Development Bank (IDB) show.

“Energy planning is crucial for defining the initiatives needed to lower cost, provide reliable energy, and improve grid resiliency and sustainability,” the IDB noted in its response to The Sunday Gleaner on what Jamaica needs to do to reduce the high cost of electricity.

The OUR also noted the need for diversification of the fuel-generation mix.

While the country has made strides toward utilising more renewable energy sources, up to last year, just 13 per cent of electricity production was generated by renewables, with natural gas accounting for 59 per cent, data from the Ministry of Science, Energy and Technology shows.

The ministry, however, did not provide an update on the IRP or shed light on where the country currently stands on the energy-diversification targets.

However, despite the operators having to pass the initial investment costs to consumers, Gordon believes Jamaicans will eventually feel the effects of this pass-through in their electricity costs.

With the trend of increasing prices for natural gas, heavy fuel oil, and even diesel, alternating the use of the fuel sources when prices dip would, in theory, lead to cost savings for production.

“But what has been happening on the grid is that you’re running the more expensive plants at the expense of the cheaper ones because of how the system is designed,” Gordon reasoned.

Wisynco Group Limited, a manufacturer and distributor of food, beverages, and paper products, cut its reliance on the JPS by establishing a co-generation plant to slash the burdensome line item. The company expects a 20 per cent reduction in its obligation to the JPS.

Having projected to save US$1 million a year, the company is now realising the savings it projected, CEO Andrew Mahfood told The Sunday Gleaner.

Many small businesses, however, do not have that ability to wean themselves off the JPS grid and lament the impact of high electricity costs on global competitiveness.

Speaking to the recent OUR-approved rate increase – which sees Rate 20 (small commercial entities) paying J$122.45/kWh for the first 10kWh and J$9.03/kWh for each additional kWh, president of the Young Entrepreneurs’ Association (YEA), Cordell Williams-Graham said the increase “will prove challenging for many MSMEs”.

Improving the JPS’s customer relationship with MSMEs would also go a long way towards supporting the sector, she said.

“Businesses could be consistently paying their bills on time and still get disconnected for missing one monthly payment,” Williams-Graham complained.

The YEA president called on the Government to implement an online electricity usage monitoring system for MSMEs to upload data on their consumption trends, which could then act as a guide for initiatives and incentives for the sector.

The roughly seven independent power producers (IPPs), including renewable energy providers, in the island are hoping their push to have the Government grant them permission to supply the industrial sector will lead to cheaper costs to householders. If the burden on the JPS to serve this large sector is reduced, they believe, its consumers that will feel the benefit in their pockets.

The IPPs have made a submission to the Joint Select Committee on the Electricity Act (2015) to consider their recommendation.

tameka.gordon@gleanerjm.com

Household electricity rates of selected countries (March 2021)

Rank Country Price (US$)

1. Germany 0.371

2. Bermuda 0.360

3. Denmark 0.350

4. Jamaica 0.308

5. Belgium 0.301

6. Ireland 0.278

7. Portugal 0.278

8. Cayman Islands 0.276

9. United Kingdom 0.271

10. Liechtenstein 0.263

11. The Bahamas 0.260

16 Barbados 0.248

25 Belize 0.223

47 Aruba 0.183

56 Panama 0.160

60 United States 0.150

74 Costa Rica 0.126

75 Brazil 0.124

82 Canada 0.113

94 Dominican Republic 0.091

98 China 0.086

121 Trinidad and Tobago 0.052

134 Cuba 0.029

140 Suriname 0.015

147 Venezuela 0.000

Source: www.globalpetrolprices.com/electricity_prices/

* Only 147 countries represented.

** Haiti’s energy sector is fraught with challenges. The poorest Haitians rely on biomass such as charcoal and wood as their main source of energy for light and cooking. The country is not represented in the ranking.