No willpower: JPS officials rejected suggestions to make electricity cheaper - cable

As the calls get louder for the Government to end the monopoly in electricity distribution enjoyed by the Jamaica Public Service (JPS), it has emerged that the United States Embassy in Kingston believes the company has not done all it can to reduce the price Jamaicans pay for electricity.

According to the embassy, in 2009, the JPS dismissed a suggestion from an American expert that would have led to improved efficiency at its plants and lower electricity prices for Jamaicans.

In a May 2009 diplomatic cable, obtained by The Gleaner through the whistle-blowing entity WikiLeaks, the embassy noted the high cost of electricity to Jamaicans and indicated that an American expert had suggested how this could be cheaper.

"... a USG (United States government) electrical engineer visiting JPS's power plants commented to (embassy officials) that JPS could significantly improve efficiency and lower production cost by standardising some of its turbines and cutting staff," the cable said.

"When this suggestion was relayed to a JPS (official), he responded that there was no political will for such projects," the cable added.

Don't blame gov't

The Government owns 20 per cent of the JPS with the rest of the ownership in the hands of Marubeni of Japan and the embassy was obviously not convinced that the political directorate should be blamed.

"Given the high salaries paid by JPS and its ability to pass through most costs, his (JPS official) assessment may have referred more to JPS thinking than that of the Government," said the cable.

The JPS, which holds a monopoly licence for the distribution of electricity, is guaranteed a reasonable rate of return on its investment. That licence expires in 2020.

Under the tariff regime, the company is able to recover costs (both fuel and non-fuel) and earn a minimum equity rate of return of 14.85 per cent.

The US cable also claimed that during a meeting with embassy officials, the JPS said the average US utility company earns a rate of return on equity of 11 per cent while that of the JPS was nearly twice that at 21.6 per cent in 2009.

US$40 million profits

The JPS reported net profit of US$40 million (J$3.43 billion) for 2010.

Like many Jamaicans, the US Embassy officials concluded that Jamaica's reliance on oil and the high cost of energy is "choking future economic growth".

On Friday, Government Senator Dennis Meadows joined the list of persons calling for an end to JPS's monopoly in electricity distribution.

In a motion in the Senate, Meadows called for the members to consider and recommend that the Government and the Opposition arrive at a consensus to engage the light and power company with a view to breaking the monopoly.

He also said the Government should review existing legislation to ensure competition in the generation and distribution of electricity.

Opposition Spokesman on Energy Phillip Paulwell and Agriculture Minister Dr Christopher Tufton have both called for a review of the contractual arrangements between the JPS and the Government.

"Given JPS's monopoly position, a review and determination should be done to see whether JPS's monopoly on transmission of electricity and near monopoly on generation capacity should not be dismantled to facilitate greater competition in the industry," Tufton said recently.

Paulwell, meanwhile, has said the Government should use its 20 per cent minority interest in the JPS to break the monopoly.

Under Paulwell's plan, the JPS would be given a telecommunications licence to recover some of the revenue it is expected to lose when its monopoly ends.

Paulwell has also proposed that the Government consider nuclear power as part of the energy mix but that has been rejected by Prime Minister Bruce Golding.

But in his motion on Friday, Meadows, a member of Golding's Jamaica Labour Party, said the Senate should recommend that the Government, consistent with its energy policy, "vigorously pursue new avenues of energy generation, including nuclear energy".

The Gleaner was yesterday unable to reach JPS officials for comment.