JPC study: J$15 billion of power savings possible
Published:Sunday | July 31, 2011 | 12:00 AM
Jamaican consumers and businesses can save about J$15.4 billion on their light bills, provided that two key measures of system and fuel losses are brought in line with sector and regional averages, according to a just-released study published by the Jamaica Productivity Centre (JPC).
This would translate to about a 20 per cent savings for all Jamaicans, based on Gleaner estimates of Jamaica Public Service (JPS) average revenues of some J$73 billion (US$850 million) annually.
The study, titled Generation and Distribution of Electricity in Jamaica: A Regional Comparison of Performance Indicators, compared the power generation of JPS with other domestic private players; whilst secondly comparing the JPS distribution side with 25 Latin American and Caribbean countries.
The issue of renewable and alternative fuel sources, including liquefied natural gas, was linked to reducing energy costs in neighbouring countries, the report stated.
Economic significance
The study was launched last Thursday at the Mona School of Business (MSB) in Kingston endorsed by the Ministry of Labour; Evan Duggan, executive director, MSB; Joseph Matalon, chairman of the JPC Advisory Board, among other stakeholders.
"Today's symposium is very relevant and timely, as the issue of electricity, its distribution, generation, governance and price are at the forefront of the minds of many Jamaicans.
The economic significance of electricity to Jamaica's development is well known," stated a read speech from Pearnel Charles, minister of labour and social security.
The study found that reducing systems losses from the current 23.9 per cent to the 16 per cent average for Net Oil Importing Countries in the sample, could save an estimated J$7.4 billion.
Second, it found that improving the conversion of fuel to electricity, the heat rate, could save some J$7.86 billion annually; while implementing quality of service, or a Q-factor requirement under the licence, could save consumers about J$130 million in one year.
"In short, countries with a diversified fuel mix are generally those with the lowest electricity prices - Argentina, Venezuela, Paraguay, Bolivia, Honduras, Mexico, Costa Rica, and Colombia," the study said.
Expensive electricity
In Jamaica, residential, commer-cial, and industrial electricity prices are among the highest in the LAC region. This is partly because 95 per cent of the electricity generated uses expensive imported petroleum, coupled with the inefficiency with which fuel is converted to electricity, said JPC.
"Jamaica's dependence on petroleum resulted in erratic swings in the price of electricity over the last tariff period (2004-2009), reaching a record high of 38 US cents/KWh in July 2008," said the JPC study.
"Effective fuel diversification is expected to improve energy security, reduce generation costs, mitigate the volatility of oil prices, and reduce vulnerability to external shocks."
The performance of Jamaica's electricity industry is crucial because of the high degree of correlation between electricity consumption and gross domestic product, it stated.
"Indeed, electricity consumption is believed to be the single best physical indicator of overall economic activity, whether official or unofficial ... in most industries or sectors a huge part of their productivity growth is due to technical advances that are facilitated by electricity consumption. In addition, for these industries and sectors, productivity growth is generally greater the lower the real price of electricity, and the converse is also true," it said.