The Jamaica Public Service Company (JPS) is imploring the government to speedily make a decision on which entity will be given the job of supplying the country with 360 megawatts (MW) of power to replace the aged and inefficient generating plants now operating.
The company is one of four bidders for the right to supply the electricity based on a request for proposals issued by the Office of Utilities Regulation (OUR).
The OUR is expected to make its selection and recommendation to the Cabinet within the next 30 days.
Move now
But even as the OUR continues its deliberations and seek clarifications from bidders, JPS President and CEO Kelly Tomblin is urging the State to move now to get the ball rolling.
“At this point we are desperate for lower energy prices, and if we (JPS) are not going to be the entity that builds it, let somebody else build it,” Tomblin told
Kelly Tomblin, CEO of the Jamaica Public Service (JPS) Company, may have been bit a melodramatic. For thievingelectricityconsumers, as draining as they are on the company, and as difficult as they make her life, mask the larger problem faced by the light and power provider – and Jamaica.
For electricity theft in Jamaica is symptomatic of more fundamental issues, among which are the Government’s failure to advance and implement a clear energy policy; its ‘outsourcing’ of elements of its social welfare programmes; and the JPS’s own failure, over a long time, to adequately invest in the technologies to allow it to operate as efficiently as possible in a market it says it wants to be in. Which, of course, doesn’t derogate from the facts presented, or the logic of the argument advanced by Ms Tomblin last Friday.
JPS’s inability to adhere to agreed debt-to-earnings ratios potentially imperils its relationship with its lenders and could, as their auditors pointed out in their review of its 2012 accounts, present a risk to the company “as a going concern”.
Reducing the 14 per cent of electricity that is stolen would be an inherently good thing. It would enhance the viability of the power company, as well as ease the burden on those consumers who now pay.
But there is another pertinent matter which the Government and the JPS must address squarely. The estimated US$30 million, or nearly J$3 billion, lost to the thieves is a sum inflated by policy failures and inefficiencies. Faced with this fact, a serious government would end the dithering over what fuel is to be used to generate electricity, as well as conclude the becalmed bids for new power plants. Nothing, though, gives us confidence that this will be the case.
Cheaper fuel is essential
The fact, however, is that the electricity produced from expensive oil at US 41 cents per kWh is unviable for Jamaican firms and domestic consumers. Cheaper fuels and modern power plants are essential. Procrastination by the Government in giving policy directives on the former, and JPS’s failure to act on the latter when that was in its purview, helped to create today’s crisis.
Further, Jamaica’s perennially weak economy, with its high rates of joblessness and underemployment, means that electricity, at its real cost, is beyond the effective demand of many consumers, who nonetheless have expectations of it. So, they steal it and have, in the process, been enabled by the Government, as was all but admitted by Roger Clarke, the agriculture minister, in relation to whole communities on sugar estates that were allowed to tap into government entities for their electricity.
This is, at once, reflective of a kind of blind-eye social welfare and a breakdown of law and order. Theft becomes normal. Attempts to break the cycle often erupt in violence.
It is obvious that Jamaica must get on with the policies and projects that will lower electricity tariffs. The Government, too, must have the will to address the thievery.
It is also in the JPS’s interest to invest in the smart technologies that make the stealing of the product difficult.
These are the kinds of things that firms sometimes have to do to survive in a market. And sometimes are made to do as monopolies in regulated markets.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
THE JamaicaPublic Service (JPS) says it has sought the assistance of the Office of Utilities Regulation (OUR) and the Government in crafting strategies to deal with electricity theft in a more effective manner.
“The root of the problem is crime and poverty, and no technological solution is going to fix that,” said JPS President and CEO Kelly Tomblin, in addressing questions regarding the failure of the recently implemented Resident Advanced Metering Infrastructure (RAMI) system to eradicate electricity theft.
Jamaica Public Service President and CEO Kelly Tomblin speaks with Gary Barrow (centre), senior JPS vice-president, and Keith Smith, information technology director at the light and power company, before Thursday
It’s all smiles for from left: JPS’s Kirsten Pedersden, customer care manager, St Ann; Kenyatta Campbell, parish manager, Westmoreland and Antoinette Burton-Steer, parish manager, Hanover; at their Region West Media Appreciation Breakfast at The Pelican in Montego Bay Tuesday morning.
Combining solid experience with a new breed of customer care representatives, the Jamaica Public Service Company gathered with media practitioners from Western Jamaica and St Ann on Tuesday, at Montego Bay’s most popular restaurant- The Pelican.
Tagged, the ‘Region West Media appreciation breakfast’, the utility company succeeded in getting North Coast Time’s Franklyn Knight out of his bed, to travel from the garden parish to the second city. A host of media practitioners defied their 10:00 am work schedule, to mingle with parish customer care manager, key account and e-Store managers, as well as the man task with changing the company’s image in the west, Blaine Jarrett.
Yes, it’s a new JPSCo, since the affable Kelly Tomlin touched down on Jamaican soil. Tomlin is bent on changing the image and perception of the company from that of ‘uncaring’ to personable-and her team have bought into the mandate.
“The regions were established to take service to our customers,” explained Blaine, who is the regional director for region west.
With the power vested in them to turn around the company, community relations and expeditious service are major planks in the process.
It’s all smiles for from left: JPS’s Kirsten Pedersden, customer care manager, St Ann; Kenyatta Campbell, parish manager, Westmoreland and Antoinette Burton-Steer, parish manager, Hanover; at their Region West Media Appreciation Breakfast at The Pelican in Montego Bay Tuesday morning.
Combining solid experience with a new breed of customer care representatives, the Jamaica Public Service Company gathered with media practitioners from Western Jamaica and St Ann on Tuesday, at Montego Bay’s most popular restaurant- The Pelican.
Tagged, the ‘Region West Media appreciation breakfast’, the utility company succeeded in getting North Coast Time’s Franklyn Knight out of his bed, to travel from the garden parish to the second city. A host of media practitioners defied their 10:00 am work schedule, to mingle with parish customer care manager, key account and e-Store managers, as well as the man task with changing the company’s image in the west, Blaine Jarrett.
Yes, it’s a new JPSCo, since the affable Kelly Tomlin touched down on Jamaican soil. Tomlin is bent on changing the image and perception of the company from that of ‘uncaring’ to personable-and her team have bought into the mandate.
“The regions were established to take service to our customers,” explained Blaine, who is the regional director for region west.
With the power vested in them to turn around the company, community relations and expeditious service are major planks in the process.
The Jamaica Public Service Company (JPS) is expressing concern that the long-running problem of electricitytheft could cause its demise.
“For the JPS this might very well be the death knell … . There is no business in Jamaica that can lose $2 million to $3 million per month and still be viable, so for us it has reached a very critical point,” declared JPS President and CEO Kelly Tomblin yesterday during a media briefing.
Tomblin underscored that the JPS was at a financial precipice and could fall because it is in breach of a debt covenant which could trigger a demand for it to pay off US$425 million in debt.
According to Tomblin, the financial state of the company is worsened by electricity theft which triggered a penalty of US$30 million last year. That more than doubled the US$12.9 million which the JPS recorded as profit for the year.
“It is causing deteriorating financial performance that keeps me from doing many of the things that my team and I want to do to improve customer service,” Tomblin told journalists during a media briefing at the JPS’ New Kingston office.
“It is not just the theft, but it is also the penalty that we get because of the theft, so we are up against it and we don’t know how to combat,” added Tomblin.
Illegal connections removed
She said for the first three months of this year more than 54,000 illegal connections (throw-ups) were removed; 75 persons arrested and approximately 36,000 electricity audits conducted.
The JPS has also intensified the introduction of its Residential Automated Metering Infrastructure (RAMI) tamper-resistant metres with more than 22,000 persons connected at a cost of approximately $1,000 each. In addition, a special unit has been established to go after the commercial entities and other large users involved in electricity theft.
But Tomblin noted that these measures have not significantly reduced the level of electricity theft across the island.
“Estimates are that we still have 150,000 or up to 200,000 households stealing electricity and that’s against the backdrop of less than 600,000 customers … that could be a third of the people stealing so that is significant.”
Multifaceted approach
According to Tomblin, the problem of electricity theft has to be addressed in a multifaceted way because it is a socio-economic problem that cannot be addressed only by the JPS.
“We have a goal in the country that 100 per cent of Jamaicans should have access to electricity … but everybody cannot afford electricity, so what is the stop gap or the bridge? There is also the community acceptance of theft because we don’t see persons being arrested in droves.”
Tomblin argued that the root of the problem is crime and poverty and until these problems are addressed electricity theft will continue.
She charged that there needs to be tighter legislation with harsher penalties for electricity theft, even as she noted that the JPS does not benefit from the arrest of persons caught stealing electricity.
The JPS boss added that it needs the input of several different governmental and non-governmental organisations to come up with new measures to deal with the problem of electricity theft.
“We all have to get around the table and say let’s find a different solution because this one isn’t working.”
KELLY Tomblin yesterday reiterated the dire financial state of the Jamaica Public Service Company (JPS), and expressed disappointment that two State-owned sugar companies in Clarendon and Westmoreland allowed residents of neighbouring communities to steal electricity amounting to more than $100 million.
“We have about 230 people, we are spending a lot of money each year working on preventing theft. Those people are out in the community, serving my customers, helping to figure out how to get smaller payment frameworks and doing other customer service, improving reliability,” Tomblin told a news conference at the JPS head office in New Kingston.
Jamaica Public Service Company President and CEO Kelly Tomblin addressing a news conference at the JPS head office in New Kingston yesterday.
“What happens when theft of service occurs. For JPS, it may very well be the death knell. Last year, we were fined by the OUR $30 million, that’s two-and-a-half times our total profit and we again submit that there is no business in Jamaica that can lose two to three million dollars a month and still be viable,” she said, adding that the company is facing bankruptcy as it has broken several covenants with its lenders.
“So for us it has reached a very critical point. This has led to us being in breach of our financial covenants. We have been in breach since last year and we continue to be in breach. What that means is that there is a covenant in our loan agreement with our lenders that said we would maintain a specific EBITDA (earnings before interest, taxes, depreciation and amortisation) to debt ratio and we haven’t met that, and we haven’t met it for a year,” Tomblin said.
She said that the company’s lenders have been granting it waivers, but JPS is not earning enough to meet its debts.
“That is a violation of our agreement, and now we have a lender that has not given us a waiver,” she said.
“So in the US, we call it a financial cliff; we call it a precipice here, but the fact remains that JPS cannot be viable in the current framework.”
Tomblin spoke to the electricity theft issue affecting the sugar estates in an interview with the Jamaica Observer after the news conference.
“It shocks the conscience,” she said, “because if you drive around right now you see it [electricity theft] everywhere. We [Jamaicans] have become very immune to it and I think that is what has gone on here.”
Yesterday’s Observer lead story reported Agriculture Minister Roger Clarke as saying that the Government will have to fork out $200 million to remove illegal connections set up at the sugar plantations.
Disconnecting the illegal connections, Clarke said, was the “only outstanding matter” in negotiations with the new owners of the factories, Pan Caribbean Sugar Company, to invest in a US$100-million sugar refinery.
For years, residents in neighbouring communities were allowed free access to electricity and irrigation water which cost the sugar company $100 million in additional costs annually. The $200 million is being sought to pay for a regularisation programme for the affected communities.
Yesterday, Tomblin did not say whether the regularisation process had started, or if the Government had paid any portion of the regularisation costs.
She, however, bemoaned the debt the Government had incurred for electricity, and said the State will have to pay up if the JPS is to remain viable.
“We certainly have difficulty collecting from the Government, and of course the Government has had its woes,” Tomblin said. “But remember, we bill the Government in Jamaican dollars and we have to pay most of our suppliers, including Petrojam, in US dollars. So the longer they take to pay us, the more detrimental it is to JPS.
“So we really do need to get everyone to be current, and for the Government to repay JPS what it owes us,” she said.
In the meantime, Tomblin said that new measures are to be implemented to detect electricity theft by major organisations which, she said, is harder to detect than those set up by ordinary citizens.
Jamaica Public Service Company President and CEO Kelly Tomblin addressing a news conference at the JPS head office in New Kingston yesterday.
There is so much talk and slow action about implementing alternative energy sources these days. Without a doubt, Jamaica will benefit from any decrease in cost for energy, but has anybody stopped to think of what will happen if we do not formulate firm strategies to manage consumption in all spheres of our daily life?
As it exists now, our main supplier of electricity is unable to generate the amount of power to meet its demands, and whether our dreams of rates US 14 cents per kwh becomes a reality or not, we must think outside of the box in an effort to control consumption.
Office equipment, especially computers, are often left on after use in the office. (PHOTO: AP)
For the most part, energy saving activities are centred around the use of household appliances, lighting, and air condition units, which consume the most electricity. However, there is not as much enthusiasm expressed in the public domain as to how companies should effectively manage their power consumption.
It is believed that by now, organisations would have been proactive with fully developed programmes in engaging their team members in the importance of keeping their operational costs down by carefully managing the use of electricity.
However, as these organisations become more dependent on information technology to drive efficiencies in their operations, there is usually a correlative increase in power consumption. In many cases, this increase could actually be greatly curtailed, but on the other hand, IT mangers who orchestrate equipment usage are never usually concerned with cost containment.
Desktop and laptop computers usually account for the majority of technology equipment used in most companies, and this is where the haemorrhaging of electricity takes place, simply because these units are left on for long periods when not in use.
Individuals in most organisations cannot be relied upon to shut off their computers when not in use for long periods, particularly at the end of the day and Friday evenings.
The continuous waste of power inhibits the Jamaica Public Service Company to meet its demands for power in areas of the island which have never been privileged to have this modern convenience many of us take for granted.
Organisations that operate more than 50 or more computers are at serious risk of inflated JPS bills because of this type of oblivious behaviour. The associated costs of operation really add up when tabulated on a per annum basis.
Let us do some simple mathematics:
If your PC is on for left idle for 16 hours each week day after the usual eight hour work day and on weekends for a full 48 hours :
The total wasted hours per week is (16 x5) weekday + 48 weekend= 128 hours
Per Year this adds up to 128 x 52 (weeks) = 6656 hours
Each computer uses 128W = (6656 x 128)/1000 = 822kwh
Cost for Electricity Per KW/h in Jamaica is US$0.44
Total Cost for wasted electricity per computer per year is 882 X $0.44 = US$375
The kilowatt hours used in the computation does not include hours that computers may be idle during the work day.
This figure may not seem like a whole lot but consider those large corporations in Jamaica that have 500 to 1000 + employees. If 200 computers were to be left running for those hours per annum then that corporation will be looking at a whopping J$7,425,000 ($US375 x 200 x ROE J$99 = US$1) in payments to JPS.
These are not just costs that are impacting the private sector. This dilemma is every taxpayer across the nation’s problem. Our government employs more people than any private sector organisation and the waste in electricity throughout the various ministries is staggering.
The government owns approximately 80,000 computers. If just 20,000 are to be left on for 128 hours then the cost to taxpayers is over J$742.5 million. The current public sector bill for electricity is over J$1.2 billion per month which will grow as the government strives to modernise its operations.
Many companies have introduced energy conservation awareness programmes which are created to help their employees to better understand the impact of their action on the companies’ bottom line; however the benefits are usually short lived. The senior management in these large organisations must look at other ways they can manage these processes with a view to ensuring a more favourable outcome.
The implementation of software applications which do not require human intervention, which will shut down these computers when not in use is in fact available and organisations at risk should look at the available options coupled with its awareness programmes.
While cheaper sources of energy are still a far ways off, the issue of power generation by the JPS will always be a problem that will never go away if conservation is not tackled in a very serious way.
Dean Johnson is a specialist in information technology, sales and marketing. You can email him at energybugja@gmail.com.
Hardly a day goes by without me hearing of electricity theft from Jamaica Public Service Company (JPS) supply lines. What about armoured cable? Has JPS tried this?
Twin armoured cables are made up of a minimum of five layers of insulation, the individual insulation of the two conductors, an overall insulation of these two, then comes the armour rap which in the low cost cables is normally made from aluminium and finally the outer insulation.
Steel armoured cables are considered the best. The 16mm steel armoured cables come in at about US$600 per 100 metres.
I know that there are many Jamaicans who are very ingenious at theft – and not much else – but unless one calls the Grim Reaper and asks him to stay away, it would be a very brave person, or possibly a fool, who tries to make a connection to an armoured cable without first switching the power off and using the correct tools.
You can’t connect to an armoured cable by throwing up a hook! Yes, I know that future legal connections to such a line will take longer and cost more, but it is a one-off payment. This will, in the end, cost less than going to and fro to remove illegal connections or throwing up hands and saying, “We don’t know what else to do.” We can’t go on like this!
JPS does not (I stand corrected) have any means of determining the difference between line loss which varies and theft, but as it is allowed to charge you and me for that which is guessed theft, why bother to go to the expense of putting up armoured cables in predominantly theft areas.
THE Office of Utilities Regulations (OUR) is to partner with the National Contracts Commission to negotiate actively with four interested bidders for the building of a new power plant and present a recommendation to the Government in 30 days.
Minister of Science, Technology, Energy and Mining Phillip Paulwell, who made the announcement during his contribution to the 2013/14 Budget Debate at Gordon House in Kingston yesterday, said the OUR is to get additional powers of monitoring, evaluation and enforcement, similar to those it has over the telecommunications sector. “Legislation will be brought to Parliament during this year to amend the current Act,” he said.
Minister of Science, Technology, Energy, and Mining Phillip Paulwell makes his contribution to the 2013/14 Budget Debate at Gordon House in Kingston, Turn to POWER on Page 4 yesterday. (PHOTO: LIONEL ROOKWOOD)
In 2010, the OUR went to tender for 480 megawatts (MW) of generating capacity, and the Jamaica Public Service (JPS) was the sole bidder at the time and was awarded the right to construct a 360 MW combined cycle plant. It was contemplated that the Government
would be responsible for securing the supply LNG of fuel for the new plant, through the Liquefied Natural Gas project.
However, the OUR, on February 1 this year, informed the JPS and its shareholders that it had terminated the request for proposal (RFP) process in relation to the 360-MW project. The OUR said it ended the process after JPS missed a third deadline on January 30 to complete the requirements under the RFP for the 360-MW project and had requested a 30-day extension.
The JPS said the project scope changed significantly since 2011, when it was granted approval to proceed with construction of the plant saying its role initially was simply to construct the plant, but late last year the company was asked to take on the additional responsibility of identifying a supplier and managing the process of procuring the LNG.
A subsequent decision by the OUR to accept unsolicited proposals from the JPS and other companies, this year,
saw five entities presenting unsolicited proposals for 14 discrete projects.
Yesterday, Paulwell said this development was “a big turnaround from 2010, when there was a sole bidder, signifying confidence in this administration, its policies and regulatory framework”.
He said that following evaluations by international consultants Mott McDonald, which contemplated among other factors the firmness of the proposal, the overall price and expected impact on retail electricity rates of the 14 projects submitted, four were rejected because the information was incomplete.
The energy minister said, although 10 were screened for detailed technical and comparative economic analysis, of the 10, the OUR determined that three entities made the pitch. Those include Amorview/Tankweld, which presented a
232-MW project proposed for Old Harbour and a 122.4-MW project proposed for Caymanas; JPS, which presented proposals for a 323-MW and a 350-MW combined cycle plant, both proposed for Old Harbour; and Azurest/ Cambridge, which presented a proposal for a 388-MW plant mounted on a barge.
Paulwell said all three proposed the use of natural gas.
In the meantime, he said subsequent to the OUR receiving and assessing those proposals, the Government has since received another unsolicited proposal from a Hong Kong company, proposing to build an LNG receiving terminal and power plant and to supply LNG from its own gas fields. That company has proposed a combined cycle gas-fired 360-MW power plant adjacent to the LNG hub terminal.
“After several stops and starts, today I can speak with certainty that a positive change is about to come to the supply of electricity in Jamaica. It is essential that we begin construction of new generating capacity this year; there have been too many delays, and we can no longer live with these high electricity prices,” Paulwell told the House.
