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.

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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.

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The local oil refinery Petrojam, which has served Jamaica for a generation, should be shut down unless negotiations with the new Venezuelan government result in expansion plans, according to Energy Minister Phillip Paulwell.

The plant expansion has been delayed for eight years.

“In relation to Petrojam, this is a project that is well delayed. If Petrojam is not upgraded and expanded, we will have to shut it down. It is as simple as that,” Paulwell said at a press briefing at the Office of the Prime Minister on Thursday in Kingston.

“So we are awaiting the settling in of the new government and we were promised that as soon as that occurs, there will be a very important meeting with the players.”

Petrojam, the company, was incorporated 31 years ago. Government owns 51 per cent of the plant and Venezuela has the remaining 49 per cent since 2006.

Petrojam is projected to earn US$21.2 million net profit for this fiscal year ending April 2014 on US$1.9 billion of revenues. The capital expenditure for the year is projected at US$26.9 million.

A tractor exits the Monymusk Sugar Factory. In 1986, a study was completed on the feasibility of installing and operating a steam-electric power cogenerating facility adjacent to the Monymusk Sugar Factory. The project never got off the ground. - File
A tractor exits the Monymusk Sugar Factory. In 1986, a study was completed on the feasibility of installing and operating a steam-electric power cogenerating facility adjacent to the Monymusk Sugar Factory. The project never got off the ground. – File

CHIEF Executive Officer (CEO) of Jamaica’s PetroCaribe Development Fund (PDF) Dr Wesley Hughes has said that even a facile victory by

Callum
Callum

THE EDITOR, Sir:

I must thank Winsome Callum of the Jamaica Public Service Company (JPS) for her response (‘Don’t mislead the public, Mr Montague’,Gleaner, April 9, 2013) to my calls for her company to share in the sacrifices the whole nation is being called to undertake. The call was made on March 6, 2013 for her company to reduce electricity rates by 10-12 percentage points.

Two recommendations were then made.

1) For JPS to use the recommended Office of Utilities Regulation rates, as contained in the current request for proposal (RFP), for alternative energy solutions. JPS is suggesting a rate of US$0.2672 per kilowatt-hour. If you add the US$0.11 per kilowatt-hour, for transmission and distribution, you would get US$0.3772 per kilowatt-hour. JPS charges approximately, US$0.40 per kilowatt-hour.

A decrease in its rates to match the OUR rates would be welcomed by all JPS customers.

2) The Government was also asked to reduce the so-called guaranteed 17.5 per cent profits. The writer claims there are no such guaranteed profits.

Therefore, could JPS consider publishing the terms and conditions of the licence?

Would the JPS also consider engaging the OUR and see how best it could bring the rates in harmony? Noting that alternative energy solutions are more expensive?

I am well aware that JPS is one of our best corporate and compassionate citizens and will take into account the feeling of merciless exploitation, that many of its customers feel when we get our monthly bills.

I am also heartened by the openness of the company for dialogue and anxiously await an invitation so to do.

In the meantime, all of Jamaica would be so happy if the JPS announce a cut in its rates.

JPS, we are depending on you to help in whatever way you can to advance Jamaica.

ROBERT MONTAGUE

Chairman, JLP

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Callum
Callum

THE EDITOR, Sir:

I must thank Winsome Callum of the Jamaica Public Service Company (JPS) for her response (‘Don’t mislead the public, Mr Montague’,Gleaner, April 9, 2013) to my calls for her company to share in the sacrifices the whole nation is being called to undertake. The call was made on March 6, 2013 for her company to reduce electricity rates by 10-12 percentage points.

Two recommendations were then made.

1) For JPS to use the recommended Office of Utilities Regulation rates, as contained in the current request for proposal (RFP), for alternative energy solutions. JPS is suggesting a rate of US$0.2672 per kilowatt-hour. If you add the US$0.11 per kilowatt-hour, for transmission and distribution, you would get US$0.3772 per kilowatt-hour. JPS charges approximately, US$0.40 per kilowatt-hour.

A decrease in its rates to match the OUR rates would be welcomed by all JPS customers.

2) The Government was also asked to reduce the so-called guaranteed 17.5 per cent profits. The writer claims there are no such guaranteed profits.

Therefore, could JPS consider publishing the terms and conditions of the licence?

Would the JPS also consider engaging the OUR and see how best it could bring the rates in harmony? Noting that alternative energy solutions are more expensive?

I am well aware that JPS is one of our best corporate and compassionate citizens and will take into account the feeling of merciless exploitation, that many of its customers feel when we get our monthly bills.

I am also heartened by the openness of the company for dialogue and anxiously await an invitation so to do.

In the meantime, all of Jamaica would be so happy if the JPS announce a cut in its rates.

JPS, we are depending on you to help in whatever way you can to advance Jamaica.

ROBERT MONTAGUE

Chairman, JLP

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