Tue | Nov 21, 2017

Govt owes JPS approximately $5 billion for street lights

Published:Thursday | February 16, 2017 | 12:00 AMJovan Johnson
Damaged street light

Jamaicans could be punished for becoming energy efficient, a consultant has argued before a parliamentary committee, once again raising questions about the 2016 licence granted to the Jamaica Public Service Company (JPS).

Richard Gordon, a consultant to the local government ministry, made the pronouncement at yesterday's meeting of the Public Administration and Appropriations Committee (PAAC), which received information showing that the Government owes JPS approximately $5 billion in outstanding street light bills.

Permanent secretary in the ministry, Denzil Thorpe, however, told the committee that future bills are expected to cost less when the JPS replaces the 105,000 streetlights with energy-saving LED lamps over three years starting in June. As a result, the yearly street light bill of $2.8 billion could be cut by a "at least" a half to about $1.4 billion.

The new lights will be run on a so-called smart system that would indicate when the lights stop working. The Government has argued that it's being billed for street lights that have not been working.

No plans were presented on how the arrears to the JPS will be cleared. Each year, $2.5 billion is budgeted for light bills.

 

BE VIGILANT

 

Gordon argued that there is reason for the Government to be "vigilant" with the JPS.

"[With the new JPS licence], you're moving from what you call a price cap where you charge per kilowatt hour to a revenue cap where, in principle, JPS will say 'I expect to get $10 billion' and you calculate how much electricity you sell and based on the sale, you divide that in your earning," he said.

"If you go the revenue cap which is in the licence and we become efficient and use less kilowatt hours, the principle is that they can apply to the Office of Utilities Regulation (OUR) to say 'well, we need to get our $10 billion or whatever it is [because] the consumers are consuming less and we need to adjust the rate'. That's why I am alerting the Government that we need to be vigilant about efficiency relating to the licence."

PAAC Chairman Dr Wykeham McNeill said the committee will have to emphasise in its report to Parliament that rates are kept to "some degree of uniformity so that gains made from increased efficiency can be realised".

On Monday, the OUR advised that customers will pay more for electricity come July when it reviews rates to allow JPS to recover certain losses.

Last month, Aubyn Hill, senator and chief technical adviser to the finance minister, questioned the change from the pricing regime to the revenue cap. He said the Andrew Holness administration was "obliged" to review the JPS licence because of threats to the Jamaican economy.

JPS Chief Executive Officer and President Kelly Tomblin, however, said she hoped the administration was not planning to overturn a licence negotiated "in good faith" under the previous Portia Simpson Miller government. The Government plans to divest its nearly 20 per cent stake in the JPS.

jovan.johnson@gleanerjm.com