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Gov't senator wants review of JPS licence, says it threatens economic progress

Published:Friday | January 20, 2017 | 1:01 PM
Hill spoke out against the JPS licence as he opened the State of the Nation Debate in the Senate.

Jovan Johnson. Staff Reporter

Government Senator Aubyn Hill is calling for a review of the Jamaica Public Service Company (JPS) licence arguing that it could threaten the economy and lead to high costs to consumers.

The new licence was approved last year.

Opening the State of the Nation Debate in the Senate, Hill this morning said replacing the price cap regime with the revenue cap regime in the licence means the JPS targets are no longer in tied to growth in the economy.

A price cap sets a limit on the price that the utility company can charge and is influenced by factors such as inflation.

A revenue cap is also influenced by inflation, but limits the total amount of revenue received by a company with monopoly status.

The switch to a revenue cap, Hill added, can be expensive to JPS customers and dampen economic growth.

Hill further said it can be argued that the revenue cap approach blunts incentive on the JPS to support expansion of renewable energy sources or improve its inefficiencies.

The Office of Utilities Regulation had rejected a previous proposal by JPS for a revenue cap before it approved the provision for the 2016 licence.

Meanwhile, Hill said giving the JPS the right of first refusal to replace generating plants due for retirement entrenches the company's monopoly and is inconsistent with international standards and Jamaica's national energy policy.