Paulwell laments not breaking JPS's monopoly in 2007
Published:Thursday | July 14, 2011 | 12:00 AM
Daraine Luton, Senior Staff Reporter
PHILLIP PAULWELL says he regrets not pressuring the Jamaica Public Service Company (JPS) to give up its monopoly position in the power distribution market when his Government engaged in the last negotiation over aspects of the utility provider's contract in 2007.
At that time, the People's National Party (PNP) government made several demands of the power company when majority shareholder, Mirant, proceeded to sell its shares to Marubeni.
Those demands were geared at achieving competition in the area of power generation but did not include power distribution.
"JPS is not a pure monopoly and we should not have acceded to that argument. One of the things is that when you are in Opposition you get a chance to reflect and, in our reflections, based on the progressive agenda, we believe this is the route to take once more to enable Jamaica to have a chance at national development," Paulwell said yesterday.
The Opposition spokesman on energy was addressing a press conference at the PNP's headquarters in St Andrew yesterday.
Paulwell used the press conference to renew his call for the current Government to use its position to break the monopoly.
He said in 2007 the matter of breaking the monopoly "was not dealt with forcefully then because we were focusing on competition in generation".
Paulwell said: "In 2004, by way of the licence, we broke the monopoly on generation. I think at the time we wanted to see greater competition in regard to generation. We did not deal with competition on the transmission side because we believe there was additional scope for greater efficiency. In hindsight, I will be the first to admit that we should have gone that route."
Open to new players
The JPS licence expires in 2020 and is renewable for another 10 years. Paulwell has suggested that the JPS be given a telecommunications licence to transmit broadband over its power lines.
He also suggested that the JPS continue to own the distribution grid but make it accessible to new players at a reasonable rate for interconnection, which will allow a reasonable rate of return to JPS on its investment on the grid.
Recently, an international team of consultants hired by the light and power company said the Government should not break the monopoly over power distribution held by the JPS.
The Washington DC-based advisers, Castalia, said the break-up would more likely result in an increase in rates for residential and small commercial customers, and no reduction in the costs to large industrial users.
But Paulwell is adamant that there are enough examples which indicate competition in the market could halve the cost of electricity from its current US32 cents per kwh.
"I have a group of university students who have researched this worldwide. We have found good models where your actual costs decrease," Paulwell argued.