JPS promises fewer and shorter blackouts as it applies for rate increase


Sunday, August 18, 2019

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The Jamaica Public Service Company (JPS) is promising that its customers will see more reliable service over the next five years as it continues several improvements in its operation.

“We intend to improve reliability linked to the frequency of any outage or the duration of any outage by about 20 per cent, and we have made tremendous strides in the past five years, and we have actually said we are not satisfied by that,” chief financial officer (CFO) of the JPS Vernon Douglas told SUNDAY FINANCE during an exclusive interview last Thursday.

“Even if we have outages, we want to make sure the duration is very short,” added Douglas as he pointed to the company's already introduced centralised grid management network which divides the island into sub-islands.

“That (centralised grid) is designed for restorative purposes. In the case where you have a major hurricane we can bring up the grid in a sustained manner by bringing in sections at a time, and if, you have a disruptive factor you are able to isolate that as part of how the grid is designed,” added Douglas.

The JPS official was providing more details on the company's request to the Office of Utilities Regulation (OUR) for a rate review.

According to Douglas, the rate review is part of its 2019-2024 Business Plan which has also been submitted to the OUR and provides for a new level of modernisation of Jamaica's energy sector.

Douglas underscored that the business plan shows what the JPS will be doing to transform its business and the country, in terms of energy reliability, improvement, and sustainability over the next five years.

The Munroe College alumnus said the JPS is committed to transforming Jamaica to make it attractive to persons doing business here.

“It requires massive investments to ensure that for our country, when it comes to energy and electricity provisions that becomes a non-factor when you are making a decision to build a house or operate a business because you will have a sustainable supply of electricity that is not in question,” said Douglas.

The JPS, in its business plan, indicated that it intends to spend more than US$500 million to improve its operations over the next five years.

This includes US$140 million to upgrade or replace its 640 megawatts of daily generation, US$208 million to upgrade the national transmission and distribution network and millions more to establish charging stations for electric cars which Douglas projected will be a reality in Jamaica by next year.

“So, we now have to design new rates, new tariff structures to accommodate this new growth industry. If you don't have that in place you will not be enabling electric cars.

“We also have to have new structures and new investments to deal with the fact that we are shifting as a country, rightfully, in the direction of driving investments in renewable sources as in solar, wind, and other sources.

“We have to align those with the regulator to ensure that we are not making these decisions on our own, and we have to create tariffs to include pricing structures to deal with that kind of stuff,” argued Gordon.

In its tariff review application the JPS proposes an average increase of 3.2 per cent on the monthly bills of its customers by early next year. This includes an increase of almost 13 per cent in the non-fuel portion of the bill and a reduction to the tune of five percentage points on the fuel portion. But, according to Douglas, this breakdown is inevitable.

“Yes it will result in a reduction in fuel because that reflects how much more efficient we are getting, but the investment will show up on non-fuel,” said Douglas as he noted that the new business plan also makes provisions for it to become easier for people to do business with the JPS.

“One of the changes we are looking at implementing, in the not too distant future — 2020 — is to change fundamentally our 'join, move and leave processes' to make it fully digitally enabled. We don't want our customers to have to be going into offices to be joining long lines.

“If you move your house or your business place …we want that to be a seamless exercise and if, for example, you decide to exit, we want that to be a seamless exercise. That's fundamental to what we want to deliver to the experience of our customers,” said Douglas as he admitted that the JPS is concerned that some of its larger customers are opting to leave its grid.

Douglas said the JPS is designing appropriate pricing structures for its large customers linked to time of use that would see them paying less for operating at periods when the general demand is lower.

The company has also announced plans to commission at least two distributed generation projects that provide electricity directly to feeders near large customers thereby boosting reliability and reducing the incentive for them to leave the grid.

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