Productivity Improvements at JPS Could Reduce Energy Prices

A study by Jamaica Productivity Centre (JPC) offers evidence of the performance gap between JPS power generation and other domestic power producers; ranks the JPS distribution operations among the least efficient in the region for total distribution losses, non-technical losses and reliability; and places JPS in the group with the highest electricity prices. At issue is whether modifications to the current operations of JPS and changes to the orientation of regulation could deliver significant short term benefits by way of lower electricity prices.

The rising cost of electricity is inimical to the interest of consumers and to national growth and development. Hence the generation and distribution of electricity in Jamaica continues to be the focus of intense debate. While much of this debate has been centred on whether coal or LNG should be the fuel choice in the expansion of the generation system programmed for 2014, this is undoubtedly a long term solution. In a 2011 study by the Jamaica Productivity Centre (JPC) it is argued that modifications to the current operations of Jamaica Public Service Company (JPS) and changes to the orientation of regulation could deliver short term benefits by way of lower electricity prices to consumers.´╗┐It is therefore in this context that we considered it worthwhile to examine the issues raised in the study and their short term implications for reducing electricity prices.

 ´╗┐SYSTEM LOSSES

The JPC study, which benchmarks the performance of Jamaica’s electricity sector against that of 25 Latin American and Caribbean countries, indicates that in 2009 the average system losses for the group was 16% compared to 23.9% losses registered by JPS in the same year. The study estimates that significant savings can be achieved, at least J$7.43 billion annually, if JPS reduces its system losses to the 16% average. 

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