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We may be stuck with JPS for many more years

Mark Wignall

Thursday, August 23, 2012    

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REALITY check 101. Our conquests at the Olympics are behind us and the economy is close to a flat line. This means that about eight months ago patient Jamaica changed hospitals, and although the patient is still ailing and complaining of even greater pain than before, the doctor cannot say if the patient is likely to get better.

Relatives and friends have been badgering the medical officer in charge to level with them. "Listen," states the doctor as he attempts to rush away from them. "The patient is still alive, but take heart that he is not dead. We know what is wrong with him, but with the medication that we have available and have given him, he doesn't seem to be responding positively to it."

"What can we do?" ask the relatives.

"First, pay the amount outstanding for the many months that he has been here. Without that, we cannot administer the needed medication," says the doctor.

"But doctor, we are willing to pay, but what guarantee do we have that you will be able to source the medication, if we do pay?"

The doctor pauses and turns to stare them in the face. "Why don't you try to get a loan? The hospital has been trying for eight months now to negotiate its own loan, but so far, we do not know whether we are coming or going."

The hospital has just built a multi-million dollar wing called Consultants' block. The equipment there is state-of-the-art but the beds are empty. The doctor bids them goodbye and walks away whistling. His swanky new 2013 Audi is parked outside. The relatives head outside to take their chances with public transportation.

It is accepted that if Jamaica is unable to solve its problems of high energy costs, we will be forever in the hospital. We cannot trade on fairly equal footing with our partners in the region, and outside where energy rates are even cheaper, it is a losing game.

A friend from my days at KC, an electrical engineer living and working in Canada, attempted to explain to me some of the realities that would face any other player who would want to compete with JPS under the "rules" that are likely to be implemented in the wake of the much publicised CURE victory in the courts.

Said he, "It is not feasible or necessary for the competition to install a separate Transmission and Distribution (T&D) network. But they may be required to do the necessary upgrade to the existing system at the injection point from the new generation station. A systems analysis would be required to determine this upgrade, most likely in collaboration with JPS. This most likely would result in:

"(1) Higher capacity transformers, circuit breakers and power lines on the existing sections of the grid to cope with the new fault current levels associated with the increased generation as the systems analysis determined.

"(2) A metering and synchronising scheme to measure the amount of power injected and allow connection unto the existing grid.

"(3) Devices and equipment to detect, isolate and protect both systems in case of faults.

"A reliability benefit would also accrue since the new generation would allow flexibility to split the system and supply customers in the area of the new generators.

An operating protocol would have to be determined, perhaps by OUR, as to which entity is the principal power supplier with respect to varying customer demands and other aspects of operating the expanded grid. For example, when demand is low, who gets to sell power? How is the maintenance cost for the grid shared? How are the T & D losses shared? The fuel supply to the new entity?

"If this ruling stands, it may be quite some time before it can be effected on the ground."

The CURE victory which determined that JPS's sole source of electric power (monopoly) licence was illegal has generated much emotional heat but little light.

Let us assume that the government is able to negotiate, by purchase, ownership of the distribution network (poles, lines), what happens next?

If we accept, for example, that the grid will be split in two to accommodate the entity competing with JPS, who decides which section is held by JPS and which part is leased to the competition?

It is accepted that the market is stable at less than 600,000 customers. If, as my engineer friend states, the new player would want to install, in addition to new generation, new and improved lines and transformers at the outset, would that new entity not want to recover on its capital outlay as quickly as possible? Under such a scenario, it is possible that JPS, at its section of the grid, could undersell the new entrant and force it to close down. In time, it would be forced to sell to JPS, and we would be back at the proverbial square one.

In public discourse it sounds politically correct to speak of a multiplicity of smaller players competing with JPS, but as we examine the mechanics of setting up these systems, some harsh realities begin to stare us in the face. It is not a simple matter of just dropping a generating system in, say, Manchester, and after disconnecting a certain section from JPS, plugging into the new system of lines. Upgrades will have to be made and the capital outlay will be significant.

JPS has an advantage in that the present system is ancient and JPS is best able to operate that old system. A new player or new players will step in with modern equipment and that will force them to outfit the system with new transformers and lines.

Are the Jamaican consumers prepared to deal with the unpleasant permutations that could arise? Much more needs to be fleshed out on this matter which has so far generated considerably more heat than light.

observemark@gmail.com

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