Hit hard by an Office of Utilities Regulation (OUR) order to refund close to $1 billion to customers, the Jamaica Public Service Company (JPS) is preparing to file an appeal which will also place in the public sphere the challenges the energy provider has been facing in its quest to upgrade its systems.

“We’ve started a journey and we need to continue that journey,” Sheree Martin, senior vice-president, customer and corporate services at JPS, told the Jamaica Observer.

“A lot has happened in the past, a lot has happened since privatisation; we’re not in any way trying to gloss over the things that have gone wrong; we’re not perfect,” Martin added.

“There are reasons for why we’ve been operating the way we have and the patience that it requires to fix what we are today is something that we need all the stakeholders at the table to appreciate,” she argued.

Martin had actually made the comments before the OUR announcement last week of the refund, and ahead of the regulator’s decision last month to deny JPS a tariff increase and cut in half the company’s proposed profit target.

The comments, though, demonstrate the mindset at JPS, which is clearly on a mission to burnish its image, especially in the areas of customer relations and overall service.

“When people say you’re asking for an increase, I’m asking on behalf of the customers, not on behalf of my shareholders,” explained JPS President and CEO Kelly Tomblin.

“We want the increase to fix the system, we want the increase to maintain the system,” she added.

The system of which Tomblin spoke is old and creaking. In fact, in 2001 when Marubeni Corporation bought the majority stake in JPS from the Government, the Japan-based company found that it had acquired assets that had been run into the ground.

The new owners had to invest heavily to improve the infrastructure. Today, on average, the company says it invests US$60 million per annum on maintenance and upgrades.

“My team comes to me every year with a US$100-million cap-ex budget, but the public can’t afford us to spend US$100 million,” Tomblin said.

However, she sees a window of opportunity for the company and country now that oil prices have nosedived to just under US$50 a barrel.

“If I were the regulator, now when oil prices are low, I would say let’s fix some of the problems while we have a little breathing room,” Tomblin argued.

“I think we have done what we could do over the years while we were fixing some basic generation problems,” Tomblin added.

“Overall, while we have old generation that needs fuel diversity, our plants are running well. So I think we’re at a point now when [with] the cost of fuel prices working for us… we’ll be able to clean up some of the things we have wanted to do,” she said.

Probably the two biggest items on JPS’s list are its generating plants and its fuel diversification efforts.

“Our sub-stations now need some investment,” Tomblin explained. “We have situations where we have very long feeders… for instance, in Hanover, that I’m embarrassed about… and to correct that we need to add a sub-station which will be a huge cost. Some are design issues that we’re struggling with.”

Asked to give a worst-case scenario if the plants are not upgraded, Tomblin and her team used the analogy of having a 40-year-old car that gets 20 miles to the gallon instead of a new car that could get 30 miles.

“The good thing about 40-year-old plants is that they’re kinda like diesel engines. You can keep them going, but it just costs so much more to do so, and you are at risk of having a catastrophe from which you can’t recover,” they said.

But the generation expansion project is costly. “We’re talking about a US$500-million project for 190 megawatts, and it’s much smaller than the one we were proposing,” Tomblin said.

Although the JPS team admitted that it was difficult to excite people to invest US$500 million, the company — after receiving Government approval — announced earlier this month that it intends to start construction on the 190-megawatt plant at Old Harbour using a mix of debt and equity.

The new plant, which will replace its existing units at the Old Harbour power station, is expected to be completed in the fourth quarter of 2017.

In the area of fuel diversification the company is convinced that by moving to natural gas and replacing its power plants it can become at least 35 per cent more efficient with fuel usage.

“So this is why this US$500-million project is so important; it allows us to bring state-of-the-art generation equipment which must be fired on natural gas to give us that overall efficiency improvement,” the company argued.

Technology upgrade was another big item on JPS’s list and on which the company appears to be placing great importance.

“We just spent $20 million in IT to get our systems up to where we can now segment our customers, interact with our customers, give them the opportunity to do self-service,” Tomblin said.

Martin agreed, adding that the journey that the company has started “really puts the customer back at the heart of our business, and has started us on this focus of prioritising the things that matter most to what Jamaica requires”.

On the issue of renewable energy and the requirement for JPS, as the grid operator, to facilitate that, Martin pointed to the US$36-million hydroelectric plant in Maggotty, St Elizabeth that was commissioned into service last year.

“We’re also trying to fulfil the policy agenda and the national goals that see us putting investments in the areas the country needs, sometimes not as a shareholder looking on strictly on the numbers in the best interest of an investment, but we’re looking more long-term and we’re saying this is what the country will need right now,” Martin said.