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JPS $3b plan to curb outages

Power utility Jamaica Public Service Company Limited, JPS, will spend US$18.25 million ($2.83 billion) on specific projects designed to improve the reliability of the electricity grid following a spike in outages.

On average, the number of outages in 2022 equated to 10 every hour, up from the 7.5 outages that prevailed in previous years.

Plans for the project were included in the utility’s application for an annual rate increase.

If the new application is approved, it could result in a rise in electricity costs for some residential customers bill by 0.77 per cent, but a decline overall by 0.69 per cent when all customer groups are factored, based on upward movements in inflation and foreign exchange rates but a downward movement in oil prices year-on-year.

The capital investment in “reliability projects” to be undertaken by JPS this year cover:

– Voltage standardisation: US$4.54 million;

– Grid modernisation programme: US$2.81 million;

– Distribution structural integrity: US$4.82 million;

– Distribution line reconditioning and relocation: US$2.4 million;

– Transmission structural integrity: US$1.84 million; and

– Substation structural integrity: US$1.84 million.

Outages totalled 91,000 in 2022, up from 61,830 in 2021.

Over seven years the average number of forced outages was 66,860. The spike last year was due in part to bad weather, but also teething pains from the introduction of a new outage management system, according to JPS head of communications Winsome Callum, who said it led to double-counting of some outages.

However, there was no estimate on the level of duplications.

The tariff document officially outlined that of the over 91,000 outages, the main causes were overgrown vegetation, which accounted for 27 per cent; equipment failure for another 27 per cent; and ‘unknown’, 15 per cent. Another 11 per cent were lumped under ‘other reasons’.

JPS added that motor accidents usually cause five per cent of outages. It wants sector regulator, the Office of Utilities Regulation, to eliminate any penalties arising from power disruptions caused by road accidents.

The company’s US$18.25-million budgeted spend will slightly trail the US$19.1 million spent on improving reliability in 2022.

Reliability projects, however, is usually just one component of the utility’s larger capex programme annually.

Last year, its capital investments totalled US$85 million, less than a quarter of which went towards the reliability programme.

For this year, while the total capital spend for 2023 was included in the application, the related Appendix F section was not posted online with the 100-page rate application.

Neither JPS nor the OUR responded immediately to a request for an update on the figure.

Since the onset of the COVID-19 pandemic, JPS has been dealing with tightening supply chains, unusually long lead times for critical assets, and shipping logistics delays. These issues have curtailed planned work activities.

“As a result, five projects were deferred until 2023 due to significant supply chain challenges. Nevertheless, JPS has made significant efforts through strategic planning and other initiatives to reduce the impact on its reliability objectives and the quality of service it provides to its valued customers,” the power utility said.

The major projects being rolled out over the period 2022 to 2024 include the smart meter programme, Old Harbour-Hunts Bay 138kV line upgrade, voltage standardisation, residential advanced metering, grid modernisation, critical spares for generation, distribution line structural integrity, customer growth, combined cycle plant, and the smart LED streetlight programme.

“JPS has not cancelled the implementation of any approved 2022 project and does not intend to delay any projects beyond the 2023 regulatory window, except for the 138KV transmission line project which is slated for completion in 2025,” the power utility said in its rate application.

The JPS can apply for three main tariff adjustments to its regulator: the annual adjustment, which accounts for things outside its control; an extraordinary review based on shocks such as the pandemic; and its five-year tariff review application, which includes its business plan and capital budget. The latter covers the period 2019-2024.

The Office of Utilities Regulation is expected to make a decision within weeks on JPS’s current tariff application. Overall, JPS expects the impact on customer bills to fall.

“For 2023, this adjustment is approximately 13.15 per cent relative to 2022. However, the average billing impact is expected to see a reduction, as fuel prices are projected to improve throughout the year based on JPS’s generation estimates and the outlook for oil and natural gas prices,” JPS said.

The electricity provider projects a reduction from the current average tariff of $49.08 to $48.75 under its 2023 proposal, which would result in a marginal reduction of 0.69 per cent in electricity billings overall.

Within the specific billing categories, JPS estimates that the average bill would rise by 0.77 per cent for small residential users, or rate 10 customers; fall by 2.3 per cent for rate 20, or larger residential customers; rise by 0.23 per cent for rate 40, or large commercial customers; fall by 2.55 per cent for rate 50, or larger commercial customers; and fall by 2.83 per cent for rate 70, or wholesale commercial customers.

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