Leonardo Blair, Enterprise ReporterLIKE THE recurring decimal - it never seems to go away. For the second time in four years, light and power company Mirant - the mother of Jamaica Public Service (JPS) - is battling with its customers over pricing and general service.
Just three months after the Government of Jamaica sold 80 per cent of the Jamaica Public Service Company Limited to Mirant Corporation in March 2001, the US-based company was implicated in one of the biggest energy scandals in the United States.
A United State's Federal Energy Regulatory Commission administrative law judge overseeing refund settlement talks in California's power market, announced that energy firms including Mirant, that sold electricity in the state would have to pay back overcharges of "several billion dollars."
And not many people in Jamaica seemed to care about those allegations until now just when the bitter complaints about energy and huge light bills being generated by the Mirant owned JPS began sounding like the complaints the Californian public made against Mirant and other power companies during 2001.
Winsome Callum, corporate communications manager at the JPS explained to The Sunday Gleaner last week that what happened in California's competitive energy market cannot be compared with what is now happening in Jamaica's regulated energy market.
"The situation in California to which you refer impacted many companies in the U.S. energy sector and was an isolated phenomenon based on a faulty market structure," said Ms. Callum.
However, on Friday, the Office of Utilities Regulation (OUR) announced that they had ordered an independent audit into the billing process of the light and power company in the wake of continuous customer complaints of unreasonably high light bills.
The OUR explained that they would also be renegotiating the energy company's customer service contract, all of which point to memories of California.
According to a report from the Atlanta Business Journal in the United States, in August 2004, California sued bankrupt Mirant Corp., alleging that the firm unjustly profited from rampant lying and fraud during the California energy crisis of 2000-2001 that drained billions of dollars from California's economy and rate payers.
"Mirant profited by breaking the law and plundering the people of California," said Bill Lockyer, California attorney general in a statement at the time. "They were, without question, one of the worst offenders during the energy crisis. They told grid operators generating units were down when they weren't. They created bogus grid congestion, then received premium payments to relieve it. To avoid in-state price caps, they created the illusion of importing energy from out of state. Californians paid dearly for Mirant's fraud."
JPS' PROFITS DEFENDED
Ms. Callum, however, defended JPS' profits as fair when compared to the company's asset base.
"Any constructive discussion of JPS' first-quarter profit of $487 million must be done in the context of the company's asset base, which stands at $42 billion. A mere five per cent return. And this profit comes after two years of losses in a very capital-intensive industry," she said.
"If you will, I challenge you to objectively look at JPS' profit with that of other companies with comparable asset base for the same period: C&W Ja made a profit of $609 million on an asset base of $37 billion GraceKennedy made a profit of $569 million on asset base of $38 billion," she pointed out.
There is nothing random about the JPS' current rates either, she explains. "JPS' non-fuel energy charges are set by the OUR. In 2004, JPS non-fuel rates were set for five years. The only change permitted in those rates before 2009 (when the next comprehensive rate review is due) is the annual inflation adjustment," she said.
"Customers' electricity bills continue to reflect movements in world oil prices. Each month, the fuel rate on bills will change, as JPS bills customers for the costs it incurs for fuel each month," she further explained.
"The fact that world oil prices have been increasing in the last few weeks is of serious concern particularly with fuel reaching record highs of $68 per barrel just this week. No doubt, the fuel rate on the electricity bills customers receive in September will be higher than the $7.092 per kwh that they are paying on August bills," she said.
Finance Minister Dr. Omar Davies will tomorrow travel to Atlanta, where he will meet with Mirant's corporate executives.
In February this year, the OUR ordered the JPS to compensate some 21,000 account holders, who were overbilled last November.
J. Paul Morgan, director general of the OUR, also directed the utility company to completely overhaul its meter-reading system to correct deficiencies by June 30 this year but that is yet to be done.
Earlier this year, Kingston's Mayor Desmond McKenzie also accused the JPS of neglecting to maintain several street lights across the Corporate Area despite being paid approximately $20 million monthly to provide the service.
