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Stabroek News

That's not JPS, Ms Ritch
published: Sunday | October 2, 2005


PERMIT US space to respond to the article, 'A dereliction of public duty', by Dawn Ritch in the Sunday Gleaner of September 25, 2005.

While we're disappointed by the general tone of the piece, we take this opportunity to correct some errors of fact in the hope that it will assist readers in evaluating the merits of the wider commentary.


There is no general consumption tax (GCT) charged on electricity bills. In fact, as a GCT-exempt organisation, JPS is not allowed to charge GCT and so must absorb the added cost when our suppliers of goods and services pass on increases in that tax.

Hurricane Ivan cost recovery

The $457.5 million in hurricane cost recovery deferred by the company would have resulted in customers seeing a less than one per cent increase in monthly bills, not seven to ten per cent as stated.

JPS has not filed an appeal with the Court of Appeal. The company's licence outlines the process to be followed whenever there is a disagreement with a determination by the OUR. The licence stipulates that it be referred to an appeals tribunal. JPS has asked that this tribunal be convened and so the issue is not at this time before the courts.

We will not seek the award of interest specifically because of the appeal on any settlement that the tribunal may make. This is the company's unequivocal position.

Overcharging customers

There is no evidence to support any assertion that JPS has systematically overcharged customers. JPS is on record as objecting to the OUR's conclusions regarding the November 2004 billing episode. We are, however, complying with a regulatory directive to adjust some accounts with significant consumption changes in the post- 'Ivan' period.

Guaranteed rate

JPS's profits are not guaranteed. We are allowed the opportunity to make a target Return on Equity (ROE) of 14.85 per cent. Since privatisation in 2001 our actual ROE has never exceeded 8 per cent. Additionally, the company's bottom line is at risk from penalties that would restrict us from recovering the full cost of fuel from customers if we fail to make several performance targets set by the OUR.

Disconnection of street lights

JPS has not disconnected street lights for non-payment. We would be very interested in hearing evidence to the contrary if there is.

JPS & Mirant are open books

The Shareholders' Agreement between Mirant and the Government of Jamaica for the purchase of JPS was tabled in Parliament at the time of the acquisition and is a document on record. The operating licence under which JPS operates is a public document available to any interested member of the public. Details of the company's tariff applications and the determinations of our regulators are freely available on the OUR's website.

Further, as a publicly traded company with preference shares listed on the Jamaica Stock Exchange we make quarterly disclosures of the company's finances to the JSE. What's more, our licence gives the OUR full authority to seek whatever information they may require in regulating the company. In that respect, JPS is an open book and there is no need for speculation on the terms under which it was privatised or the rules by which it must operate.

Similarly, Mirant Corporation is a listed company operating under Chapter 11 bankruptcy protection in the United States. Under U.S. laws, it is required to make full disclosure of its affairs to the Securities Exchange Commission (SEC). Details of ownership, board of directors, management and its finances are therefore also freely available.

My gravest concern about Ms. Ritch's article is the assertion about a pensioner whose monthly electricity bill has reportedly gone from $300 to $4,000. If this is so, I am keen that Ms. Ritch provides us with the customer's details, as an increase of this magnitude could not be caused by electricity price increases even accumulatively over the past four years.

Finally, with Ms. Ritch's agreement, I would be happy to be her liaison whenever she requires information on JPS or Mirant for future articles.

I am, etc.,


Head, Government & Regulatory Affairs,

Jamaica Public Service Company Ltd.

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