Get off the back of JPS !!

Why are people trying to make the JPS look like the devil, its not JPS why the cost of electricity is so high, its the government. Part of the reason why our energy cost is so high is, we do not have an energy policy in place and our environmental acts dont’ seem to work or are ignored, which again is the fault of the government.

One senator on Friday, July 8, 2011 went as far as to describe the JPS as an “extortionist  “, burdensome and manipulative and the monopoly needs to end now, so lets’ deconstruct the senators statement.

JPS used to be owned by private interest (foreign) and was bought out in the 1970’s and operated by the government of Jamaica. The GOJ in 2001 decided that it was a burden on the public purse and they could not longer support it and hence calls were made to divest it, to persons who could better manage and run the operations. This was supported by the private sector in Jamaica who all said that if operated by private interest we would be able to get lower rates as efficiency increases.  JPS was once again returned to private foreign interest – Mirant owing 80% and the n GOJ retaining 20%.

So the senators who are calling JPS an extortionist are in fact saying the GOJ is an extortionist,  by virtue of the fact that they own 20% of the shares and in so doing benefit from the exploitation of the very people the senators including the government senators are saying needs to be protected, what irony!

JPS seems today to operate at the lowest initial cost level vs. using lowest life cycle cost, and they don’t have to use the later. The fact is all the increased operating cost incurred by using lowest first cost vs. life cycle cost can simply can be passed unto the consumer, as the government via the their regulatory agency the OUR allows them to do so as part as their operating license.

If we had a good energy policy coupled with good environmental policies such as clean air act, we could say to JPS, that their emissions are X and needs to be reduced by X/3 in 5 years. This would force the company to get rid of their old inefficient plants and invest in plants with greater levels of efficiency. We have not done so and JPS have no choice but to use what is has and pass on the cost to the consumer.

It is the lack of proper policy why the cost of electricity is so high and liberalization alone will not give the benefits we think, like we experienced in telecom.

Jamaicans are the problem, not JPS

Senator Bennett showed a bill for $80k in parliament yesterday(Jul7, 2011) to make the point that JPS was making a killing by ripping off people. I therefore want to throw these questions at the senator:-

  1. Senators did you use that amount of energy?
  2. Where you billed for what you use?
  3. Do you think you were overbilled in terms of actual KWH consumption?
  4. What were you expecting in terms of your total bill and why ?
  5. What E-Con methods have you used or are you using to get electricity consumption do?

You see we  all like  to complain and expect to get something for nothing, there is no free lunch, everything in life comes at a price, and so the question is what price are Jamaicans willing to pay for lower energy bills? That is a profound question that we need to answer in order to move forward.

The Power Generation Cycle

I will endeavor to keep this as non-technical as possible so those reading and without technical knowledge can follow me, as I briefly describe what I call the power generation cycle. I will briefly explain the entire generation and distribution process and how JPS comes up with the final cost of electricity to the consumer so you can all have a deeper understanding of the process.

As most persons already know a significant portion of the fossil fuels purchase today (approx 23%) goes into the generation of electricity. Approximately 95% of the power supplied in Jamaica today is from oil while the other 5% is from renewable i.e. wind farm (Wigton) and some small hydro plants. I must also note that JPS also purchase power from the IPP (Independent Power Producers/Providers), but this forms part of the 95% mentioned above in terms of oil.

Efficiencies

According to the laws of thermodynamics there is no process that is 100% efficient and the JPS and its power producing process is no different. Now many would know but do not realize this, but most power plants operate at an electrical efficiency in the region of 30-35%!! This means more that half of the fuel used is rejected as heat in the form of radiation, convection and conduction losses. Many power producers however have been able to recovery this loss heat and have used this heat generated to create steam to drive a steam turbine thus increasing the overall efficiency of the combustion process. This is typically referred to as a combined cycle plant, which moves overall efficiencies up to 85%( electrical and thermal efficiency) and forms part of the Co-generation process.

The entire process is made up the following subsets.

  1. Generation
  2. Transmission
  3. Distribution
  4. Billing
  5. Collection.

Generation.

 

We know that the process is roughly 35% efficient from an electrical generation standpoint with 65% going into thermal heat load (rejection).

Transmission

Once generated the power goes to the major substation where the voltage is increased mainly before distribution. JPS today transmission system is between 69KV and 138KV. This increased voltage is done to reduce what is termed line losses or IR losses, the higher the transmission voltage the lower the line losses. Now consider this, the smaller the cable used in the transmission process, the greater the resistance and thus IR losses are greater. It is believe that in the case of JPS the IR loses could be as high as 6% for the transmission.

Transformers are used to step up the voltage but in doing so it too consumes power, which is released in the form of heat, these are termed as transformer losses and are a combination of winding losses (full load) and hysteresis and eddy current losses which makes up most of the losses at no load

Distribution.

To get power to where we can use it,  the voltage must be dropped further in a distribution substation, which again is made up of transformer and other switchgear, which also have inherent losses (since no process is ever 100% efficient).

From the distribution substation , power is then transmitted at a lower voltage but still not low enough for say the house holder, and hence you will notice these pole mounted transformers which now drop the voltage further to say 220V.  Here again we have  losses in the distribution system which tends to be higher than what occurs at the higher voltages due to lower levels of efficiency of distribution transformers coupled with lower voltage and small wire which means higher current and hence higher IR losses. Total losses in the distribution system could run as high as 9%, so total losses in transmission and distribution could be as high as 15% of generated output.

Theft (losses)

This is not a normal part of the electrical generation process, but in Jamaica this must be included as it forms a significant part of losses that occurs in the distribution network. The figure that have been reported seems to suggest that losses in this area runs as high as 15% which is astronomical and unheard of in anywhere else on the planet.

Losses incurred in the process.

 

  1. We know that approx 65% of the fuel used to generate power is lost as thermal energy and only 35% produces electricity.
  2. We estimate transmission and distribution losses to be in the order of 15%.
  3. We estimate that losses as a result of theft runs as high as 15% of generated power (JPS numbers).

When one adds up the number we can see that approx. 30% of the 35% of the fuel used for generation is lost in after the power is generated leaving only approx 23% of all the fuel used being able to delivery electricity to the consumer.

This therefore means that we the paying customer must pay for approximately 77% of the fuel used in the generation process but which we never see, in other words we are paying for a process where the efficiency could be as low as 23% !!!

Further losses.

While I have no real data, I know (by law of nature) that not all billable electricity is collected after the bills has been sent to the consumer which means JPS losses once again here depending on the delinquency rate of the Jamaicans consumer. This must be factored into JPS pricing mechanism to then come up with a final cost for each KWH of power consumed plus their profits.

 

Do we really need deregulation to get lower energy cost

 

Deregulation is not the panacea to our energy problems and neither is LNG, what is truly required is  implementation of a  well thought out energy policy of which deregulation LNG, renewable, energy conservation are all a part of the mix. We simply cannot single out deregulation and suggest if we simply break the JPS monopoly we will get energy cost down to $0.10 as exist in the USA, it simply will NOT happen.

JPS Discounts

 JPS offers quite a bit of discounts for its industrial and large commercial customer, which I am sure many are not even aware of and which they could benefit from.

  1. JPS for example offers a discount (I think it was up to 1.6%) if you own your own substations transformer, which can take transmission power down to distribution power for your operations. The cost avoided by JPS having to purchase, setup and maintain this station is passed unto the customer in terms of a discount which exist as long as you have that substation.
  2. Time of day demand (TOU). JPS offers discount rate if you use the bulk of your power in the off peak period, these are significanyl lower than standard rates.. Example (2010 actual rates).

Rates are J$/ KVA Demand

RATE STRUCTURE STD (Not applicable to TOU) OFF PEAK PART PEAK ON PEAK
Rate 40 TOU $1,295.28 $54.98 $569.52 $729.27
Rate 50 TOU $1,165.75 $51.81 $505.16 $647.64

As you can see from the above the difference between the standard rates and off peak rates under the TOU option is pretty significant and can offer some significant energy savings if you chose to shift your on peak demand to 10pm to 6am which is the off peak period.

Energy Conservation

I am of the firm belief that the most cost effective and sustainable way to lower our energy cost is energy conservation. LNG for example will bring only temporary relief as once more countries get on board in their use on LNG the price will increase as demand increase, therefore eroding any cost savings we had received in the early stages. Not only that, we will be dependent for our energy source and hence security from foreign sources, as Jamaica has yet to find any commercial available sources of fuel from around our shores.

Energy conservation is what we should push as lower demand means lower generation from the JPS. JPS like most utility companies uses the most efficient plants to generate base loads which means this is the cheapest way to generate power.

High demand means JPS will have to use “gas turbines” to make up the “short fall”. The longer these “gas turbines” are on line the more expensive it is to generate and provide electricity to the consumer, which means we continue to pay very high rates.

So if we were to take conservation seriously, which is the most cost effective approach and say drop our demand by 10 – 15%, we could see electricity rates going down by 5 -10%. This is simply due to the fact that the supplier will be using his most efficient generating equipment to meet most of load requirement.

I have managed to cut my own electricity consumption by an average of 50%, by making some life style changes, I am willing to sacrifice a little comfort to keep more money in my pocket vs. giving it to the public utility company.

I have even included my bill as proof of the savings that I have managed to accomplish and I must say I am very happy, one less KWH means more money in my pocket to do the things I really want do.

So I am not opposed to deregulation as a part of a broader national energy policy but I am not in favour of deregulation just by itself as that is not the answer and will NOT give us what we are looking for.

Politicians are trying to use JPS as a beating stick to cover up their own inability to make good decisions which will result in benefits to the country, JPS today is hated and they are sure they will get people support for the very emotional subject of energy bill and the JPS, but its plain wrong.

See my results here

Want to reduce you “light” see practical tips here that works.

Here are the actual graphs showing savings over time.

Energy Consumption 2010 2011

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14 Responses

  1. Jay:

    Why did you take down the Thread about the person who killed that 17-year old? Give us some hints as to why please.

  2. Let’s just say one is being very cautious here. I will review the material and re-post later today.

  3. may I suggest you list the lifestyle changes you made?

  4. One of the things the Government of Jamaica should start doing is offering rebates to Homeowners (and Businesses) who implement Energy conservation measures which will lead to less use of electrical energy. Encourage Homeowners to use Solar Water Heaters, installing Attic Insulation, passive or forced Attic Ventilation (Under-eave vents, in combination with Ridge Vents, wind turbines on the Roof or powered Attic Ventilators), high reflective roof materials, wall Insulation, Window Solar Screens (East, South & West), High Efficiency Air Conditioning System (>13.0 SEER) and more energy efficient Appliances such as Refrigerators.

    Homeowners can also check to make sure there is no leakage around the Refrigerator Gasket(s) and that the Refrigeration components are fee of dust and debris. Jamaica building practices (Code) is devoid of any energy saving measures as are required in the US.

  5. i think even with all of this if we had another company that supplies electricity then the bills wouldn’t be so high, they would be forced to cut corners in some way to get more customers because persons are going to stick with the lower rate. i think they can do better but they’re all taking advantage of the situation because they are the only supplier.

  6. Have to agree with KJ… I really want to know what you did so that in the space of 60 days your consumption was cut in almost half (338 in October vs 164 in Dec). I believe that the “cheapest” way to get our consumption down is to encourage business and individuals thru tax breaks etc to go to renewable energy and surely folks need to stop stealing. I’ve looked at solar for my home – not cheap but I’m still going to take the plunge but have to save up!

  7. Warren,
    Did a bit more research based on your comments. You mentioned peak and off peak. Well, that is NOT applicable to residential customers (per JPS website) I think your post is a bit misleading.

  8. JW,

    Sorry if you felt I was misleading persons, but I guess this portion was a bit more technical that I thought. I did preface my statement by say and I quote what I wrote above ” JPS Discounts”

    JPS offers quite a bit of discounts for its industrial and large commercial customer, which I am sure many are not even aware of and which they could benefit from.

    As you can see it said industrial and large commercial customers, these fall in rate 40 & 50 category.
    Residential customers are rate 10, we never pay for demand and as such its not applicable.

  9. Looking to save energy well refer to this blog where some practical tips are provided which can help you.
    http://emsenergyconservation.blogspot.com/2011/07/energy-conservation-methods.html

  10. The reality is that the cost of electricty in Jamaica is high…well saying its high is relative, because its definitely not the highest even in the Caribbean region. A good article for persons to read is one published in the Gleaner, January 3, 2011, entitled “Burden of power – How Jamaican Govt’s lack of energy has fuelled high electricity cost”..it came in two parts. The truth is though most of us (Jamaicans) will not reason/think but we prefer to emotionally respond to serious issues. Successive governments are the leaders responsible for our current and continuous predicament. The other side of the problem is that many of us would want to pay no more than $1500.00 Jam for using 4 AC units, two door refrigerators, electric stove, etc…and some of us want the electric power for nothing! Go ahead and break up the monopoly, implement LNG, coal powered units at the same time, and let those of us who can think (or choose to) see to what extent your bills are reduced. it definitely wont be some grand 40 – 50% pie in sky cut some persons are hoping for..good luck if we get 15 – 30%. I have a better suggestion…conserve, live within your power demand limits, and use the extra savings to try and secure alternate energy facility (such as photo-voltaic systems) to reduce your spend on electric energy over time.

  11. I was just reading back what I wrote here nearly 16 months ago

    ” LNG for example will bring only temporary relief as once more countries get on board in their use on LNG the price will increase as demand increase, therefore eroding any cost savings we had received in the early stages. Not only that, we will be dependent for our energy source and hence security from foreign sources, as Jamaica has yet to find any commercial available sources of fuel from around our shores.”

    Deregulation is not the panacea to our energy problems and neither is LNG, what is truly required is implementation of well thought out energy policy of which deregulation LNG, renewable, energy conservation are all a part of the mix. We simply cannot single out deregulation and suggest if we simply break the JPS monopoly we will get energy cost down to $0.10 as exist in the USA, it simply will NOT happen.

    Seems like this blog was way ahead of the curveron this one

  12. Great job on this post. I will be sourcing it for an energy post I am working on

  13. Seems like this blog was way ahead of the curveron this one

    We usually are. I think that if we combine our specialized knowledge with some good data mining, we can out-shine much of the mainstream media.

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