The Editor, Sir:

The franchise holders of electricity supply in Jamaica have made a claim for an increase in the tariff charges for electricity usage. The demand at this time is questionable and is cause for concern. Tariff structures derive from cost input factors.

There are fixed costs and variable costs; e.g. a generating plant has a specific life. Divide installed cost by the assessed life of plant to get annual fixed cost per unit of energy generated. The life of a diesel generator will be shorter than that of a water turbine generator and much shorter than that of line equipment.

Fixed capital expenditure

These costs result in depreciation charges based on the anticipated life of the respective items of fixed capital expenditure. Other fixed costs relate to administrative expenditures which are standard and result in a cost per unit of electricity consumed.

A part of the costing is related to insurance charges for fire and special perils which are acceptable elements of cost in terms of units generated.

In arriving at a tariff structure, certain factors require specific variations from the norm.

Where the cost of generation is inclusive to known fuel costs at the time the tariffs were determined, charges will be affected by upward or downward movement arising from changes in the cost of fuel and result in a variation factor to take care of variations from the norm.

Factors involving exchange rates have become a standard part of variation charges. No consideration has so far been given to conversion factors resulting in cost savings, but increases are taken into account and passed on to the consumer. This point, of course, may be rebuttable.

Failed to meet the requirements

It is the responsibility of the franchise holder to install generating facilities to meet defined tariff-structure requirements. In the recent past, franchise holders have failed to meet the generation requirements to satisfy their obligations for supply. They then purchase from private sources, energy surplus to the producers' needs.

The franchise holders collect from consumers, under the normal tariff structure, charges for electricity derived from outside sources and any additional variation charges on this account is wrong in principle.

Generation of electricity from solar, wind, and hydrological energy may be vital to our needs. The question is : "How can we find out what can be done?"

My advice is that the Government of Jamaica should take control of the facilities for electricity supply; call in the Commonwealth Development Corporation for investigation, advice and / or participation within agreeable terms for the supply of electricity where the benefit of cost savings would ensure the satisfaction of the parties concerned.

I am etc.,

W. S. RICHARDSON

Kingston