The Editor, Sir:

I write in response to your 'Letter of the Day' in The Gleaner of May 11. The writer, Andrew Hewitt, makes a number of inaccurate statements, which must be addressed.

First of all, he suggests that JPS chooses not to pay for and derive the benefits of insurance. The fact is: JPS's assets are insured, except for the Transmission and Distribution (T&D) assets, for which there is no insurance available. This situation is not unique to JPS, as there is no insurance available for the T&D assets of utility companies in the hurricane belt of the Caribbean and North America. Insurers are not willing to accept such high risks, due to the susceptibility of the region to hurricanes.

Given the unavailability of insurance for T&D assets, utilities in the hurricane belt have two main options: (1) recover the cost of damage caused by hurricanes through a surcharge on bills; or (2) cover the cost from a self-insurance fund.

The Office of Utilities Regulation (OUR) authorised JPS to exercise the first option and recover some of the costs of the damage caused by Hurricane Ivan through a charge applied to customers' bills between 2007 and 2009. Although JPS has a Self-Insurance Fund, at the time the island was hit by Hurricane Ivan the fund was inadequate to cover the cost of the damage. Subsequent storm damage claims have been processed and the Self-Insurance Fund was utilised to cover those claims. Today, the Self-Insurance Fund has reasonable coverage - in the region of US$9 million - and is growing at the rate of US$5 million per annum.

INSULATED POWER LINES

The letter writer incorrectly suggests that JPS has dismissed the option of using covered power lines to deter those who are inclined to make illegal connections to the grid. The use of insulated power lines has been a part of JPS's efforts to address the problem of theft for several years. In fact, 'rubberised' or insulated power lines are now used routinely for all our low voltage system maintenance and expansion. Additionally, in 2008 JPS introduced concentric neutral cabling, which is more than twice as expensive but which provides even greater protection against tampering.

There is no doubt that insulated power lines are definitely more costly than the regular power lines, and this contributes to the overall cost of providing electricity service to customers.

While we recognise that every effort must be made to curtail the theft of electricity, we are very conscious of the fact that increased operational costs will ultimately be reflected in the electricity rates charged to customers. We have a responsibility to ensure that the incremental cost of preventing losses does not exceed the additional savings (or revenues) to be gained.

In making a decision about electricity rates, one of the challenges facing the regulator is the need to maintain a balance between customers' ability to pay, and the investment that would be needed to make the power delivery network entirely tamper-proof.

NO MONOPOLY ON GENERATION

Hewitt's suggestion that JPS continues to ignore the possibilities of alternative energy overlooks the fact that JPS is not responsible for decisions on the type, scope and timing of new generation projects. Such decisions are the responsibility of the Office of Utilities Regulation, and are based on the policy set by Government. Since 2004, all new electricity generation projects are open to competitive tender, with the OUR making the final decisions on the nature of these projects, and the company that should implement them.

We do accept that JPS has a role to play in fuel diversification, however, and this is why we submitted proposals for three renewable projects last year, in response to the OUR's call for proposals for projects to add 60 megawatts of renewable energy to the grid. Two of our projects were accepted by the OUR - one for a new hydroelectric plant in Maggotty, St Elizabeth, and the other for the construction of a wind farm in Munro, also in St Elizabeth. JPS is now preparing to start construction on these projects.

I am, etc.,

WINSOME CALLUM

Head, Corporate

Communications

Jamaica Public Service

Kingston