Less than two years since leaving office, the Opposition People's National Party (PNP) has called for the immediate liberalisation of Jamaica's electricity transmission and distribution network.

But the proposal is likely to be resisted by the monopoly supplier , Jamaica Public Service (JPS), which still has more than a dozen years left on its exclusive power distribution licence.

Senior JPS officials were still crafting a comment up to press time on Thursday, but a source knowledgeable about policy matters in the company, asked rhetorically: "What would be your response in the circumstance, and given the time left on your operating licence?"

Earlier this decade, at the time of divestment to the US company, Mirant Corporation, JPS - now majority owned by a consortium of Japan's Marubeni Corporation and TAQA, an Abu Dhabi-based utilities firm - was granted a 20 year power and transmission and distribution licence.

JPS is the dominant generator of electricity, but also sources power from so-called independent private providers (IPPs), under long-term contracts.

Further dismantling

But speaking in Parliament on Tuesday, the shadow technology and energy minister, Phillip Paulwell called for a further dismantling of JPS' monopoly and later told the Financial Gleaner that the process should begin immediately.

"On addition to liberalisation of generating capacity ... the distribution network , the grid, should be treated as an essential facility with competitors having reasonable and easy access to it," Paulwell told legislators.

"The competitors will be charged a fee, to be determined by the OUR (Office of Utilities Regulation), that will seek to recover the cost for the efficient maintenance of the network with special emphasis on the reduction of both technical and non-technical losses," Paulwell said.

Speaking later with the Financial Gleaner, he added: "What I am saying is that by negotiation, we need to bring it (the distribution monopoly) to an end now and to allow for inter-connectivity and to make space for competitors."

He drew a parallel between this proposal and the likely response to it, and his spearheading in the early 2000s of the liberalisation of Jamaica's telecommunications market.

"Look how that turned out and what competition has done to the market," Paulwell told the Financial Gleaner.

However, the policy source with knowledge of JPS thinking, or more aptly the thinking of the utility's Marubeni/TAQA owners, suggested that the liberalisation of electricity distribution networks did not work well in small markets with a bulk of relatively poor consumers.

Cherry pick

"It allows the new players to cherry pick, going after the best quality customers," the source said. "The older player, which invested in the development of the network then struggles with the rest."

However, Paulwell in his parlia-mentary presentation sought to address part of that concern with his proposal of a universal access fund "to which providers of electricity would contribute towards to ensure that the non-profitable areas of the country can properly maintained and serviced".

"JPS would benefit from their grid," the shadow spokesman told the Financial Gleaner.

"The new players may want to cherry pick but the universal access fund will allow the provision of access in areas that are not so profitable."

Paulwell also told legislators that the government should overturn the principle of guaranteeing JPS a "reasonable return" on its investment and instead allow the market to determine profitability.

"In a competitive environment, the market should be allowed to determine these matters, not the OUR," Paulwell said in his speech.

JPS is allowed a return of up to 17 per cent on its capital, but the company has said that it has in recent years failed to reach that benchmark and has posted losses.

business@gleanerjm.com