Zia Mian | A JPS paradox: do the poor steal electricity?

“The poor and those without modern energy access are often the same, and having access to modern energy is a necessary condition for poverty alleviation which is the first Sustainable Development Goal (SDG1).”

– Energy Access Outlook 2017, From Poverty to Prosperity, International Energy Agency.

 

The level of income and the ability to affordable energy (for cooking and lighting) are among the key indicators that define the poverty level of a household in an economy.

For inter-country comparative purposes, a Pakistani economist, Mahboob-ul-Haq, while developing human development index (HDI) for the United Nations’ (UN) Human Development Report (1990), introduced a threshold of US$1 per day per person as a measure of the international poverty line. At present, the international poverty line (based on purchasing power parity – PPP – index) is estimated at an income of US$1.90 per person per day (a threshold for extreme poverty).

Today, about 1.1 billion people in the world live below the poverty line. The same number of people also does not have access to electricity for lighting, cooking, or to obtain potable water.

In Jamaica, the percentage of the population that lives below the poverty line is estimated at about 14.5 per cent. According to the HDI, Jamaica ranks at 97 in the world (2017).

With a population of about 2.73 million (2017), Jamaica’s age-dependency ratio is relatively high and is estimated at 43.6 per cent (non-working population). About 24.1 per cent of the youth between the ages of 15 and 24 are without a job. In 2017, the unemployment rate was 11.7 per cent.

Thanks partly to the Rural Electrification Programme (REP), about 98.2 per cent of the population in Jamaica has access to electricity. However, the uncomfortable truth is that not all of these households have the financial means to afford a connection or to pay for the electricity that they need.

There are about 880,000 households in Jamaica. Of these, about 864,000 households are within a the proximity of a transmission line. The numbers of households close to transmission lines that are below poverty line are estimated at 125,000.

In 2017, the Jamaica Public Service Company (JPS) had 571,541 Rate 10 paying category accounts, or residential customers. The JPS estimates that in addition, about 180,000 homes were illegally connected to its network and using electricity without paying for it.

According to the JPS, the electricity theft by these illegal connections accounted for about 9.34 per cent of its non-technical losses. Under the rate-making mechanism, the regulator allows the utility to pass an approved level of system losses on to the paying customers, thus jacking up the cost of electricity for all ratepayers.

The theft of electricity mainly results from line tapping (illegal throw-ups, etc), meter tempering (electro mechanical devices to slow down or reverse the meters), or bribing the meter readers to report false readings (corruption).

STEALING BY THE PRIVILEGED

There are many reasons why people steal electricity. Numerous country studies have shown that while electricity theft in developing countries is high, poverty is not one of the main reasons for this phenomenon. It is not the poor that generally steal electricity. it is the privileged in the poorer countries that have the means and are the main cause of high non-technical losses.

In general, most underprivileged individuals or people on the fringe abhor the idea of stealing electricity. They are either fearful of the social stigma of being called a thief, are too proud or religious, or are afraid to face criminal prosecutions.

The fact that there is a wide gap between the number of illegal connections and the number of households under the poverty line shows that the theft of electricity in Jamaica is not strictly socio-economic as believed by many.

A higher consumption rate by illegal connections (188kWh/month), as compared to the legal connections (156kWh/month), is symptomatic that it is not the poor, but the affluent household that may generally be responsible for stealing the electricity. They are the ones that have appliances to use high levels of electricity and to buy the tools that are necessary to bypass a meter.

This class of ‘consumers’ is the one that the JPS should be able to target and control by installing smart Automated Metering Infrastructure (AMI) while prosecuting and shaming those who are caught stealing electricity (more on this later).

For example, a campaign by the JPS in 2012-2013 to identify illegal connections removed illegal ‘throw-up’ lines, launched meter inspections and audits, and monitored large accounts, as well as investigated accounts with suspected irregularities (current customers).

Indeed, with the assistance of the police, 2013 was a record-breaking year in terms of the number of arrests made by the police for the theft of electricity (there were approximately 1,300 arrests). Many affluent customers denied the knowledge of bypass and paid fines to avoid publicity.

During this campaign, I recall meeting with the then chief executive officer of the JPS. She informed me of the sophistication of the systems that the JPS investigators had encountered that were being used to steal electricity.

For example, in one raid in the middle of the night, a popular nightclub in Kingston was found to be bypassing the meter. This meter bypass system was turned on during the night operations hours and was turned off before the club closed in the wee hours of the morning. The owner, in order to avoid publicity, wrote a check on the spot to pay for an estimated theft!

The CEO also gave to me an example of an affluent household on the north coast that was found with ingenious mechanisms in place to bypass the meter. The bypassing system was controlled remotely and was switched back to the meter before the JPS investigators could be admitted to the residence.

Many restaurants were found to be bypassing the meters as well. I can assure you that none of these are below the poverty line.

In some instances, the meter bypass systems were embedded in the building infrastructure and could not be easily detected. In some garrison communities, a ‘don’ might steal electricity and then became a de facto distributor to the community, by providing illegal connections and charging a fixed amount from his electricity customers. Poverty has its costs!

EMBEDDED UNDERGROUND

I also recall that following Hurricane Sandy in 2012, I visited parts of Kingston and upper St Andrew to assess the damage to the power lines that the hurricane had caused. In these upper-income neighborhoods, I observed many illegal connections that were deeply embedded underground to avoid detection. We had to follow the connection from the pole and dig the ground to see which home was the beneficiary of those sophisticated bypass systems.

Believe you me, none of those homes were owned by individuals below the poverty line. The poor could not afford to buy the material that was necessary to install such mechanisms.

While the smart technology can be used to detect the illegal connections, the ones on the fringe (14.5 per cent) are unable to pay for the electricity that they cannot afford to buy but do need a safety net to raise themselves out of poverty.

There is an increasing global recognition of the importance of access to clean and reliable energy to alleviate poverty. By improving the poor’s access to modern energy sources, we can make an important difference to their welfare and make them catalysts in achieving our strategic development goals as well as economic growth.

In the next article, we will look at an innovative approach to address the electricity needs of those who cannot afford to pay for it.

- Zia Mian, a retired senior World Bank official and former director general of the OUR, is an international consultant on energy and information technology. He writes on issues of national, regional, and international interest. Email feedback to mian_zia@hotmail.com or columns@gleanerjm.com.