Letter of the Day | Split power generation and distribution into two entities

THE EDITOR, Madam:

For competition in Jamaica’s energy sector, power generation must be separated from power transmission and distribution. The current model, where one company handles both, creates a monopoly and leads to conflicts of interest, inefficiencies, and unresponsiveness to customer needs.

The Jamaica Public Service Company (JPS) should be split into two entities. These companies, still owned by the existing investors, should operate at arm’s length. This approach will make the transition easier, compared to forcing JPS to hand over the grid to the government, as it maintains ownership continuity and leverages the existing operational familiarity of management and staff.

By retaining the assets within the existing framework and dividing them between two specialised companies, disruption can be reduced and investor confidence maintained.

This separation would allow independent power generators to compete more effectively, potentially attracting more investment in clean energy. The Office of Utilities Regulation (OUR) would play a crucial role in overseeing this process, establishing clear guidelines and robust oversight mechanisms to ensure fair competition and prevent collusion between the two entities.

Governments have the authority to break up monopolies, especially when they are detrimental to public interest. The current arrangement is indeed a monopoly, leading to inefficiencies and poor responsiveness to customer needs.

To further improve this recommendation, the following can be considered:

– Engage with all stakeholders, including JPS, independent power producers, investors, and consumers, to build consensus and address concerns through public consultations and advisory committees.

– Consider a phased approach to the separation process, starting with functional separation within JPS, followed by legal and ownership separation.

– Introduce policies and incentives to encourage investment in renewable energy, such as tax breaks, grants, or feed-in tariffs for clean energy projects.

– Enhance the capacity of the OUR to monitor and regulate the new entities, possibly creating a specialised unit focused on the energy sector.

– Implement measures to protect consumers during the transition, such as price caps, service quality standards, and clear complaint-resolution processes.

– Establish clear performance metrics for both the generation and transmission/distribution entities to ensure they meet efficiency, reliability, and service quality goals.

By addressing these practical considerations and incorporating improvements, the recommendation to separate power generation from transmission and distribution in Jamaica can lead to a more competitive and efficient energy sector.

CARLTON FEARON

Mandeville, Manchester