WITH the Jamaica Public Service Company (JPSCo) as the monopoly supplier of electricity to the Jamaican public, the question of just how it is governed by the Fair Competition Act (FCA) which is administered by the Fair Trading Commission has become a cause for concern, particular in light of the sale of the company to Mirant.
JPSCo as the monopoly supplier of electricity currently operates under a licence giving them an exclusive franchise for the commercial sale of electricity. This 39 year licence was granted in 1978 and is due to expire in 2017. This licence is under Section 3 of the Electric Lighting Act.
In the recent negotiations for privatisation of majority shares in JPSCo to Mirant Corporation, it was agreed that the exclusive franchise of JPSCo would be extended by four years to 2021, under the same Act and in accordance with Section 4 of the OUR Act.
It was agreed that given the urgent need for additional generating capacity, JPSCo would be granted a three-year period of exclusivity for supplying new generating capacity, notwithstanding the intention under the Government's energy policy that there should be competition for the procurement of any new generating capacity.
It was also agreed that JPSCo would give up its present licence and accept a new 20 year licence that provides for full regulation by the OUR. Any exclusive licence issued to JPSCo on the OUR's recommendation can in effect be challenged under the FCA.
The exemption of JPSCo from the FCA makes it clear that it is the OUR that is charged with protecting the public interest as it relates to the supply of electricity, and prohibits any action under the FCA.
The grant of an exclusive licence is therefore a mechanism aimed at achieving the universal supply of electricity in a reliable manner and at a reasonable prices for all consumers.
It is important that JPSCo must be seen to operate within a framework that forces it to seek maximum efficiency in the provision of electricity service and also in a framework where consumers interests will be protected. This goes some way in explaining why JPSCo has been placed under the regulatory oversight of the OUR.
