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Shocking electricity costs

Jul 20, 2011 Editorial

The continuing travails of Synergy, with the road to Amaila Falls, do little to allay fears about the entire hydroelectricity project. We still do not have a firm handle on the overall cost of the actual hydro-electrical generation and transmission components, so that boasts about lowering our electricity bill remains just that – talk.
In Guyana, electricity costs to the ordinary citizen are an astounding 26.8 US cents per kilowatt-hour (kWh) and we will not be seeing any decrease in the near future – if at all. We are therefore in a Catch-22 situation, where we desperately need to attract industries to our shores, but our electricity costs do not even place us on their radar.
Over in T&T and Barbados, for instance, electricity costs are less than half of ours. Their governments have been subsidising the cost of electricity – as a matter of course – for years.
While in Guyana the electricity company regularly receives cash infusions from the government, somehow GPL’s overall costs never seem to fall. And this brings us to the nub of the travesty (and tragedy) of electricity costs in Guyana.
GPL’s cost of electricity, even in the best of times, has always been astronomical – averaging at least twice the worldwide average costs, according to the World Bank. There are several factors contributing to this albatross on economic development in our country, apart from bankrupting the ordinary man and woman in the street. GPL has always been top heavy in its staffing, which led to the Guyanese variant of the old joke: how many GPL staffers does it take to change a light bulb? Seven – six to turn the ladder and one to hold the bulb.
But the greatest inflators to electricity charges were what are termed “technical and commercial losses”: these added up to an incredible 44 percent of our charges by 2002. It is claimed that the figure is now 33 percent, but we certainly have also not seen that purported diminution reflected in our bills.
The “technical losses” are those caused by inefficiencies in GPL’s operations – generation and transmission – and the “commercial losses” are due to theft, with the latter component being the major contributor. Very simply then, even if oil were to drop to US$10 a barrel, GPL would still probably be running at a loss – and charging the honest customers among us to subsidise the cheats and its own inefficiencies.
When GPL had been privatised in 1999 there had been specific benchmarks that had to be met in specified areas, including reduction of “technical and commercial losses”. In 2002, the Public Utilities Commission (PUC), which was the authorised body established to regulate the electricity monopoly so that the interests of the public were served, ordered GPL to reimburse customers US$7 million for not having achieved in 2001the overall target of 29% stipulated in the GPL licence.
What makes our predicament even more dire is that the PUC has been gradually sidelined from performing its oversight functions since the Government re-nationalised GPL in 2003. Now that Government is its owner, all the requirements of its monopoly licence are thrown overboard and whatever GPL does has to be accepted. While we have been focusing on the lack of review powers afforded the PUC over rates, the greater damage to our pocketbooks has been inflicted by a GPL given free rein over its performance – or lack thereof. Has GPL been hitting its targets? Are there targets any longer?
The Amaila Falls Hydro Electric Project (AFHEP) has been presented as the light at the end of the tunnel for our electricity woes. GPL has committed itself to purchasing the total power output from the AFHEP. In the grand scheme of Guyana’s development, it is imperative that this project be brought to consummation. But it cannot be “power” at any price as seems to be the guiding mantra of the administration.
There has been a tremendous amount of comparative data produced by analysts and other commentators that suggest the overall cost of the AFHEP is just too high. Maybe we need to go back to the drawing board?

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