PUC raps GPL over $7B in system losses for 2013

– says some operating standards fall short of efficient utility

The Guyana Power and Light Inc. (GPL) failed to meet the majority of its performance targets for last year, including reducing system losses that eventually cost the company over $7 billion, according to the Public Utilities Commission (PUC).

Following a review of GPL’s Operating Standards and Performance Targets (OSPT) for 2013, the PUC said it would not impose a fine on the company, having recognised that the operating standards are set within the framework of the company’s infrastructural and cash flow limitations.

“However, some of the standards fall far short of what generally constitute an efficient utility. There remains much work to be done to incrementally improve the quality of service to customers,” the PUC stated in its general comments on the OSPT. Although it decided against imposing a fine, it did warn of consequences should GPL fail to act on system losses. “…The company should be warned that unless there are positive steps going forward to reduce system losses the Commission would have no alternative but to censure the company,” it said.

The OSPT, which are included in GPL’s approved Development and Expansion Programme, according to the PUC, constitute the standard and quality service that GPL is required to provide in accordance with section 25(2) of the PUC Act.

GPL was measured according to eight operating standards and performance targets. Apart from system losses, they are customer interruptions, voltage regulation, meter reading, issuing of bills, accounts payable, accounts readable, and average availability.

According to the PUC, actual losses at the end of last year were reported by GPL at approximately 31%, with a reduction of .8%, which was below the company’s in-house reduction target of 1.6%. It noted that the standard set system losses at 28.1% of dispatched power for 2013, down from 28.65% in the previous year.

The PUC said system losses cost the company over $7 billion in 2013 and the cost looked set to continue into 2014 and beyond. “The losses are collectively borne by the company and the Government. Rather than financing the losses as is the common practice it makes sense to identify components of the system losses and make the investment in reducing either singularly or in total each of the loss components. At some point this would have to be done and the sooner a start is made the better,” the PUC recommended.

The PUC warned that consistent failures in not meeting the system losses standard will widen the gap between the standard and the actual losses in the ensuing years.

GPL reported to the PUC that despite its best efforts, reduction in consumer theft remained a challenge. For 2013, it said, 7,239 illegal connections were removed and investigations led to 489 tampering charges, with 39 convictions resulting from the charges.

GPL also explained that significant investments, which it lacks, would be required to reduce technical losses. It also noted that in 2013, it launched a pilot project, funded by the IDB, involving the installation of 1,867 Advance Metering Infrastructure (AMI) meters, which are considered tamper proof.

 Interruptions

GPL also failed to meet its Customer Interruption standards, which were measured using two indices according to frequency and duration. The target for frequency of interruptions was 140 occurrences for the year but the actual number of interruptions were 180, while the target for duration was 160 hours (or just over six days) but consumers experienced 167.8 hours during the year. The Commission accepted the reasons attributable to the increase in frequency in power outages but found no valid reason why the company should not have been more circumspect with the management of its vegetation control. This, it reported, would have offered the consumers a measure of respite as they would have experienced fewer outages.

GPL said it had success in managing vegetation on its transmission lines but was not as vigilant as it should have been with respect to growth on distribution circuits and secondary lines.

The PUC did note that the frequency index was 28% above the standard the duration index was just 2% above the standard, which suggests that average power outages were of shorter durations. The inconveniences suffered by consumers as a result of an increase frequency in outages were countered by shorter duration of outages, it added.

For 2013, GPL was required to achieve an average availability of 75% but reported an average availability achievement of 70%, falling short of its target. The PUC said the failure to achieve this standard may have been a contributory factor in the company not meeting the customer interruption standards. “It may also indicate that the company was not as forthcoming as it should have been with respect to its planned maintenance schedule,” it added.

One operating standard area where the PUC was unable to assess GPL was the regularity of voltage supplied to consumers. According to Part 1 of the Voltage Regulation Standard, “GPL shall seek to maintain in stable conditions voltages, of ± 5% of the nominal voltage and ± 10% following a system disturbance.”

The company has maintained that it would be difficult to monitor the voltage supplied to each customer and had previously suggested that as an alternative the company would report on the number of voltage complaints and the time taken to have them resolved. However, the PUC stated that empirical evidence suggests that the voltage supplied varies from the standard especially during peak periods and often results in damages to consumers’ equipment. It further recommended that a system of selective random testing be implemented to allow for determination of the quality of voltage supplied to consumers.

GPL also failed to meet its set standard for meter reading, which is aimed at reducing the number of annual estimated billings based on actual meter readings. The PUC noted that for 2013, GPL was required to read 97% of maximum demand consumers and 90% of non‐maximum demand consumers. However, with regard to the non‐maximum demand consumers, it produced 87.68% of the bills based on actual readings, while for maximum demand bills, 85.25 % of the bills were produced based on actual meter readings.

GPL’s identified failure to have access to the premises, changes in personal lifestyle, suspicion by consumers that criminals may be posing as meter readers to gain access to the building, defective meters and inclement weather as reasons for its inability to meet the set standard for non-maximum demand consumers.

In relation to maximum demand consumers, it said it had aggressive collection drives during the year, resulting in the disconnection of a number of these consumers, who were nevertheless factored into the readings, thereby accounting for about half of the number of unread meters.

It said too that the hand‐held remote meter reader that records consumption from the ITRON meters malfunctions from time to time, resulting in a delay in the reading of the meters. The company’s estimate is that the device’s failure contributed to 18% of the un‐read meters in the period.

The PUC found the company’s performance to be satisfactory, and noted the reasons for the company not attaining the standard as acceptable.

Meanwhile, GPL is required to issue maximum demand bills within seven days of the reading of the customer’s meter and within 10 days of the reading of non‐maximum demand meters. Both standards were achieved. In response to a question from the Commission when a bill is deemed issued, GPL said that the company regards a bill as issued when it leaves the company’s office for the post office.

In the area of accounts payable, GPL is committed to settle in full with its creditors within 30 days. GPL reported that it took on average 34 days to settle with its creditors and explained that it takes on average 60 days for overseas suppliers to complete delivery of an order. The company said that this time period skewed the credit period resulting in the company not achieving the standard.

In addition, in the area of accounts receivable, GPL is committed to a 45-day cash collection cycle and reported that its average cash collection cycle was 37 days.

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