Non-technical electricity losses need a ‘culture change’

Dear Editor,

Please allow me to respond to the article entitled ‘Opposition urge PM to retract “plain stupid” statements on electricity theft,’ which appeared in the Thursday, December 18 edition of the Stabroek News. I was addressing the issue of electricity theft, at the ceremony marking the end of the Guyana Power and Light (GPL) Inc’s Transmission Upgrade Programme, in light of my colleague Member of Parliament’s – A Partnership for National Unity (APNU)’s Joseph Harmon – call of “Find ways to reduce [electricity] tariffs – get off Guyanese backs,” and the ongoing considerations, at GPL Inc, with various multilateral consultants, which could see GPL Inc reaching for technological solutions that could add, eventually, up to US$200 million in investments in our distribution networks and metering (and about 10% in electricity billings) for the most extreme technological solutions to counter what is largely a historical culture of electricity theft.

I am concerned that without the attendant cultural change, those investments would bring us little; with the cultural change, much less would be needed to be invested. But we cannot stand still and do nothing, for we are at a critical point.

We, in Guyana, need to review our views and attitudes toward electricity prices.   We, Guyanese, find it hard to accept that our electricity prices are on par with our circumstances. But do not take my word! Earlier this year, the President of the Caribbean Development Bank (CDB) informed us that in Caribbean countries, where electricity generation is based on petroleum products, the cost of generation and delivery runs between US30 cents and 40 cents (G$63 to G$84) per kWh. He called for “bold and brave steps toward renewable energies – photo-voltaic (PV) solar, wind, hydro and geothermal.

And where are we in Guyana? During last week, at a public presentation on a gold mine being built in Guyana, it was disclosed, on enquiry of the officials, that their electricity cost is being put at US33 cents per kWh. This company would have made use of the best expertise and experience available, and would have considered the potentially lower cost of heavy fuel oil (HFO), and I am also aware that they commissioned two preliminary studies of hydro-power generation at Oko Falls, a few kilometres upstream on the Cuyuni River.

A number of important points should be recognized in this disclosure. Firstly, the gold company – a competent company – has come up with a self-generation solution at US33 cents/per kWh; this would not be an easy number to better. Secondly, no doubt, they, like all of us, would have been happy to have had a ‘Trinidad situation’ of, say, US5 cents per kWh for generation, but they are not in Trinidad, they are in Guyana, and they have accepted the 33 cents per kWh, and are going ahead with their project on that basis. Of course, they would always be keeping an eye out for, encouraging, and testing any emerging opportunity for lower costs.

And where are we in GPL Inc? Taking account of the different, longer-term mandate of a utility, our new generators have been HFO-fuelled, so that, today, GPL Inc’s generation is 85-90% based on the lower-cost HFO, giving a comparable all-in generation cost of about US24 cents (G$50.40) per kWh, compared with US33 cents (G$69.30).

What I am embarrassed about (in the Guyana circumstance) is not generation, but our losses, up to 45% ten years ago, and earlier. Reduction seems to have stalled a year ago, at about 30-31%; about 14% technical, and 16% non-technical. The costs of generation have to be recovered against billings, so the generation component in billing cost is magnified by the losses to US24 cents divided by (100% minus 30%) = US34.30 cents (G$72.00) per kWh. Allowing for, and including, transmission and distribution, as well as commercialisation costs, the average total cost of providing electricity is about G$85 per kWh. And what is GPL Inc’s average charge? G$67.20 per kWh. Government, on the average, by a variety of mechanisms, has been subsidizing electricity costs by about 20%. No one is on the back of any Guyanese! Indeed, Guyanese enjoy an average of 20% ‘ease’.

A network could not run without some technical losses – the not-so-long-term target for GPL Inc is ‘total loss of 8%’ – 5% technical, and 3% non-technical. With this target, the generation component in billing would have been US cents 24/0.92 – US26.09 cents, or G$54.78, per kWh, a potential reduction of G$17.22 per kWh, in reducing losses to the respectable target value.

We are known, embarrassingly so, as a country with high electricity losses; 14% technical, 16% non-technical, as stated earlier. I can bear the embarrassment of the high technical losses; they reflect that we have been doing the best we could with the money and other resources that we had. We have been extending electricity to, say, 100 Guyanese households with resources which better-heeled utilities would have extended to only 50 customers. To get down to 5% technical losses, from 14%, we roughly have to double-up our distribution networks (doubling the number of conductors, or sizes of conductors, and transformers). GPL Inc is getting on with this!

It is the embarrassment of the non-technical losses that I cannot bear. The non-technical losses need, most of all, a ‘culture change’. Barbados boasts a total loss of 6%-to-8%, with no more than 1%-to-2% non-technical. We should be able to match, and even better, the Bajans. In the course of GPL Inc’s work with multi-laterals and consultants, meters and metering systems advocated to be impregnable were implemented, but these have brought little improvement, as ways were found to defeat them, often, it would appear, with the connivance of knowledgeable persons, including past and present GPL Inc employees.

In the course of studies, with consultants, of the losses, GPL Inc, about a year ago, disaggregated the average losses to its 39 feeders across the entire country. This table was presented to sectoral committees of Parliament in late 2013 and early 2014. The disaggregation shows up variations of the average losses on each feeder – some are low, at total losses of 10-to-12%, and some are large, the largest being feeder SF5 (south and west of Georgetown) with a total of 60% loss – 20% technical, 40% non-technical. No doubt, if we could disaggregate to smaller areas, we would find even wider variations in ‘losses.’ The implication in the smart metering proposal, is disaggregation, down to each transformer with its, say, 20 customers.

We know that, in every location, there are people who do not engage in, or allow, any tampering with their meters; GPL Inc wants and needs everyone to get that way. We can readily recognize how we arrived at the cultural position at which we are today – our history of being victims and being imposed upon, and hitting back whichever way we could.

The President of the CDB has been urging Caribbean leaders to urgently consider ‘renewables.’ We have been pursuing the development of Amaila Falls for some 10 years now, following in the foot of the government of the early 1970s. With an average generation cost delivered at Sophia of US10 cents/per kWh over the 20-year BOOT (and US3 cents per kWh, thereafter), total losses reduced to 8%, and retaining G$13 per kWh for transmission, distribution and commercialisation costs, we could see average total cost of about G$36 (US17.2 cents) per kWh. We can get there – Joseph Harmon and David Granger should join with me to get there! Let us embark on Amaila! Let us challenge our Guyanese people to do even better than the Bajans, in this matter of non-technical electricity losses.

We need new attitudes today, in our 49th year of independence. Responsible leaders must lead their people in ways of doing right, and in attitudes that lead to success. Statements like those attributed to Mr Harmon, wittingly or unwittingly, provide ‘cover’, or, worse, may be understood to be subtle encouragement to electricity theft, and there is no basis for his statement. My statements were building soundly, for ourselves, a steadily prosperous life in the not-too-distant future.

I call on my parliamentary colleagues, Mr Harmon and Mr Granger, and, indeed, all MPs, to study the published table and join me in working to reduce electricity losses. Let us spread faith that through our honest, earnest and hard work, and through thoughtful, thrifty living, we shall reduce electricity losses. Based on facts, there was no question of race!

Yours faithfully,

Samuel A A Hinds, MP

Prime Minister and

Minister Responsible for Electricity