The Guyana Power and Light has confirmed that the combined technical and commercial losses at the end of 2001 exceeded the target by 9.3% and blames this on its inability to secure sufficient funding for capital projects. However, the company hopes to be able to reduce commercial and technical losses by more than six per cent this year.

"GPL has made best efforts within the available financing to reduce losses to the defined targets [but] further progress will require significant additional funding; elimination of fraudulent activities on the part of some employees, contractors and third parties; and support from paying customers," GPL said in a written presentation to the Public Utilities Commission on Tuesday.

GPL said because of the multiple demands for capital expenditure to develop all aspects of the electricity system in Guyana and the difficulties in raising funds, a decision was taken to focus on lower capital cost solutions to reducing the commercial and line losses.

The power company said its original plan was to achieve technical and commercial loss reduction by major capital programmes, which would involve rebuilds of the transmission and distribution system and wholesale meter change-outs. However, problems in 2000 with cash flows led to the decision to focus on less capital-intensive solutions.

"While these low-capital programmes haven't delivered all the required benefits, they did achieve a number of good results...." GPL told the PUC.

The company said that given the continued difficulty to raise sufficient funds last year, GPL again refocused its efforts and only recently initiated a number of smaller, "more focused capital projects". These include power factor correction; rearranging overloaded lines and replacing meters in specific groups of customers.

"These projects will not produce the widespread loss reductions we had originally aimed for but they represent the best approach in light of the available funding," GPL told the PUC. It also said that it will continue to seek to maximise gain from capital expenditures and use limited financial resources effectively having regard to the availability of funding.

According to the operating standards and performance targets associated with GPL's licence, the firm was supposed to bring down commercial and technical losses to a combined 29% at the end of 2001 and 24% at the end of this year and 20% next year. This excluded auxiliary load/losses. The latter is the amount of electricity used within the generating station on essential supporting equipment whereas technical losses arise from both transformer and line losses. Line losses are dictated by the size and lengths of conductors and the square of the current carried. The winding characteristics and the square of the current carried and the build characteristics of the transformer dictate transformer losses. The extent of technical losses, GPL said, is usually estimated based on the load and network data supplemented by measurements where available. Commercial losses are determined as net generation less technical losses less sales. Commercial losses can arise from defective meters not recording sales, administrative problems such as discrepancies between field metering and information in the billing system, unauthorised and undocumented connection to the electricity system and theft of electricity.

However, GPL said that its approach to loss reductions between 1999 and 2000 has evolved because of the great difficulty the company has encountered in obtaining debt funding as planned for its capital programme. It informed the PUC that in the case of technical losses, the original plan was to implement a highly capital intensive transmission and distribution programme that would reduce loads on the network and have a significant impact on losses reduction as well as reliability of supply and voltage. But this got hit by the unavailability of funding and GPL said even if this were not so, its experience suggests that the unavailability of suitable skills in Guyana and the long procurement process may have delayed implementation. The projects included the provision of new 69 kV lines and stations to reduce technical losses by providing new injection points on the 13.8 kV networks. This would have reduced loads on existing outlets, a major contributor to reducing technical losses. The firm said that subject to funding, completion of the key stages of work on this project is now set for mid-2003 (the 10 megawatt generation set for the Garden of Eden and the 69kV station at Eccles).

The power company said in response to the shortfall in funding, it has identified a number of smaller projects aimed at technical loss reduction. It said while these would not have as substantial an impact on technical losses, it represents pragmatic and effective steps possible with more limited funding. This would include the installation of power factor correction equipment at locations throughout the distribution system and further conversions of existing 4kV systems to 13.8kV. GPL says it will continue to advance the major transmission programme as funding becomes available.

As to the commercial losses, GPL said the lack of funds has made it impossible to replace service wires and meters on a system-wide basis. As such, the company chose to focus its short term efforts on an inspection and rectification programme to avoid the need to replace equipment and avoid the upward tariff impact of the associated capital expenditures.

GPl said its approach to commercial loss correction has not had the impact originally anticipated. This, the company said, is due to the unsatisfactory design of residential and commercial metering and customer interface installations as well as poor and inconsistent metering installations which are difficult to verify. It also mentioned specific actions by parties to undermine the loss reduction programme. Commercial losses were 25.3% whereas technical losses were 13%.

The firm says 1700 accounts were moved to inactive status as they had been previously billed inappropriately and it is estimated that they contributed to between one and two per cent of the overestimating of sales.

Meanwhile, for its loss reduction programme this year, the company said on the technical side it intends to improve the power factor, which it estimated is much lower than originally estimated. Poor power factor causes technical losses to be higher than would otherwise be the case and GPL said it has placed orders for capacitors to enable this to be corrected on the networks worst affected. Delivery of materials is expected in the second quarter this year and installation is scheduled for completion by the end of the third quarter, subject to funding. This is expected to carry down technical losses by one per cent.

GPL is also reducing loads on the distribution outlets this year at an estimated cost of US$2. The impact of this is expected to be a reduction of technical losses by one to two per cent.

In terms of commercial losses, the firm intends to replace 200 large customer installations with standard equipment designed for consistency and security. The cost can run up to US$1 million here. This programme is to be repeated next year. It is anticipated that this can deliver an approximate five per cent improvement both this year and next year.

In the case of smaller consumers, inspections continue at the rate of 2500 per month and 4000 meters are budgeted to be replaced. The estimated cost of this project is US$800 000. A further 6000 service and meters are to be replaced if finances are available. It is difficult to assess the impact of this programme, GPL says, as 10 000 meters represent eight per cent of installations and if small customers account for 60% of commercial losses, this represents 15% of the losses. Replacing 10 000 installations would reduce loss by 1.2%. GPL notes that this does not make allowance for the fact that people not paying the full cost of electricity probably use more than others. Hence it is estimated that the 10 000 target installations could reduce losses by 2%. Again this project is subject to funding and contractors to deliver the programme.

GPL told the PUC that the new billing system has been delayed due to a longer selection/procurement process and a recommendation on the system to be chosen is under preparation. It is anticipated that in nine months the system should be in place. This is a US$2 million project. But again project implementation is subject to funding and normal variability of implementation.