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<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"><span style="font-weight: bold">JPS paid $1.86-billion in dividends from retained earnings</span>
By Steven Jackson
Friday, April 03, 2009
Jamaica Public Service's (JPS's) retained earnings dipped 40 per cent in 2008 in order to pay $1.86 billion in dividends which could not be financed from the year's $58-million profit.
It is the second consecutive year that JPS has dipped into its retained earnings - which now stand at $3.7 billion - to finance dividends. In 2007, it paid $1.7 billion to its mainly Japanese shareholders even though it made a $515-million loss. The last time the light and power company made a substantial profit was in 2006, growing the retained earnings to $5.4 billion.
A JPS power plant.
An attempt to get a comment from the JPS yesterday was fruitless. But the Office of Utilities Regulation (OUR) is not concerned that the raids will negatively affect JPS's ability to raise funds for expansion. This is because it benefits consumers (all things being equal) for JPS to rely more on cheap loans than equity to finance projects.
"Equity is more expensive than debt. So from the consumer point of view it is better to finance projects by debt rather than equity," said a high-level technical source at the OUR who requested anonymity. "The banks prefer them to have the equity, but from a consumer point of view it is preferable to finance projects by debt rather than equity, so paying out a lot of dividends is not an issue."
Yesterday, an industry analyst said that by remitting profit to its shareholders, JPS will reduce its capital and therefore the level of profit that it would be required to make in Jamaica - based on a return on equity formula worked out with the OUR.
<span style="font-weight: bold">JPS currently has a guaranteed 14.85 per cent return on equity based on its 2004 tariff review. The light and power company is presently seeking to increase the real return on equity to 21.6 per cent in its current tariff review submission.</span>
JPS hopes to increase its non-fuel revenue by 60 per cent in an effort to secure $7 billion return on equity for 2009, and plans to get it <span style="font-weight: bold">by increasing energy rates to customers by as high as 97 per cent.</span>
In 2008, the company made $23.8 billion from non-fuel revenues while making $47.66 billion from fuel revenues.
JPS plans to construct projects over the next eight years costing US$1.3 billion, including a 300 Megawatt (MW) coal-fired generating facility in Old Harbour at an estimated cost of US$950 million; a petroleum coke plant in Hunts Bay, Kingston at some US$280 million; 6.4 MW expansion of its existing hydro plant at Maggotty, St Elizabeth for US$26 million, and a 3 MW wind farm at Munro, St Elizabeth at a cost of US$10.7 million.
JPS currently has an installed capacity of approximately 621 MW complemented by almost 200 MW of firm capacity purchased from Independent Power Producers under long-term Power Purchase Agreements. This gives a total installed system capacity of 821 MW.</div></div>
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"><span style="font-weight: bold">JPS paid $1.86-billion in dividends from retained earnings</span>
By Steven Jackson
Friday, April 03, 2009
Jamaica Public Service's (JPS's) retained earnings dipped 40 per cent in 2008 in order to pay $1.86 billion in dividends which could not be financed from the year's $58-million profit.
It is the second consecutive year that JPS has dipped into its retained earnings - which now stand at $3.7 billion - to finance dividends. In 2007, it paid $1.7 billion to its mainly Japanese shareholders even though it made a $515-million loss. The last time the light and power company made a substantial profit was in 2006, growing the retained earnings to $5.4 billion.
A JPS power plant.
An attempt to get a comment from the JPS yesterday was fruitless. But the Office of Utilities Regulation (OUR) is not concerned that the raids will negatively affect JPS's ability to raise funds for expansion. This is because it benefits consumers (all things being equal) for JPS to rely more on cheap loans than equity to finance projects.
"Equity is more expensive than debt. So from the consumer point of view it is better to finance projects by debt rather than equity," said a high-level technical source at the OUR who requested anonymity. "The banks prefer them to have the equity, but from a consumer point of view it is preferable to finance projects by debt rather than equity, so paying out a lot of dividends is not an issue."
Yesterday, an industry analyst said that by remitting profit to its shareholders, JPS will reduce its capital and therefore the level of profit that it would be required to make in Jamaica - based on a return on equity formula worked out with the OUR.
<span style="font-weight: bold">JPS currently has a guaranteed 14.85 per cent return on equity based on its 2004 tariff review. The light and power company is presently seeking to increase the real return on equity to 21.6 per cent in its current tariff review submission.</span>
JPS hopes to increase its non-fuel revenue by 60 per cent in an effort to secure $7 billion return on equity for 2009, and plans to get it <span style="font-weight: bold">by increasing energy rates to customers by as high as 97 per cent.</span>
In 2008, the company made $23.8 billion from non-fuel revenues while making $47.66 billion from fuel revenues.
JPS plans to construct projects over the next eight years costing US$1.3 billion, including a 300 Megawatt (MW) coal-fired generating facility in Old Harbour at an estimated cost of US$950 million; a petroleum coke plant in Hunts Bay, Kingston at some US$280 million; 6.4 MW expansion of its existing hydro plant at Maggotty, St Elizabeth for US$26 million, and a 3 MW wind farm at Munro, St Elizabeth at a cost of US$10.7 million.
JPS currently has an installed capacity of approximately 621 MW complemented by almost 200 MW of firm capacity purchased from Independent Power Producers under long-term Power Purchase Agreements. This gives a total installed system capacity of 821 MW.</div></div>
i can only figgah that there will be more of that to come...same ole same ole...nutt'n new.
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