Economics Ia

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Statement of Aim

Topic: The impact of a monopoly firm on consumer choice in the electricity distribution industry. Aim: How does the lack of competition in the local energy sector affects consumer choice and consumer satisfaction.

Objectives

The objective of this internal assessment is to:
* Analyze the contribution of JPS to the Jamaican economy * Determine the strategies used by JPS in their service delivery to meet consumer demand * Identify and evaluate the type of market structure in which JPS operates

Introduction

The Jamaica Public Service (JPS) is considered as the sole distributor of electricity in Jamaica. It has inherited a tradition dating back to 1892 when Jamaica first received electricity. This as a result placed Jamaica in the forefront of technological advancement, as it was only thirteen years after an American scientist Thomas Edison had invented the electric lamp. In that year the first electricity service in the island was supplied by the Jamaica Electric Light Company which eventually became Jamaica Light and Power Company. In 1897, another company, the West India Electric Company, established an office at 151 Orange Street. Afterwards they built the hydroelectric plant on the Rio Cobre River at Bog Walk. Early in 1907, a severe earthquake destroyed a section of Kingston, disrupting city life and public services. Following this, West India Electric leased the property and businesses of Jamaica Light and Power Company and integrated the Gold Street Station into Bog Walk supply system which resulted in a significant improvement in the service available to customers. In this time several towns had their own electric companies but through a process of consolidation, buy- outs, amalgamations, Jamaica Public Service emerged and was registered in 1923.At the time, JPS had 3928 customers which are far from today’s customer base of over 585000. The company was granted an all island franchise in 1966 and today remains the sole supplier of electricity. The nature of the ownership of JPS has changed several times throughout our history. The company started as a private company, owned by foreign shareholders. In 1970, the government of Jamaica acquired controlling interest. In 2001, ownership of JPS returned to private hands when Mirant Corporation, a US based energy service provider acquired 80% of the company, with the government retaining almost 20%. The remainder, amount to less than 1%, is owned by small group of shareholders. In 2007, Mirant sold its majority shares to Marubeni Caribbean Power Holdings (MCPH)Inc, a subsidiary of Marubeni Corporation in Japan. In early 2009 Abu Dhabi National Energy Company of the United Arab Emirates, joined Marubeni as co-owner of JPS. Majority of the shares are therefore held by Marubeni TAQA Caribbean. However the government didn’t sell its 20% stock subsequent to this. The purpose of the internal assessment is to examine the Jamaica Public Service as a monopoly and how it affects the consumers’satisfaction.It will also indicate the different pricing strategies and production methods used by the company in order to maintain efficiency, i.e. how resources are allocated. Also, the market structure will be evaluated as well as measures the JPS Company have implemented to satisfy the needs of its consumers. In addition, the contributions to both the environment and the Jamaican economy.There will also be an in depth investigation on the operations used to supply the customers with electricity.

Methodology
In conducting the research on JPS as a monopoly firm and how it affects consumer’s choice/satisfaction. The different methods were used by the researcher in order to gather relevant data. To access primary data interviews were conducted while reports were pursued for secondary data. The data collected by the researcher derived from a randomly selected sample of the employees at JPS. Both primary and secondary sources were used in data collection....
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