This document summarizes a presentation on the costs of electricity theft and power disruptions. It finds that: 1) Electricity theft is a significant problem globally and in Jamaica, costing utilities millions and disrupting power. 2) Jamaica ranks 17th out of 100 countries in terms of electricity theft levels, above some Latin American countries but below others. 3) The estimated cost of power disruptions to the Jamaican economy was over $22 million in 2013 based on analyzing costs by sector.

1. Costly ‘Throw-Ups’: Electricity Theft
and Power Disruptions†
Fabian B. Lewis†
, Ph.D.
Research and Analysis Unit, Taxation Policy Division
Ministry of Finance and Planning
October 29, 2015

2. Disclaimer
•The views expressed are personal and not
necessarily those of my affiliated institution.
•Full paper available in the Electricity Journal
i.e. Aug./Sept. 2015 Volume.
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3. Outline of Presentation
Introduction
Research Objectives
Why Important?
Electricity theft in an Int’l Context
Methodology, Data and Empirical Results
Policy Implication
Conclusion and Future Work
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4. Introduction
• Power theft is a longstanding problem globally
(even amongst developed countries).
• Electricity theft for example, via ‘throw-ups’
(i.e. a Jamaican phrase for illegal connections
attached to overhead power distribution lines to
abstract electricity), often contributes to power
disruptions which in turn, result in inter alia a
loss of productive output that could have
otherwise been created in an economy.
• These electricity interruptions have practical
policy implications. 4
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5. Research Objectives
We want to inter alia:
1.Analyse the evolution of Jamaica’s
electricity theft over an extended period.
2.Assess the magnitude of power theft in an
international context.
3.Estimate the direct costs of power
disruptions for several countries (including
Jamaica and its sectors).
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6. Why Important? i.e. Justification for
Research
 Electricity theft is a serious problem manifested
in at least four ways: (i) fraud, (ii) directly
stealing power, (iii) billing irregularities and
(iii) unpaid bills!
 Power theft has serious consequences for both
utility companies and legitimate customers.
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7. Why Important? cont’d
• Yet there is a surprising paucity of research
which explores the relationship among
electricity theft, power disruptions and the
associated costs internationally.
• We therefore attempt to fill this gap.
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8. Why Important?, cont’d
Power theft:
(a) unnecessarily raises the price of power for
legitimate consumers.
b) adversely affects the quality of electricity
supply leading to intermittent power
interruptions (i.e. power outages) for both
genuine customers and illegal consumers, loss in
output and damage to electrical appliances.
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9. Why Important?, cont’d
• (c) adversely affects the amount of re-
investment and employment in the power
sector by curtailing potential revenue that can
be collected.
• (d) power theft especially via ‘throw-ups’ (or
‘spider-webs’), creates fire hazards and
sporadically results in death of power thieves
and innocent (entangled) persons.
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10. Jamaica’s Electricity Theft
• Overall, electricity theft is typically highest in
the most populous and urban parishes of the
island.
• In general, the literature corroborates that high
electricity theft occurs mainly in relatively
poor communities (Not unique to Jamaica.
Common in India, for example).
• JPS; the only local, licenced distributor of
electricity suffers greatly from power theft.
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13. Notes
• Systems losses comprise “technical” (internal)
and “non-technical” (external) energy losses.
• “Technical losses” occur naturally while
“Non-technical losses” result from actions
external to the power system, such as
electricity theft and bill non-payment.
Disaggregation of overall systems losses is key
but data rarely available.
• Non-technical energy losses is the commonly
used proxy for electricity theft.
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14. • Overall, “approximately 26.6 per cent of the
total electricity produced/purchased (4,104
GWh) by JPS was lost” in 2014.
• Specifically, 7.0 per cent was stolen (i.e. non-
technical loss portion), up from the 8.0 per
cent registered in 2003.
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Table1: Jamaica’s Electricity Demand-Supply Profile, 2003-2014
Year Electricity Produced Electricity Sales System Losses Non-Technical Losses*
(MWh) (MWh) (%) (%)
2003 3,696,005 3,009,461 18.6 8.0
2004 3,717,022 2,999,639 19.3 9.3
2005 3,877,990 3,055,154 21.2 11.2
2006 4,046,428 3,120,669 22.9 12.9
2007 4,078,771 3,131,494 23.2 13.2
2008 4,123,290 3,179,078 22.9 12.9
2009 4,213,980 3,203,878 24.0 14.0
2010 4,137,350 3,187,488 23.0 13.0
2011 4,136,879 3,215,990 22.3 12.3
2012 4,135,919 3,133,966 24.2 14.2
2013 4,141,644 3,069,688 25.9 15.9
2014 4,107,457 3,012,979 26.6 17.0
Mean 4,034,395 3,109,957 22.8 12.8
Median 4,115,374 3,126,082 23.0 12.9
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16. Jamaica’s Electricity Theft in an
International Context
• Rationale: Want to inter alia gauge Jamaica’s
electricity theft relative to other countries (is
magnitude above or below average?).
• Perform comparative assessment of electricity
theft to update and extend Smith’s (2004)
research.
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17. Cross-Country Electricity
Theft Evolution
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Table 1b: Evolution of Electricity T&D Losses (%) by Selected Regions and Years
Region 1971 1980 1990 2000 2011 Overall Change*
East Asia & Pacific 7.3 6.4 6.3 6.3 5.7 -1.7
Europe & Central Asia 7.3 7.1 7.4 9.2 7.9 +0.6
Latin America & Caribbean 11.8 12.5 14.5 16.0 14.9 +3.1
Middle East & North Africa 7.0 8.9 9.5 11.9 12.0 +5.0
North America 8.5 8.8 9.0 6.0 5.9 -2.5
South Asia 17.6 19.4 20.0 26.9 20.4 +2.8
Sub-Sahara Africa 7.9 9.1 8.9 11.2 10.8 +2.9
Notes: *
Percentage point change between 1971 and 2011. Discrepancies due to rounding.
Source: Compiled by author using data obtained from the World Bank’s World Development Indicators.
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20. Snapshots
• In our sample of 100 countries, the extent of
power theft ranged from 1.8 per cent (Slovak
Republic) to 54.6 per cent (Haiti). Average of
12.2 per cent (and Median of 10.4 per cent).
• Jamaica ranked 17th
in terms of electricity theft
magnitude; high rank by any measure.
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21. Snapshots, cont’d
• Jamaica’s power theft is above that of notable
Latin American and Caribbean countries such
as Ecuador, Brazil, Mexico, Panama and Peru
but below Nicaragua, Venezuela and
Honduras.
• Half of the countries (including developed)
experienced an overall increase in electricity
theft between 1980 and 2011.
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Table 2: Transmission and Distribution Losses for Selected Countries, 1980 and 2011
T&D Losses No. of Countries (%) No. of Countries (%)
Range (%) in 1980 in 1980 in 2011 in 2011
1 to less than 4 2 2.0 8 8.0
4 to less than 11 55 55.0 45 45.0
11 to less than 16 26 26.0 24 24.0
16 to less than 20 7 7.0 11 11.0
20 to less than 55 10 10.0 12 12.0
Total 100 100.0 100 100.0
Source: Compiled by author using data obtained from the World Bank’s World Development Indicators.
Jamaica Statistics Symposium, U.W.I.
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23. Findings to Ponder
• “Extensive power theft” (i.e. T&D losses of at
least 16.0 per cent) rose overall to 23.0 per
cent in 2011, up from 17.0 per cent in 1980.
• Smith (2004) utilized an almost identical
sample size of 102 countries but based on
1980 and 2000 data. Author did not estimate
the cost of power disruptions.
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24. Methodology
Estimating Costs of Electricity Interruptions:
(a) the “production loss” approach
(b) customer surveys i.e. “willingness to
pay” and “willingness to accept” methods
(c) “captive generation approach” and
(d) “case studies”.
Teaser: Would you be willing to accept a lower
light bill but suffer more power outages?
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25. Value of Lost Load (VoLL)
• VoLL essentially represents “the economic
value created by one unit of electricity”.
• Importantly, estimates of the VoLL by sector
can assist power companies to determine
priority areas for disrupting power when
supply shortages arise i.e. statistics supporting
policy!
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26. Estimating the Value of lost Load
• VoLL = Gross Value Added divided by
Total Electricity Consumed
where VoLL>0. Note that the higher the VoLL,
the greater the direct cost of power
interruptions to the country’s overall economy
or sector.
• We utilise the above production loss approach
(PLA) and input-output analysis due to data
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27. VoLL Results
• PLA method quantifies the loss in production
due to unavailability of electricity supplied by
the grid.
• Overall, the average estimated cost per unit of
electricity not supplied due to a power
disruption was US$2.94 per kWh in 2011
(compared with US$1.30 per kWh for 1996).
• In other words, the direct cost to the Jamaican
economy of one kWh of electricity not
supplied is almost US$3. 27
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28. • Jamaica’s VoLL was below the simple
average VoLL of US$3.66 per kWh for the
overall final sample of 96 countries.
• Using JPS’ T&D System Average Interruption
Duration Index (SAIDI), we imputed the
overall direct cost of power disruptions to
the Jamaican economy for 2013 to be
approximately US$22.84 million (or roughly
0.17 per cent of GDP).
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Table 3: Jamaica’s Electricity Consumption, Total Value Added and Value of Lost Load by Sector, 2011
Sector Electricity Consumed Sectoral Electricity Total Value Added Sectoral Value Added Value of Lost Load
(GWh) Use Share (%) at Basic Prices (J$ M) Share (%) (US$ per kWh)
Agriculture, Forestry &Fishing 78.6 1.9 70,438 6.6 10.35
Mining & Quarrying 63.2 1.5 15,487 1.5 2.83
Manufacturing 489.9 11.7 96,566 9.1 2.28
Electricity & Water Supply -760.0 - 35,867 3.4 -0.54
Construction 38.3 0.9 77,921 7.3 23.49
Wholesale & Retail Trade;
Repairs; Installation of
Machinery & Equipment 517.8 12.3 201,491 18.9 4.49
Hotels & Restaurants 756.9 18.1 45,481 4.3 0.69
Transport, Storage & Communic. 182.4 4.4 104,330 9.8 6.60
Finance & Insurance Services 144.5 3.4 111,869 10.5 8.94
Real Estate, Renting &
Business Activities 143.0 3.4 130,771 12.3 10.56
Producers of Government Services 665.6 15.9 152,708 14.3 2.65
Other Services 352.6 8.4 69,803 6.5 2.29
Total Economy 2.94
Notes: VoLL computed by dividing sectoral Gross Value Added by the electricity consumed in each sector. GWh means Gigawatt hours. The negative sign on the
‘Electricity’ sector is due to the fact that it generates more electricity than it utilizes and consequently, the sector’s electricity demand is negative. Source: Author’s estimates.
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30. Policy Implication
• When power has to be disrupted due to a
“generation forced outage”, it should be cut
first in the Hotels & Restaurants (i.e. tourism)
sub-sector followed by Manufacturing but last
in Construction. Direct cost to economy would
be lowest. (But we qualify our prescription as
tourism was 5.8 per cent of real GDP in 2014).
• JPS’ approach to distributing scarce electricity
should be re-visited to account for the direct
economic effects (based on sectoral VoLL
estimates). 30
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31. Conclusion
• Electricity theft by whatever means, is costly.
• Paper (for the first time) investigated the nexus
among electricity theft, power disruptions and the
resulting direct cost to an economy.
• We showed that electricity theft rose overall not only
in many countries but in most regions globally
between 1971 and 2011. Haiti ranked 1st
overall.
• Worryingly, “extensive power theft” increased
internationally since 1980.
• We estimated the direct cost of one kWh of electricity
not supplied in Jamaica to be approximately US$2.72
for 2013. 25
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32. Conclusion, cont’d
• The direct damage to the Jamaican economy
due to power disruptions is below the
corresponding average cost per kWh for a
2011 sample with 96 countries.
• Estimated direct cost of electricity disruptions
ranged from US$0.43 to US$9.91 per kWh.
• JA’s sectoral value of lost load was highest for
Construction but lowest for Tourism.
• JPS could explore using harmonic generator
system (Depuru et al., 2011) to isolate and
punish “throw up” users. 32
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33. Future Research
• Future work on electricity theft should inter
alia extend our analysis to ascertain damage
to households (in terms of lost leisure time or
spoilage of goods) and corroborate our
original VoLL estimates using alternative
methodology.
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Thanks for Listening!
Selected References
Depuru, S. S., Wang, L., and Devabhaktuni, V. (2011). Electricity Theft: Overview, Issues,
Prevention and a Smart Meter Based Approach to Control Theft, Energy Policy, Vol. 39, pp.
1007-1015.
Jamaica Public Service (2015). Annual Report 2014, Jamaica.
Lewis, F. B. (2015). Costly ‘Throw-Ups’: Electricity Theft and Power Disruptions, Electricity
Journal, Vol. 28, Issue 7, pp. 118-135.
Smith, T. B. (2004). Electricity Theft: A Comparative Analysis, Energy Policy, Vol. 32, pp.
2067-2076.
World Bank (2014). World Development Indicators, Available at:
<http://databank.worldbank.org/data/download/WDI_excel.zip>.
Appendix
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