July 2012

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The Jamaica Public Service Company, JPS, is to challenge yesterday’s Supreme Court ruling regarding the exclusivity of

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THE Supreme Court yesterday ruled that the all-island licence held by the Jamaica Public Service (JPS) is not exclusive, paving the way for other players to enter the market for distribution of electricity.

The ruling by Justice Bryan Sykes was immediately hailed by Hugh Wildman, attorney for the claimants, as a major victory. “It is a major victory, because the claimants have been able to break the monopoly licence,” Wildman told reporters following the handing down of the ruling.

JPS head office in Kingston.

“What the court is saying is that the exclusive nature of the licence is illegal; that is what this judgement has done. We have succeeded in the main declaration,” said the attorney.

Yesterday, Justice Sykes told the court that the minister had the right to grant a licence to a single light and power provider to cover the entire island, but that the minister does not have the power to grant a licence on terms that preclude him from considering any other applicant. “That is not what Section 3 [of the Electric Lighting Act of 1890] in my view, intended. The exclusive licence to JPS did that,” said the high court judge.

Said the judgement: “The minister does not have the power to grant a licence upon terms that bars the possibility of any other person entering the market for transmission of electricity. The term of JPS’ licence granting it exclusive right to transmit electricity is not valid.”

Michael Hylton, QC, who appeared for the JPS, told the Jamaica Observer that his client would be appealing Justice Sykes’ ruling.

The claimants

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Energy Minister Phillip Paulwell - file photo.
Energy Minister Phillip Paulwell – file photo.

Jerome Reynolds, Gleaner Writer

Energy Minister Phillip Paulwell has indicated that yesterday

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Citizens United to Reduce Electricity (CURE) is celebrating the landmark decision handed down in the Jamaica Supreme Court today in which the monopoly license of the Jamaica Public Service Company (JPS) was declared invalid and illegal.
The ruling comes almost one year after CURE initiated a class action suit challenging the JPS

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Barbara Gayle, Justice Coordinator

Supreme Court Judge Bryan Sykes has ruled that the monopoly power distribution license granted to the Jamaica Public Service Company (JPS) is not valid.

In his ruling handed down a short while ago, Justice Sykes said the minister does not have the power to grant a license on terms which prevent other applicants from having their applications being considered genuine.

The judge also said the minister does not have the power to grant a license upon terms that bar the possibility of any other person entering the market for the transmission of electricity.

As a result, the judge says the terms of the JPS license granting it exclusive right to transmit electricity is not valid.

However, the judge says the minister has the authority to grant a license to an operator to supply power to the entire island.

The group Citizens United for the Reduction of the cost of Electricity had
brought a class action challenging the monopoly license granted to the JPS.

radio@gleanerjm.com

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ENERGY and Mining Minister Phillip Paulwell will be travelling to Japan and South Korea this year to discuss liberalisation of the national power grid with the major overseas shareholders in the Jamaica Public Service (JPS).

Speaking in the sectoral debate in the House of Representatives on Tuesday, Paulwell said that he will be travelling to South Korea this week to meet with executives of East West Power, and in the latter part of the year he will visit Japan to meet with the other major shareholder, Marubeni to assess options for liberalising the grid.

He said that he expects “constructive dialogue, cooperation and understanding” from his trips, based on the knowledge that the Japanese Government is exploring similar transmission and distribution of electricity options, while South Korea has some experience in this area.

“Let us face the fact that to fundamentally restructure our energy market we must, as a matter of urgency, take steps to liberalise the transmission and distribution of electricity, to bring down costs to the consumer,” the minister said.

He pointed out that Jamaica has been operating a vertically integrated system, in which the bulk of the generation, systems control, transmission and distribution are controlled by the same entity, the JPS.

He noted that while the JPS has a monopoly on transmission and distribution, the market for generating electricity is liberalised under a single-buyer model: The JPS purchases some 200 megawatts from independent power producers (IPPs) under long-term power purchase agreements (PPAs).

“… As a consequence, while liberalisation in generation has allowed some level of participation and competition in the sector, IPPs are required to negotiate a PPA with the utility which, in Jamaica’s case, happens to be the very company they compete with,” Paulwell told the House.

He said that an example of the “market contortion” was that in the recent procurement process for a new 360 megawatt power plant, JPS established a wholly owned subsidiary which was the sole bidder and winner of the bid.

“This new JPS subsidiary will then proceed to negotiate a power purchase agreement with itself. This underscores the urgency with which we must proceed to restructure the energy market and introduce greater transparency and competition,” Paulwell said.

Read more:

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ENERGY and Mining Minister Phillip Paulwell will be travelling to Japan and South Korea this year to discuss liberalisation of the national power grid with the major overseas shareholders in the Jamaica Public Service (JPS).

Speaking in the sectoral debate in the House of Representatives on Tuesday, Paulwell said that he will be travelling to South Korea this week to meet with executives of East West Power, and in the latter part of the year he will visit Japan to meet with the other major shareholder, Marubeni to assess options for liberalising the grid.

He said that he expects “constructive dialogue, cooperation and understanding” from his trips, based on the knowledge that the Japanese Government is exploring similar transmission and distribution of electricity options, while South Korea has some experience in this area.

“Let us face the fact that to fundamentally restructure our energy market we must, as a matter of urgency, take steps to liberalise the transmission and distribution of electricity, to bring down costs to the consumer,” the minister said.

He pointed out that Jamaica has been operating a vertically integrated system, in which the bulk of the generation, systems control, transmission and distribution are controlled by the same entity, the JPS.

He noted that while the JPS has a monopoly on transmission and distribution, the market for generating electricity is liberalised under a single-buyer model: The JPS purchases some 200 megawatts from independent power producers (IPPs) under long-term power purchase agreements (PPAs).

“… As a consequence, while liberalisation in generation has allowed some level of participation and competition in the sector, IPPs are required to negotiate a PPA with the utility which, in Jamaica’s case, happens to be the very company they compete with,” Paulwell told the House.

He said that an example of the “market contortion” was that in the recent procurement process for a new 360 megawatt power plant, JPS established a wholly owned subsidiary which was the sole bidder and winner of the bid.

“This new JPS subsidiary will then proceed to negotiate a power purchase agreement with itself. This underscores the urgency with which we must proceed to restructure the energy market and introduce greater transparency and competition,” Paulwell said.

Read more:

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The Government of Jamaica has taken steps towards creating a legislative and regulatory framework that will facilitate investment in the renewable energy sector.

Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell made the announcement on July 24, during his 2012/13 Sectoral Presentation in Parliament.

Minister Paulwell said renewables represent the shortest route to both diversification of Jamaica

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Phillip Paulwell, minister of science, technology, energy and mining.
Phillip Paulwell, minister of science, technology, energy and mining.

New cellphone, fibre-optic licence for auction

Philip Paulwell, minister of science, technology, energy and mining, said Tuesday that South Korean company Samsung has emerged the preferred bidder to develop Jamaica‘s liquefied natural gas (LNG) infrastructure.

He otherwise announced that Jamaica will auction off a new cellular phone licence and a fibre-optic licence, which will add increased competition in the telecoms market.

Speaking in Parliament, Paulwell told lawmakers that the LNG committee would now begin negotiations with Samsung, which beat out companies such as Exmar Marine of Belgium and Sener Ingenieria y Sisternas, SA of Spain for the job to develop the floating storage regasification unit.

Under the commercial structure formulated by Government, LNG gas will be funnelled through the LNG infrastructure, which will comprise a terminal and pipelines for distribution to end users, such as the Jamaica Public Service Company’s 360-megawatt plant.

Paulwell said that bidders for the supply of LNG have asked Government for a fortnight’s extension to Friday, July 27, which was granted based on a recommendation from the LNG committee now headed by Dr Carlton Davis.

“In terms of the LNG supply RFP (request for proposal), the Jamaica LNG project team received requests from all three short-listed LNG supply bidders for an extension of the original bid submission deadline,” he said.

The bids were originally due by July 17.

The introduction of LNG forms a key element of the Government’s effort to drive economic growth via slashing electricity costs, currently among the highest in the region. The submissions for the LNG terminal were due by Friday, April 27, 2012 and the final second-stage proposals for LNG supply was originally targeted for closure by the end of June 2012.

The initial demand for LNG is approximately 0.8 million tonnes of LNG per year, with future demand projected at 2.5 million tonnes per year by the end of the decade, according to Government. It is expected that the importation of LNG will serve to spur economic growth in industries across the island that would benefit from the availability of natural gas and lower energy prices.

The Cabinet, in March 2012, approved the formation of the Jamaica Gas Trust (JGT), which will act as the sole LNG purchaser for the project. It will be capitalised with US$100 million and managed by the private sector. The JGT will execute the major commercial agreements, including the LNG Sale & Purchase Agreement, Terminal Use Agreement, Gas Sales Agreements and Pipeline Transportation Agreement.

Part of the hold-up of the LNG project has been uncertainty over supplies of gas. Last week, Jamaica’s Ministry of Industry, Investment and Commerce issued a statement saying Trinidad had signalled it was committed to resolving the issue of supply.

Turning to the telecoms sector, Paulwell stated that the Government would auction spectrum to facilitate the introduction of new cellphone services.

“Mr Speaker, we intend to allocate one licence for the 700 spectrum by auction, for which there will be a reserve price. We will also attach to that award a new international fibre-optic cable licence,” said Paulwell.

He explained that the allocation of the 700-megahertz (MHz) band will provide a more cost-effective option for the deployment of 4G and Long-Term Evolution (LTE) networks in Jamaica. He said that 4G has the capacity to deliver data rates of up to 100 megabits per second (Mbits/s) of download, and up to 70 Mbits/s upload, which enables video application on the downlink as well as uplink.

“This will allow video-sharing, surveillance, conferencing and streaming in higher definition than is possible with existing 3G technologies,” the minister said.

business@gleanerjm.com

http://jamaica-gleaner.com/gleaner/20120725/business/business1.html