January 2013

The St. Lucia government says it will amend existing legislation governing the operations of the St. Lucia Electricity Services Limited (LUCELEC), the sole electricity company, as it moves to provide consumers with relief from high electricity rates.

“LUCLEC has to understand when there are good times they enjoy the good times but when there are bad times, it too must make the adjustment for the sake of the people of the country, Prime Minister Kenny Anthony said.

Its an issue I have raised with them. It is well known that I have said that LUCELEC can no longer enjoy … statutory comfort for specific profit levels. This is not the era for that kind of statutory arrangement,” Anthony added.

The prime minister said that his administration would be forced to amend the existing legislation, in addition to exploring alternative forms of energy if the company maintains its high rates to consumers.

In a statement following his recent visit to Venezuela where he discussed accessing the benefits of PetroCaribe, an initiative through which Caracas offers oil on concessionary terms to participating countries, Anthony said that as far as he is concerned LUCLECs electricity rates, whatever the logic maybe, are unacceptably high.

In addition to being the sole provider of electricity there, LUCELEC, by reason of the Electricity Supply Act of 1994, is guaranteed a return on its investment through an electricity surcharge.

LUCELEC shareholders include the Canadian-based Emera, First Citizens Bank Ltd., National Insurance Corporation, the Castries City Council and the St. Lucia government.

In a statement posted on its website late last year, LUCELEC said electricity rates in St. Lucia were among the lowest in the Caribbean. It quoted the latest tariff study report produced by CARILEC, the Caribbean Electric Utility Service Corporation to support its position.

It said the CARILEC report showed that for the first half of 2012, St. Lucia had the lowest electricity rates for residential customers among the 14 reporting countries.

Residential customers using 100 or 400 kilowatt hours or units in St. Lucia enjoyed better rates than their counterparts in the other OECS territories,

Deputy director general of the OUR, Hopeton Heron (right), responds to a question at the 115MW project meeting hosted by the Office of Utilities Regulation, on Thursday, January 17, 2013, at The Jamaica Pegasus hotel in New Kingston. OUR's manager of utility monitoring and generation procurement, Peter Johnson, is at left.
Deputy director general of the OUR, Hopeton Heron (right), responds to a question at the 115MW project meeting hosted by the Office of Utilities Regulation, on Thursday, January 17, 2013, at The Jamaica Pegasus hotel in New Kingston. OUR’s manager of utility monitoring and generation procurement, Peter Johnson, is at left.

Steven Jackson, Business Reporter

 

This article was originally published online on Friday, January 18, 2013.

 

Prospective investors complained about parking millions of US dollars as a security deposit via the government regulator Office of Utilities Regulation (OUR) for bidding on 115 megawatts (MW) of clean energy projects.

They also want safeguards against monopoly distributor Jamaica Public Service Company effectively underbidding them in applying for these projects – as it already controls the grid.

JPS is one of 85 entities which submitted expressions of interest for the 115-megawatt renewable projects. Proposals must be submitted by April.

The OUR noted the financial concerns while indicating that investors can use it as a JPS intermediary.

Over 200 prospective investors – one-quarter foreigners – attended an OUR meeting at The Knutsford Court Hotel in Kingston Thursday. The turnout “pleasantly surprised” OUR representatives.

It indicated the financial interest in renewable energy that forms part of the Government’s 2030 vision to reduce the island’s costly dependence on fossil fuels.

But one participant, general manager Wigton Wind Farm, Earl Barrett, complained of an additional financial burden requiring developers to put up at least 20 per cent of the financing of the project, which obviates full financing by banks.

Responding to the concerns, Peter Johnson, OUR manager of utility monitoring and generating procurement, said: “We want some commitment from the developers themselves. We do not want them to be just a conduit. That is the idea. We want some commitment from the developer.”

“It is not unreasonable,” added Courtney Francis, senior regulator of engineering at the OUR.

Leo Williams, seeking to represent bidders, said inter-connection with JPS would pose another hurdle in seeking financing for projects.

JPS can charge a higher fee to rivals to connect to the grid and a lower charge to itself, said Williams and other participants.

“The question of JPS and the level playing is one of which I hope you have heard. The concern expressed relates to the inter-connection costs to the (bidders) which are totally uncapped from the JPS side. So JPS could indicate all types of requirements which could drive the inter-connection costs up for the (bidder),” said Williams, who then asked in vain for the regulator to provide some indicative empirical costings.

“That would be rather difficult. We cannot give a per-unit cost because it depends on the technology, configuration, depends on where you are accessing the system from, the size, and a whole raft of things. It’s hard to quantify such costs,” Francis responded.

Industry players negotiate interconnection based on a minimum rate set by the OUR.

Renowned lawyer Frank Phipps queried the fairness of the inter-connection arrangement and whether in previous bids, rivals won over JPS bids.

“There have been previous applications where the JPS won and others in which others have won,” stated Johnson, who later added: “Please be reminded that there are already other independent power providers on the system and interconnection was a part of those arrangements. We have not seen or heard of concerns by those persons. So we are not aware of a foundation for these concerns at this time,” said Johnson.

Finally, Johnson sought to allay fears: “If you have difficulty dealing with the operator (JPS), we recommend that you submit queries to us.”

Two Petroleum Corporation of Jamaica representatives asked why not allocate a maximum slot for JPS to bid and offer the remainder to other players.

“We do not want suboptimal solutions. So we do not want to set aside anything without knowing it will generate least cost,” said Francis. “JPS has equal opportunity to bid and to participate as any other bidder.”

Bidders must submit a refundable security deposit equivalent to one per cent of the total proposed cost. They must also submit a non-refundable fee of US$8,000.

The security deposit can be sent to the OUR in the form of a cheque or a letter of credit. It can be held for up to a year, reasoned participants. Additionally, the OUR told the

Digicel Group has deployed an energy saver across its network in Jamaica, which is expected to cut cost by US$1.4 million ($130 million) annually.

The eVolution Networks’ Smart Energy Solution (SES) is a fully-automated, intelligent software solution, which deactivates base stations during low traffic demand, while ensuring that subscribers are provided with continued high quality of service.

A Digicel store in New Kingston.

“The solution fits seamlessly into any multi-vendor, multi-technology network, eliminating the need for Digicel to invest additional capital in base stations and allowing Digicel’s engineers to continue working as usual without having to divert any time and energy to system maintenance,” said a release issued by the telecommunications company yesterday.

Digicel began testing SES in early 2012, achieving significant reductions in energy consumption.

In October, Digicel fully commissioned SES network-wide, becoming the world’s first mobile operator with the “green solution”, which should result in energy and carbon savings of 2.8 gigawatt-hours and 1,500 tonnes of carbon dioxide (CO2) respectively.

“eVolution’s SES is the most mature and cost optimised energy saving platform on the market,” said Stephen Curran, network design director for Digicel Group. “It provides a valuable solution for cutting energy across our base stations and best positions us to capitalise on the shift to a fully green network.

“Having successfully completed the deployment of eVolution’s solution across most of our base stations, we are now ready to demonstrate the full capabilities and unique advantages of the solution across our 30 other markets across the globe.”

As soon as it became operational on the Digicel Jamaica network, SES conducted both a thorough radio coverage analysis and a deep study of the typical daily traffic patterns of each existing base station across the network.

These two steps allowed SES to create individual traffic profiles for each base station across Digicel’s network

Shakuntala Makhijani , Guest Columnist
Shakuntala Makhijani , Guest Columnist

By Shakuntala Makhijani , Guest Columnist

Last month, electricity regulator, the Office of Utilities Regulation (OUR), released recommendations for Jamaica‘s anticipated electricity wheeling programme.

Electricity wheeling has been proposed in Jamaica as a way to promote distributed power generation, especially from renewable-energy sources.

Under the proposed wheeling programme, a company or individual could generate electricity in one part of the country and pay the grid operator – the Jamaica Public Service Company (JPS) – a fee to transport that power to another location where it will be used.

Because JPS currently has a monopoly on electricity distribution, a company would only be able to send electricity over the grid to be consumed at a location that it also owns. For example, a sugar company that generates electricity at a sugar refinery using bagasse can send excess power to its offices in Kingston to avoid paying high electricity bills there, but cannot sell electricity to another entity.

Several of Jamaica’s large energy consumers are considering participating in the forthcoming wheeling programme to support investments in renewable energy.

Hotel chain Sandals, the Caribbean’s largest poultry producer Jamaica Broilers, and the National Water Commission, the largest single electricity consumer in the country, all have plans to wheel power.

A National Irrigation Commission project using wind energy to power irrigation pumps also wants to participate in the programme.

Only for firm generation capacity

At a recent public consultation, however, OUR officials confirmed that the electricity wheeling programme will be intended only for firm generation capacity – meaning it will exclude variable renewable-energy sources such as solar and wind.

Electricity wheeling provides an opportunity to promote distributed renewable generation, especially at the large commercial or industrial scale (more than 100 kilowatts to several megawatts).

For this reason, Worldwatch has submitted a public comment to OUR recommending, based on our research in renewable energy transition in Jamaica, that the regulator reconsider its exclusion of variable capacity and open the electricity wheeling programme to all renewable-energy sources.

Prime Minister Portia Simpson Miller‘s administration has publicly committed to the ambitious goal of 30 per cent renewable energy by 2030. In our view, the Jamaican government has every reason to ensure that Jamaica can meet these targets by allowing all renewable-energy sources to participate in programmes, such as electricity wheeling.

For its own economic development, Jamaica’s Government would be well advised to mandate that the utilities regulation office and the national utility continue and expand ongoing efforts to strengthen Jamaica’s national electricity grid in order to accommodate new, variable renewable generation in accordance with national targets.

In the meantime, however, Jamaica’s electricity generation mix is dominated by diesel and fuel oil – and planned liquefied natural gas capacity – which can be rapidly fired up or down in response to variable renewable generation and changes in electricity demand.

So long as JPS and OUR undertake precautions to address grid congestion, voltage regulation, and other issues associated with distributed generation, Jamaica’s grid should be capable of integrating variable renewable capacity through the wheeling programme.

Commercial and industrial-scale renewable electricity generation is a cost-effective way to meet the Jamaican Government’s renewable energy targets.

Fees should be an incentive

Electricity wheeling should, therefore, include variable-generation capacity in order to promote development of solar and wind-energy technologies at this scale.

For this to be successful, it is critical that regulators assure that fees are reasonable enough to insure that distributed generators will have an incentive to participate in the programme.

Guidance from the regulatory office is also needed to clarify eligibility criteria for a single entity under the wheeling programme. For example, if the Sandals resort chain participates in a wheeling programme, why should it not be allowed to send electricity generated at one resort to another? However, each resort in the Sandals chain is registered as a separate entity, creating uncertainty as to whether such use of the wheeling system would be permitted.

Resolving this issue before electricity wheeling guidelines are finalised will help avoid potential delays and allow ready projects to be implemented on schedule.

As Jamaica’s electricity regulator, it is the responsibility of the utility regulatory office to ensure that the national electricity grid is prepared to accommodate the new renewable electricity capacity – both firm and variable – needed to meet the Government’s 30 per cent target.

Given the high cost of the current petroleum-based electricity system and the country’s strong renewable-energy resources, Jamaica can transition to a secure and reliable renewable-energy system while still reducing electricity costs for consumers.

The Worldwatch Institute is currently finalising a Sustainable Electricity Roadmap for Jamaica that details Jamaica’s abundant renewable energy potential and recommends grid integration and policy solutions for reliably harnessing these resources to help achieve the country’s long-term sustainable energy goals.

Shakuntala Makhijani is a representative of Worldwatch Institute, which is currently working on sustainable energy roadmaps for the Dominican Republic, Haiti, and Jamaica. mkonold@worldwatch.org business@gleanerjm.com

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Phillip PaulwellMinister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell – FILE

Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell, says the Government is intent on transforming the way electricity is distributed island wide with a view to ensuring competition in the generation and distribution of the utility.

 

Prospective investors flooded the 115MW project meeting hosted by the Office of Utilities Regulation, on Thursday, January 17, 2013, at The Jamaica Pegasus hotel in New Kingston.-CONTRIBUTED
Prospective investors flooded the 115MW project meeting hosted by the Office of Utilities Regulation, on Thursday, January 17, 2013, at The Jamaica Pegasus hotel in New Kingston.-CONTRIBUTED

Steven Jackson, Business Reporter

 

This article was originally published online on Friday, January 18, 2013.

 

Prospective investors complained about parking millions of US dollars as a security deposit via the government regulator Office of Utilities Regulation (OUR) for bidding on 115 megawatts (MW) of clean energy projects.

They also want safeguards against monopoly distributor Jamaica Public Service Company effectively underbidding them in applying for these projects – as it already controls the grid.

JPS is one of 85 entities which submitted expressions of interest for the 115-megawatt renewable projects. Proposals must be submitted by April.

The OUR noted the financial concerns while indicating that investors can use it as a JPS intermediary.

Over 200 prospective investors – one-quarter foreigners – attended an OUR meeting at The Knutsford Court Hotel in Kingston Thursday. The turnout “pleasantly surprised” OUR representatives.

It indicated the financial interest in renewable energy that forms part of the Government’s 2030 vision to reduce the island’s costly dependence on fossil fuels.

But one participant, general manager Wigton Wind Farm, Earl Barrett, complained of an additional financial burden requiring developers to put up at least 20 per cent of the financing of the project, which obviates full financing by banks.

Responding to the concerns, Peter Johnson, OUR manager of utility monitoring and generating procurement, said: “We want some commitment from the developers themselves. We do not want them to be just a conduit. That is the idea. We want some commitment from the developer.”

“It is not unreasonable,” added Courtney Francis, senior regulator of engineering at the OUR.

Leo Williams, seeking to represent bidders, said inter-connection with JPS would pose another hurdle in seeking financing for projects.

JPS can charge a higher fee to rivals to connect to the grid and a lower charge to itself, said Williams and other participants.

“The question of JPS and the level playing is one of which I hope you have heard. The concern expressed relates to the inter-connection costs to the (bidders) which are totally uncapped from the JPS side. So JPS could indicate all types of requirements which could drive the inter-connection costs up for the (bidder),” said Williams, who then asked in vain for the regulator to provide some indicative empirical costings.

“That would be rather difficult. We cannot give a per-unit cost because it depends on the technology, configuration, depends on where you are accessing the system from, the size, and a whole raft of things. It’s hard to quantify such costs,” Francis responded.

Industry players negotiate interconnection based on a minimum rate set by the OUR.

Renowned lawyer Frank Phipps queried the fairness of the inter-connection arrangement and whether in previous bids, rivals won over JPS bids.

“There have been previous applications where the JPS won and others in which others have won,” stated Johnson, who later added: “Please be reminded that there are already other independent power providers on the system and interconnection was a part of those arrangements. We have not seen or heard of concerns by those persons. So we are not aware of a foundation for these concerns at this time,” said Johnson.

Finally, Johnson sought to allay fears: “If you have difficulty dealing with the operator (JPS), we recommend that you submit queries to us.”

Two Petroleum Corporation of Jamaica representatives asked why not allocate a maximum slot for JPS to bid and offer the remainder to other players.

“We do not want suboptimal solutions. So we do not want to set aside anything without knowing it will generate least cost,” said Francis. “JPS has equal opportunity to bid and to participate as any other bidder.”

Bidders must submit a refundable security deposit equivalent to one per cent of the total proposed cost. They must also submit a non-refundable fee of US$8,000.

The security deposit can be sent to the OUR in the form of a cheque or a letter of credit. It can be held for up to a year, reasoned participants. Additionally, the OUR told the