President of the Jamaica Public Service Company, JPS, Kelly Tomblin, is rejecting claims that she’s using scare tactics to keep businesses from turning to renewable sources of energy.
In an interview yesterday on Nationwide This Morning, Chief Executive Officer of Solar Buzz Jamaica, Jason Robinson, accused JPS of using ‘scare tactics’.
This was in response to comments attributed to Ms. Tomblin in a recent Gleaner report that the company could be forced to raise electricity rates if its top customers leave the grid.
But speaking with Nationwide News yesterday, Ms. Tomblin sought to clarify the comments she made to the Gleaner newspaper.
She’s insisting she’s not using a scare tactics.
Ms. Tomblin says she would prefer companies stay on the power grid.
This, as the intermittent use of the grid is more of a burden on JPS than if a company were to be removed completely.
And, Ms. Tomblin says the JPS doesn’t build LNG plants contrary to Mr Robinson’s claim.
He’d said the light and power company has been offering to set up small LNG plants for large companies, which would also take them off the grid.
She’s also refuting his claim that JPS’s rates are going up.
CEO of Solar Buzz Jamaica, Jason Robinson, says the Jamaica Public Service Company, JPS, is using scare tactics to keep businesses from leaving the grid and turning to alternative energy.
In a recent interview with the Gleaner newspaper, JPS CEO Kelly Tomblin was quoted as saying that it could be forced to raise electricity rates if its top customers leave their grid.
Robinson says could mitigate any losses from clients who’ve switched to alternative energy by running a more efficient operation and doing more to combat theft.
He says JPS is already doing a lot to diversify its own fuel sources to keep energy costs down.
And, Robinson is also criticizing the power company for being hypocritical.
He claims JPS has been offering to set up small LNG plants for large companies, which would also take them off the grid.
Power utility boss Kelly Tomblin views Softbank’s acquisition of Fortress Investment Group, to which New Fortress Energy is affiliated, as positive for furthering plans to build out gas facilities in Jamaica,
American company New Fortress Energy is a gas supply partner to Jamaica Public Service Company (JPS).
Last November, the partners celebrated the commissioning of Jamaica’s first LNG-fired plant at Bogue in Montego Bay, and they are about to start development on another gas facility in St Catherine. In both cases, New Fortress invests separately in the gas-supply infrastructure, while JPS develops the power plant.
The marine terminal and gas power plant development at Old Harbour in St Catherine is to get off the ground “in a couple of weeks,” said Tomlin, the president and CEO of JPS, on Friday.
JPS secured funding locally for its plant, while New Fortress planned to finance the project themselves with cash rather than debt, Tomlin, who noted that the acquisition by Softbank means “they will have a lot more cash”.
New Fortress did not return Gleaner calls up to press.
Last Wednesday, the two parties jointly announced a US$3.3 billion deal for Softbank of Japan to acquire New York-based Fortress Investment Group. Fortress, which is co-chaired by Pete Briger and Wes Edens, said its senior executives would remain with the company.
“I am in dialogue with Wes Eden,” said Tomblin. “I am assured that this acquisition doesn’t harm the project and that also he is excited about this deal; and so too the members on the ground who work for New Fortress,” said Tomlin.
Asked about any other implication to Jamaica, she said there would be “absolutely none”.
New Fortress plans to build and operate a liquefied natural gas marine terminal and pipeline within the Portland Bight area or close to the Goat Islands, according to the environmental report released last year.
The project will be executed through affiliate NFE South Holdings Limited. The marine terminal will feed gas to the 190MW plant that JPS will be developing at Old Harbour.
However, Dennis Chung, the chief executive officer of the Private Sector Organisation of Jamaica (PSOJ), says if Government wants to divest its shares in JPS it might make sense, noting the valuation of the shares would be based on future prospects of the business.
Governor General Sir Patrick Allen, delivering the Throne Speech in Parliament on February 9, said the Government will this year begin the process of privatising its minority shareholding in JPS.
“The Government will take steps to ensure that there is broad retail and institutional participation and Jamaican owners in the divestment process,” he said, adding that an enterprise team will be appointed to lead it.
JPS is primarily owned by Marubeni of Japan and Korea East West Power Company, each of which holds 40 per cent interest.
Paulwell said the Government’s expressed plan to offload its shares in the power utility “doesn’t mean it’s going to happen as we have seen from last year’s Throne Speech”.
Notwithstanding that, “I am opposed to the divestment of the shares at this time because we would get the least possible value on those assets in JPS, largely because everybody is aware that 290 megawatt of JPSCo capacity will become scrap metal in a matter of time when the new 190MW plant is established.”
The 190MW plant to which he referred is the proposed gas-fired power station at Old Harbour Bay, St Catherine, on which construction is slated to start in early March.
“For me, the Government should participate in the new 190 (megawatt) plant which will preserve and enhance its value, and after that plant has been established, that’s the time you can think about selling the shares,” Paulwell told the Financial Gleaner.
“If you were to sell the shares now, we would end up not getting much because we owe JPSCo so much money now; so nothing will go to the government’s coffers, because any money we make from the sale will have to go and clear our debt with JPS,” he said.
He noted that the Government currently owes the JPS more than $2 billion in bills, including for street lighting.
“So if it were to sell the shares now it will be at a depressed value. The net effect would not mean anything coming into Government’s coffers,” said the energy spokesman.
What the Government needs to do is to participate fully in construction of the 190-megawatt plant, Paulwell said. “It will cost them about US$20 million in equity,” he said, noting that for that plant, the JPS has a 20-year power purchase agreement which guarantees that project a significant rate of return on the investment for 20 years.
“That is one of the safest investments you could make. Why would the Government not be a part of that? And at that time it could contemplate on how to dispose of its shares,” said Paulwell.
“And, in any event, if it’s going to do that, the Jamaican people must be the people to whom those shares are sold,” he said.
Chung indicated that in making the decision to divest its shares in JPS, the Government must know what is happening.
He said he did not see it as a big deal to divest the shares and make Jamaicans a part of the ownership.
Referring to Paulwell’s opposition to the sale at this time, Chung noted that valuation of the shares would be done based on what is expected in terms of business.
“If you know, for example, that you have a contract to sell twice what you sold this year, then you can build that knowledge into the valuation,” he said, adding that the valuation would also be based on future prospects.
He noted that shares are traded at a price-earnings ratio and sometimes can be valued at many times more than the book value of an entity.
“So it’s based on information that people have,” he said, adding that if investors believe they are going to make a killing “out of this thing, going forward, then you value the shares accordingly”.
The Jamaica Public Service Company (JPS) is preparing for a battle with the Government over any attempt to review its operating licence.
The JPS was put on its guard last Friday when Government senator and chief technical adviser to the finance minister, Aubyn Hill, declared that the Andrew Holness-led administration is obliged to review the licence of the light and power company because of threats to the Jamaican economy.
Opening the State of the Nation Debate in the Senate, Hill called for a review of the modified licence issued to JPS last January, because it “seems to be quite opposed to the interest of Jamaicans”.
“We have to look at that licence carefully [and] as a new Government, we’re obliged to,” Hill told his parliamentary colleagues.
But Kelly Tomblin, the president and chief executive officer of the JPS, in a quick response, rejected Hill’s reasons for questioning the changes to the licence and expressed the hope that his comments would not suggest that Holness will shred the contract.
“I’m sure, similar to how the Government has continued on the framework for fuel diversity, that this Government certainly wouldn’t suggest that a licence negotiated in good faith, in which the JPS has made investments, would be negated by a subsequent government,” said Tomblin.
“Surely, he’s (Hill) not suggesting that,” added Tomblin.
In his Senate presentation, Hill argued that he was making the call from his position as a senator.
“Because I may have some influence on policy, I do not lose my right as a senator to bring up independent issues. My position is quite different from a recommendation, and if I gave a recommendation I probably would not be speaking on it publicly,” said Hill.
The international banker argued that the replacement of the price cap regime with the revenue cap in the licence “could dampen economic growth” because JPS’s growth is no longer tied to that of the economy.
“A good argument can be made that the revenue cap approach blunts any incentive on JPS’s part to support the expansion of renewable sources of energy or to improve efficiencies in their current business,” said Hill, who is the chairman of Innovative Renewable Energy & Electronics Limited.
He said giving the JPS the right of first refusal to replace generating plants due for retirement entrenches the company’s near-monopoly and is inconsistent with international standards and Jamaica’s national energy policy.
Tomblin rejected those claims, arguing that Hill was making “inaccurate conclusions”.
“We negotiated with the Government for our licence amendments that we believe serve the country. We have about 31 guaranteed standards that are monitored by the Office of Utilities Regulation (OUR).
“Our overriding goal is to support economic growth. This (Hill’s arguments) requires a more fulsome discussion with the utility,” said Tomblin.
Hill’s call came days after the OUR announced new regulation which should give it more power to monitor the operations of the JPS and other entities which generate or supply electricity.
The regulation will govern the operational standards and established procedures for handling the generation, transmission, distribution, supply and dispatch of electricity across the island.
According to the OUR, the regulation adopts five grid codes, which are generation, transmission, distribution, supply, and dispatch.
“The codes, which were finalised in August 2016, have been developed in parallel, and are designed to be used in conjunction with each other,” said the OUR.