Energy Minister Phillip Paulwell – file photo.
Jerome Reynolds, Gleaner Writer
Energy Minister Phillip Paulwell has indicated that yesterday
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
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.
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Opposition Spokesman on Energy, Gregory Mair, wants an independent audit of
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.
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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.
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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
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.
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The price of oil is dropping on fresh concerns about Europe‘s economy.
Benchmark oil fell US$1.44 on Friday to US$91.53 per barrel in New York. Brent crude, which is used to price international varieties of crude, was down US$1.42 to US$106.38 in London. A decline would be the first after seven straight gains.
The main focus for traders was Spain, where the government predicted that the country’s recession will extend into next year and the region of Valencia said it needed help from the central government to pay its bills. But Germany was also a concern as finance officials there said growth in Europe’s strongest economy likely slowed somewhat in the second quarter. Meanwhile, in the UK, the government said it had to borrow more than expected last month.
Europe’s lengthy battle with a massive government debt crisis has affected industries in other countries, such as the U.S., that do business there. It also has cut demand for oil and other energy products.
Oil had risen about 10 per cent since July 10 on concerns that renewed tensions between the West and Iran could result in a disruption of oil supplies from the Persian Gulf.
“After the long run-up in prices we’ve had the last 10 days or so, I think (events in Europe) kind of reminded people that the demand picture is still not very rosy,” said Michael Lynch, president of Strategic Energy & Economic Research.
Meanwhile, natural gas prices hit the highest level since early January as businesses and consumers cranked up air conditioning systems to stay cool in the hot weather. Natural gas rose three cents to US$3.01 per 1,000 cubic feet.
The price of natural gas fell below US$2 for the first time in more than a decade in April after a production boom boosted inventories. At the same time, a mild winter kept demand in check. The cheaper prices prompted many utilities to switch to natural gas from coal to fuel their generators.
In other energy trading, heating oil fell 3 cents to US$2.91 per gallon and wholesale gasoline prices fell 3 cents to US$2.91 per gallon.
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ENERGY
Now Mr Speaker, I turn to Energy.
State of Jamaica