There is never uncertainty when Shelly-Ann Fraser-Pryce rockets from the blocks in a 100-metre dash. Usain Bolt and Yohan Blake may get off a bit behind the competition, but they accelerate with such command that the prize is usually theirs.

The same, unfortunately, cannot be said for how the Jamaican Government manages the country’s affairs, exemplified this week by the confusion over energy policy.

Energy Minister Phillip Paulwell had long since declared his Government’s intention to break the monopoly in transmission and distribution (T&D) of electricity. That seemed to be settled policy. On Tuesday, Mr Paulwell was contradicted by Dr Carlton Davis, a senior adviser to Prime Minister Portia Simpson Miller. He favours a “regulated monopoly” and suggests that Mr Paulwell’s pronouncements were, for the Government, not conclusive.

Then, Prime Minister Portia Simpson Miller tiptoed between the raindrops. The upshot continued, if not deepened, uncertainty.

PROHIBITIVE COST

The policy tug of war might have been considered just another bit of Jamaican political theatre, but the fact is that the issue at hand is of great importance and urgency. There is clear consensus that, bad economic management apart, the high cost of electricity is the greatest constraint to the competitiveness of Jamaican firms and to growth in output.

Jamaicans pay upwards of US$0.40 per kilowatt-hour (kWh) of electricity, higher than the rate in most of its regional economic competitors. Policymakers have talked much, over many years, about strategies to reduce the cost of energy. They have achieved little.

Recently, though, we appeared to have been getting somewhere, with a plan to shift from expensive oil to cheaper fuels to generate power. The idea is to start with natural gas, although coal remains in the mix.

Several months ago, the Jamaica Public Service Company (JPS), the light and power provider, and its owners won a bid to establish a 360-megawatt power plant that is to be fired by natural gas. The Government is also about to rule on bids for a liquefied natural gas storage and regasification facility.

The projection is that using cheaper natural gas to fire this power plant, combined with its greater efficiency, will lead to a reduction in the cost of electricity of between 30 per cent and 40 per cent.

Paulwell’S AMBITIOuS TARGETS

At the same time, Mr Paulwell has been loudly promoting the break-up of the JPS’s monopoly on the grid, arguing that this could deliver the 60 per cent drop in the price of power that he has set as his benchmark.

The minister’s critics, however, argue that the energy minister’s focus on the power company’s T&D monopoly has introduced uncertainty into its operations – exacerbated by a recent court ruling against the exclusivity of the JPS’s operating licence – especially with the company being in the market for capital to finance the gas-fired plant.

The attention, critics feel, should be on fuel choice. Dr Davis agrees. He believes that Jamaica’s electricity market, with peak demand for under 700 megawatts, is too small for a competitive free-for-all.

The statement from the prime minister’s office acknowledges the market uncertainty engendered by the liberalisation debate and the need for continuity “in the short run”. But it makes no policy commitment.

We wonder what would have been the result of Jamaica’s record run in the men’s 4x100m relay at the Olympics if there was such uncertainty in the team.

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Energy Minister Phillip Paulwell (left) is seen here with JPS chairman Hisatsugu Hirai in January 2012 at a reception hosted by Hirai. - File
Energy Minister Phillip Paulwell (left) is seen here with JPS chairman Hisatsugu Hirai in January 2012 at a reception hosted by Hirai. – File

Power provider, Jamaica Public Service Company (JPS), disclosed depressed quarterly profit of half-billion dollars on Wednesday but avoided accounting for the pending loss of its monopoly status amid court appeals and talks with the Government over securing its exclusive licence.

JPS made net profit of US$5.8 million (J$528m) at second quarter June 2012, down 41 per cent compared to year-earlier levels.

The company’s reduced profit resulted from a 44 per cent spike in finance costs to US$12.6 million compared with a year earlier.

Directors Hisatsugu Hirai and Fitzroy Vidal said in a joint note that it was too early to quantify the impact of the Supreme Court decision that set aside JPS’s monopoly but did not invalidate the licence.

“The outcome of this court decision, which the company intends to appeal, cannot be determined with certainty at this time and no provision has been made in the financial statements regarding this matter,” stated the directors on behalf of the board.

Hirai is chairman of the power utility.

Earlier this week, JPS president and CEO Kelly Tomblin said the company could see its US$450 million of long-term loans placed in default if it loses the legal appeal to keep its all-inclusive licence and if the Jamaican Government refuses to amend the language in the agreement.

But it also means that the financing of the near US$620-million planned natural gas power plant is virtually on hold pending the appeal. JPS’ loans were premised on its distribution monopoly arising from its licence, which runs to year 2027.

For the half year, JPS made net profit of US$7 million, or one-third the HY2011 results of US$21 million, despite an uptick in revenue to US$581 million.

Last month’s Supreme Court ruling invalidating JPS’ monopoly on distribution of electricity was a victory for claimants Dennis Meadows, Betty Ann Blaine and Cyrus Rousseau who challenged the exclusive 20-year licence granted by the then minister of mining and energy to the JPS in 2001.

Electricity charges in Jamaica remains one of the highest in the region due to its reliance on expensive oil, which has tripled in price since 2000.

JPS’ fuel bill topped US$407 million at half year, rising by more than 10 per cent year-over-year, but was flat at US$201 million in the second quarter.

business@gleanerjm.com

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The Jamaica Public Service Company (JPS) is reporting success in its efforts to reduce electricity theft in St. Catherine which is one of the parishes with a high rate of theft.

The JPS says in July, it executed 10 operations in which 1,037 illegal connections were removed.

The JPS also says its teams discovered 61 cases of meter irregularities, including the use of meter bypasses and other devices.

According to the company, arising out of these operations, 17 persons were charged with illegal abstraction of electricity.

The JPS has committed US$30 million this year to the fight against electricity theft.

editorial@gleanerjm.com

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Energy Minister Phillip Paulwell - File photo
Energy Minister Phillip Paulwell – File photo

The government has announced that energy Minister Phillip Paulwell will shortly be making a statement on his discussions with the Jamaica Public Service Company Limited (JPS).

The talks with the JPS became critical after the Supreme Court ruled recently that the licence granting the company a monopoly on the transmission and distribution of electricity was not valid.

Yesterday, the Office of the Prime Minister dismissed concern that there was a conflict within the government regarding the liberalisation of the energy sector.

Questions were raised after the head of the liquefied natural gas steering committee, Dr Carlton Davis, told a