There’s more worrying sign that Jamaicans will be seeing higher prices at the pumps.
Oil prices rose for a second straight session yesterday, closing at the highest level in 11 weeks, as U.S stock markets rallied to a three-month high and traders eyed ongoing turmoil in the Middle East.
The gains extended Friday’s strong rally after U.S. jobs data calmed concerns about a slowing economy and on hopes that Europe can address its debt crisis.
In London, Brent September crude rose 61 cents to settle at 109 dollars 55 cents, the highest close since May 16.
U.S. September crude also closed higher for a second straight session, gaining 80 cents at 92 dollars 20 cents, the highest since July 11.
The prices of
The Jamaica Public Service Company (JPS), is reporting that a lightning strike affected the Duhaney substation and possibly other areas, shortly before midnight Sunday.
This resulted
Charlene Stuart, Staff Reporter
Several houses remain without electricity following a nationwide power outage early yesterday morning.
ELECTRICITY conservation may yield higher savings than including liquefied natural gas (LNG) in the energy mix.
High capital requirements to set up infrastructure, heavy supply contract obligations and fierce competition among buyers of LNG could result in little savings, according to a recent World Bank report.
|
An LNG offshore terminal designed for unloading, storage and regasifying liquefied natural gas. High capital requirements to set up infrastructure, heavy supply contract obligations and fierce competition among buyers of LNG could result in little savings, according to a recent World Bank report. |
Jamaica hopes to save US$300 million ($27 billion) annually from switching from oil to gas.
But that’s if it can get cheaper LNG.
On the other hand, lowering electricity consumption by 10 per cent could save $13.8 billion a year. And using fatter power lines as well as switching off transformers in periods of low demand could save another $5.7 billion.
The Government has initiated a US$90 million ($7.8 billion) energy-saving programme aimed at improving efficiency across the public sector.
Electricity consumption in the public sector is set to exceed $13.4 billion this year, but the new programme is expected to save $3.2 billion annually.
The first phase, which will cost US$20 million, is to be implemented over the next four years.
Meanwhile, local distributor Jamaica Public Service Company (JPS) has already ordered a 360 megawatt electricity generation plant that will be fired by natural gas. And the LNG Steering Committee last month selected Samsung C&T to build a floating regasification and storage facility in Old Harbour, St Catherine.
Both have set 2014 as the deadline to introduce LNG in Jamaica.
The World Bank report identified Haiti, Jamaica, and Barbados as the countries within the region with the greatest potential for LNG consumption.
The Eastern Caribbean Gas Pipeline Company (ECGPC) is well advanced in plans to build a 300-kilometre natural gas pipeline to connect Trinidad to Barbados.
But importing natural gas, which is cheaper than oil, is not without its constraints.
The substantial investments in pipelines and receiving terminals, as well as tankers and other infrastructure, will have to be amortised over many years and recovered from end-user prices.
Moreover, “gas supply contracts normally include substantial take-or-pay obligations covering 80 per cent or more of the contracted volume”.
“As a result, the commercial structure of import projects can be highly complex, and the credit capacity of buyers a key limitation,” wrote World Bank energy specialists. “In addition, competition for long-term LNG supply is intense, and most LNG is traded at prices that, unlike in the United States, are closely tied to those of oil or petroleum products.”
Essentially, the World Bank believes that until supply increases, buyers may find that natural gas does not generate substantial cost savings compared to oil.
At the same time, the energy specialists also said that for creditworthy buyers who are able to “aggregate markets of sufficient size to realise economies of scale, natural gas can bring about important diversification in fuel supply”.
The experts did not say how big the demand would have to be to benefit from economies of scale.
The Government has approved the establishment of the Jamaica Gas Trust (JGT), which will handle the purchase and sale of LNG in Jamaica. It plans to capitalise JGT with at least US$100 million of cash, in addition to standby letters of credit totalling another US$100 million from the end users, in order to establish its creditworthines.
For the time being, Jamaica consumes just under 20 million barrels of oil annually. Last year, it cost the country US$2.4 billion to import.
The World Bank suggested that Jamaica could cut 1.7 million barrels out of its import bill if users improved the efficiency of their energy use by 10 per cent.
Lower energy use results in lower peak and non-peak demand, which results in a reduction in the generation capacity and transmission and distribution assets needed to supply the system.
“Measures to reduce peak demand tend to be more popular with utilities than energy-efficiency measures per se since the former reduce their costs while the latter also reduce their income,” said the report.
More specifically, energy-efficiency measures would include the promotion of compact fluorescent lamps (CFLs), instead of costly incandescent lights, and would encourage consumers to replace outdated and inefficient equipment and appliances.
Lack of access to commercial financing has also been a major impediment to expanding the market for energy-efficiency retrofitting projects in Latin America and the Caribbean.
“A step-by-step process is needed to familiarise banks with this market to reduce perceived risk, which can enable the adaptation of loan-evaluation criteria and possibly the design of appropriate instruments,” said the World Bank.
On the supply side, the energy specialists at the multilateral agency believe Jamaica can save another 700,000 barrels of oil a year by reducing electricity losses.
Increasing the cross-sectional area of lines and cables that make up the national grid, results in decreased losses, which leads to a direct trade-off between the cost of losses and capital expenditure.
The level of fixed losses in a transformer depends, in large part, on the quantity and quality of the raw materials in the core.
“Transformers with more expensive core materials, such as special steel or amorphous iron cores, incur lower losses.,” said the report. “Thus, in selecting transformers, there is a direct trade-off between capital expenditure and cost of losses.”
The biggest challenge in reducing losses comes from commercial losses, which occur for a variety of social, economic, and cultural reasons.
Such losses
JAMAICA’S energy and financial sectors are two of the areas that are to be offered assistance by the United States Government in the immediate future, US Ambassador Pamela Bridgewater said Wednesday.
In an exclusive interview with the Jamaica Observer, Ambassador Bridgewater reflected on the close relationship between the two countries as the nation marks its 50th anniversary of Independence, and indicated that the partnership would continue to deepen.
|
An artist sketches the portrait of a young boy at the Freedom Festival at Emancipation Park in Kingston, on Wednesday. (Photo: Marlon Reid) |
She said that the development of renewable energy sources such as wind and sun could be an area in which the US would partner with Jamaica.
“We know there are problems with energy sources in Jamaica and the importance of trying to find new sources of energy to take advantage of the natural elements in Jamaica
Opposition Spokesman on Energy, Gregory Mair, wants an independent audit of
Barring reversals at appeals, for which the administration is likely to lack great enthusiasm, Justice Bryan Sykes may have played a fortuitous hand in favour of Phillip Paulwell, the energy minister.
For Justice Sykes, in his ruling on Monday, broke, at least for now, the electricity supply and distribution monopoly of the Jamaica Public Service Company (JPS) – a matter seemed set to be a battle of attrition, if not a noisy war, between Mr Paulwell and the light and power company.
Whatever may be the Government‘s strategy going forward, JPS, as has been indicated by its lawyers, is not about to meekly acquiesce to Justice Sykes’ decision. But it is a signal for both sides to recalibrate their conversation and settle on a new, serious and mature discourse on Jamaica’s energy future.
The background to these developments is the 20-year (subsequently extended by seven years) licence that was granted to JPS in 2001 by the Patterson administration, of which Mr Paulwell was a Cabinet member, for the exclusive distribution of power.
Breaking that monopoly has been a mantra of Mr Paulwell since January, following the People’s National Party‘s return to office after a four-year hiatus on the opposition benches. At upwards of US$0.40 per kilowatt-hour, Jamaican consumers face among this region’s highest electricity rates. It is conventional wisdom that the cost of power is a major drag on the competitiveness of the island’s economy. Mr Paulwell feels competition would drive down costs.
He has support among Jamaican consumers who largely blame JPS directly for this state of affairs. They see JPS as neither customer-friendly nor efficient, but able to leverage its monopoly to remain profitable.
Two consumer groups and an individual manufacturer brought a class-action suit challenging the minister’s authority (Bobby Pickersgill at the time) under the Electric Lighting Act to have granted JPS an exclusive licence for the transmission and distribution of power.
Justice Sykes rejected the claimants’ argument that under Section 3 of the law, there was no provision for a single supplier of electricity, and that the minister, therefore, had no power to issue an all-island licence. What was wrong, the judge argued, was the pre-emption of the opportunity of other potential licensees.
The problem of the current licence
Said Justice Sykes: “The statute does not give the power to the minister to grant a licence on terms which effectively bar any other applicants from being considered. This, in the opinion of the court, is the problem of the current licence to JPS. The minister has committed himself and his successors to a situation in which there is no possibility of change for the required 20 years (which has been extended), even if new technology or a new company has a better and cheaper way of doing what JPS is doing.”
That, effectively, is the argument of the anti-JPS lobby – and Mr Paulwell.
This week’s ruling does not immediately affect the JPS’s ability to operate, as its licence, but for its exclusivity, remains valid. Further, Mr Paulwell has no other application on his desk. Nor are there protocols for interconnection on the JPS grid. Clearly, other potential players will be emboldened by the ruling. They will receive encouragement from consumers.
It is time for constructive engagement.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
http://jamaica-gleaner.com/gleaner/20120801/cleisure/cleisure1.html
Customers of the Jamaica Public Service (JPS) are to be repaid for a fuel overcharge by Petrojam this month.
The Office of Utilities Regulation (OUR)