Jamaica Energy Partners (JEP) has added its new 66 megawatt (MW) power plant at West Kingston to the national grid. Conduit Capital Partners, the US-based parent of JEP and a private equity investment firm focused on energy in the region, said it began “commercial operations of (its) West Kingston Power Project in Jamaica”, yesterday.

The new plant is expected to reduce the overall amount of energy lost to heat by the numerous generators that supply the power grid by a little more than 0.5 per cent.

The new Jamaica Energy Partners plant will produce 66 megawatts of power for the capital.

But Kingston will still have to import some 60 MW from other regions as the number of plants operating in the capital city fall short of the 340 MW peak demand.

JEP’s third plant to come into operations brings the independent power provider’s capacity up to 190 MW, and Kingston’s installed generation to 286 MW.

Plans on JPS’s drawing table include the construction of a US$475-million, 100-megawatt petcoke fuel plant at Hunts Bay, Kingston. But that is part of the second phase of a liquefied natural gas (LNG) project, which will first see JPS build a US$600-million, 360-MW plant in Old Harbour, St Catherine, running to 2014.

JEP broke ground on the US$126-million West Kingston power plant in December 2010. The new system is powered by engines that can run on natural gas, but will start operations using heavy fuel oil.

Jamaica is still a way off from using natural gas, having just last week announced the preferred bidder — Samsung C&T — to build a Floating LNG regasification and storage facility.

The West Kingston plant will sell energy under a 20-year power purchase agreement with Jamaica Public Service Company, the national utility. It is expected to create 60 permanent jobs, and was financed by the World Bank’s International Finance Corporation.

Conduit reacquired Jamaica Energy Partners and the right to develop the West Kingston Power Project through the firm’s Latin Power III Fund in mid-2009

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On the matter of energy, Gregory Mair has hit upon the right idea. Jamaica should be catholic in its approach.

We should not rule anything out, including, Mr Mair told fellow legislators last week, nuclear energy.

That last point is bound to be controversial, as it was three years ago when the Jamaica Labour Party (JLP), of which Mr Mair is a member, formed the Government and the case for nuclear energy was being pushed by the then Opposition. The suggestion was knocked down by then prime minister, Mr Bruce Golding.

The then proponents of nuclear power, Mr Phillip Paulwell and Mrs Portia Simpson Miller, are now, respectively, the minister of energy and prime minister.

They, clearly, are in a position to reopen and expand the debate. But, more important, Mrs Simpson Miller and Mr Paulwell bring urgency to the process of implementing a mix of available and cost-effective measures to deal with Jamaica’s energy crisis.

Indeed, the Government’s fiscal constraints apart, the cost of energy is perhaps the biggest drag on the Jamaican economy. At US$0.42 per cent per kilowatt-hour, the cost of electricity is not only substantially more expensive than most other countries in this region, but among the largest cost components of Jamaican firms. Expensive energy weakens their competitive positions.

Up to now, we have perceived the solution largely in terms of natural gas, to replace more expensive oil, to fire proposed, more-efficient power plants.

Indeed, the Jamaica Public Service Company (JPS), the light and power company, won a tender for a 360-megawatt power plant to be fired, primarily, by gas.

Further, the Government has just announced that Samsung, the Korean company, has emerged as the preferred bidder for an LNG storage and regasfication facility. It, however, remains unclear, who, and by what arrangement, will supply LNG for that facility.

JPS has projected that the use of natural gas will lower electricity by around 30 per cent, which some analysts say may not be enough to provide a competitive fillip to Jamaican firms.

However, with a new plant, if it is built, and other conversions, no more than 70 per cent of Jamaica’s existing power requirement will be met by natural gas.

Explore cheaper fuels

There is an opportunity, therefore, to explore other cheaper fuels to cover the rest of the island’s power needs and future growth. We agree with Mr Mair that nothing, in this regard, ought to be off the table.

The most immediate possibility is coal, a cheaper fuel than LNG, but with environmental issues that new technologies have substantially lessened. Jamaica must also be aggressive on renewables, such as solar and wind power, doing everything in its capacity to enhance the stability and feasibility of such technologies for the domestic environment.

Not too far in the future also, nuclear power, we believe, should be an option for Jamaica. The idea of small nuclear power reactors of the type that would be useful for a country like Jamaica was not so long ago being viewed with scepticism.

Recently, the United States announced the availability of US$450 million to support the engineering and licensing of small reactors. In this regard, the Americans are playing catch-up. But theirs is an imprimatur that Jamaicans don’t usually ignore.

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.

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THE Supreme Court yesterday ruled that the all-island licence held by the Jamaica Public Service (JPS) is not exclusive, paving the way for other players to enter the market for distribution of electricity.

The ruling by Justice Bryan Sykes was immediately hailed by Hugh Wildman, attorney for the claimants, as a major victory. “It is a major victory, because the claimants have been able to break the monopoly licence,” Wildman told reporters following the handing down of the ruling.

JPS head office in Kingston.

“What the court is saying is that the exclusive nature of the licence is illegal; that is what this judgement has done. We have succeeded in the main declaration,” said the attorney.

Yesterday, Justice Sykes told the court that the minister had the right to grant a licence to a single light and power provider to cover the entire island, but that the minister does not have the power to grant a licence on terms that preclude him from considering any other applicant. “That is not what Section 3 [of the Electric Lighting Act of 1890] in my view, intended. The exclusive licence to JPS did that,” said the high court judge.

Said the judgement: “The minister does not have the power to grant a licence upon terms that bars the possibility of any other person entering the market for transmission of electricity. The term of JPS’ licence granting it exclusive right to transmit electricity is not valid.”

Michael Hylton, QC, who appeared for the JPS, told the Jamaica Observer that his client would be appealing Justice Sykes’ ruling.

The claimants

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.

radio@gleanerjm.com

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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