KINGSTON, Jamaica – United States President Barack Obama says he is pleased with the level of talks between himself and Prime Minister, Portia Simpson Miller this morning, on a range of issues including security, energy and economic growth.

In his statement issued at the Office of the Prime Minister Wednesday following a bilateral meeting, the US president said energy was one of the main areas discussed as well as his country’s role in helping Jamaica and other Caribbean states reduce costs associated with it.

“People in the Caribbean despite having less resources, are paying significantly higher prices for energy. If we can lower those costs through the development of clean energy and increased energy efficiency, we could release a whole host of additional investment and growth. There are going to be a whole host of areas where the US can be helpful,” he said.

The commitment comes, even as Venezuela, backed by 29 countries, including four Caricom states, signed a letter which it issued to the United States embassy in that country, and which was carried in one local newspaper, calling on the president to withdraw the executive order which the White House issued earlier this month, labelling the oil-rich South American country a threat, and imposing new sanctions against it.

A number of Caricom countries, including Jamaica, now enjoy preferential arrangements through the PetroCaribe Agreement, under which they are allowed to buy oil from Venezuela, and repay a percentage of the cost up front.  In Jamaica’s case, the balance must be repaid over 21 years, at one per cent interest. But, the International Monetary Fund (IMF) has cautioned such countries that there could be a negative impact on their economies if Venezuela’s external liquidity problems escalate.

In the meantime Jamaica’s prime minister said within the context of the government’s extended fund facility with the IMF, the leaders had “explored additional ways of imploring our trade and economic relations”, including in the area of energy security and renewable energy.

She also pointed out that one of the outcomes of the visit was the signing of a statement of intent between the countries, to pursue the development and deployment of energy-related technologies.

“We aim to encourage increased bilateral trade, boost the development of emerging technologies and industries and pave the way for future innovation in energy-related fields,” she said.

The US President leaves the island later today for the Seventh Summit of the Americas, in Panama.

Alphea Saunders

The state-owned National Water Commission (NWC), Jamaica’s largest consumer of electricity, said that savings from its energy bill are being passed on to consumers.

Lower oil prices has resulted in cheaper electricity bills from Jamaica Public Service Company. NWC’s monthly bill has fallen to about $400 million at present.

“Yes, the NWC has been positively impacted by the reduction in oil prices. Our bills from JPS have gone down to just over $400 million per month, whereas before it was hovering above $500 million per month and in some instances it had exceeded $600 million,” Charles Buchanan, public relations manager at the NWC told Sunday Business.

Buchanan said that for most of calendar year 2014 the NWC, and by extension its customers, would not have benefited from the reduction in energy prices because for most of that time electricity rates were still very high. However, both the company and consumers started seeing the benefits since November 2014.

Buchanan explained that there is a mechanism built into the NWC’s tariff which is adjusted based on changes in the company’s three most significant costs: the cost of energy based on the electricity bills, the foreign exchange rate given that about 70 per cent of its operations involves purchases of items such as chlorine, fittings and meters; and the Consumer Price Index, which relates to other inputs.

“Those three things together are considered under the Price Adjustment Mechanism which customers see on their bills as PAM,” he said.

“Let’s assume that they are all going in the same direction, whenever they change it will cause customers’ bills to change in that same direction.”

Buchanan said each of the three elements are weighted by the Office of Utilities Regulation and that the size of their adjustments would determine the impact on PAM.

“So let’s say the energy price is going down and by itself would result in a reduction in the PAM, but the CPI and the exchange rate are going in the opposite direction, depending on how significant the movements are, whether the exchange rate changes are small or great or whether the energy cost reduction is small or great, as well as the relative weighting of those components it will determine whether PAM comes out on the net as a positive or negative movement,” he said.

Significant Movement

“But I can tell you that the movement in the energy prices has been significant enough to have overcome any other contrary movement in the CPI and or foreign exchange rate over recent months. As a result, for the last few months the price adjustment mechanism for the customers has been beneficial to the customers in the sense that it is represented on their bills as a deduction from their water charges,” he added.

NWC has some 1,000 locations across Jamaica that require electricity.

In 2011, its annual bill to JPS was $5.503 billion; $5.904 billion in 2012; $6.285 billion in 2013, and $6.464 billion in 2014.

“In all instances there was a continuous climb in the dollar value of the energy costs,” said Buchanan.

However, the NWC has put in place energy management initiatives which resulted in its kilowatt per hour usage hovering at around the same place or slightly declining.

For example, in 2011 the NWC’s kilowatt/hour usage of energy was 197.17 million, but it moved downward to 188 million in 2014. “This is despite the fact that we had put in a number of new water supply and waste water systems,” the NWC spokesman said.

Buchanan adds that there was a four per cent decrease in the NWC’s energy consumption in 2014 when measured against 2011. Consequently, the commission was expecting a four per cent reduction in its electricity bill, but instead there was a three per cent increase in the energy cost to the NWC over the period.

Asked about the percentage reduction to customers over the past three months, Buchanan said it was difficult to give a figure due to PAM being a combination of three elements.

“It’s a little complicated to give an exact figure … but definitely the bills have shown declines,” he said.

Jamaica Gleaner

 

Despite recent hurdles, the Kelly Tomblin-led Jamaica Public Service (JPS) is indicating that it is determined to increase its contribution to the burdened national grid and help stave off threats of power outages in the years ahead.

The light and power company has shrugged off the shock of the Office of Utilities Regulation’s (OUR) disapproval of its request for a rate hike and is moving ahead with plans to erect a 190-megawatt (MW) power plant.

Shedding light on the work of the Electricity Sector Enterprise Team (ESET), chairman Dr Vincent Lawrence told journalists yesterday that his group has its eyes firmly set on the addition of 380MW to the national grid by 2017.

Addressing a press conference at the Office of the Prime Minister, Lawrence revealed that Cabinet on Monday approved the construction of the 190MW power plant along with two others to increase generating capacity to the island by 380MW.

“The JPS has exercised its right of first refusal to replace obsolete generating capacity by the construction and installation of a 190MW gas-fired, co-generation power plant at Old Harbour,” said Lawrence.

He said the JPS had agreed to a power tariff of not more than US12.89 cents to facilitate the construction.

“ESET has recommended and Cabinet has given approval for a letter to the JPS authorising the development of 190MW of generating capacity and the construction of a terminal in Old Harbour,” said Lawrence.

He disclosed that Cabinet also approved the construction of a 140MW gas-fired, co-generation plant by Alpart Venture and another 50MW for Jamalco Venture.

Presenting an update to journalists during a press conference after the submissions were made to Cabinet yesterday, Lawrence said the JPS would also be forging ahead with the upgrading of its Bogue plant, which generates 50MW, which is not factored into the added generating capacity.

For Bogue, Lawrence said the proposal is to convert the feed stock to gas, making the retrofitted power plant a 115MW gas turbine co-generation power plant.

US$15 MILLION REQUIREMENT

Lawrence pointed out that the JPS requires capital expenditure of US$15 million for the conversion of the Bogue power plant to be completed by the end of 2015.

He disclosed that ESET had been forced to delay its due diligence on the Jamalco project because the new majority partner, the Noble Group, is finalising its own analysis of the project in order to decide whether it will be making amendments.

Lawrence said Cabinet also agreed with ESET to subject the existing co-generation proposal on the 50MW of coal-fired generation at Jamalco to further analysis before it provides more definite recommendations on the project.

The new principals of Jamalco have promised that their position will be forthcoming by the end of the month.

Lawrence said ESET has continued with a number of stakeholder consultation meetings and discussions with key players in the electricity market.

These comprise the JPS; the OUR; the bauxite alumina sector (Jamalco and Alpart); the Ministry of Science, Technology, Energy, and Mining; the Inter-American Development Bank; and Independent Power Producers (IPPS).

Lawrence said ESET continued to receive assistance from the World Bank, which has provided expertise in analysing technical and financial submissions from JPS, Alpart, and Jamalco, which are planning to build, own, and operate the proposed power plants.

He said ESET had also conducted assessments of the gas market, including trends, costs, shipping size, among other variables, and has conducted comparative studies of electricity policy and framework across the region.

Among other recommendations approved by Cabinet are the review of the Amended and Restated All-Island Electricity Licence (2014), with the goal of facilitating viability, reliability, and investment in the electricity sector.

gary.spaulding@gleanerjm.com

Jamaica Gleaner

Jamaicans to bear US$65m Bogue conversion cost, says JPS

Light and power provider, the Jamaica Public Service Company, yesterday warned that customers could be forced to shoulder more than five times the US$15-million price tag they are already set to underwrite for the conversion upgrade of the Bogue plant in St James.

Consumers will fork out a total of US$15m, through a special fund reflected in their bills, over the next year to pay for the changeover of the plant from diesel oil to gas, this after the Office of Utilities Regulation (OUR) approved a cess for the capital works. However, the total cost of the conversion is expected to be about US$80 million.

“The pipelines, as well as storage facilities, represent an investment by the fuel suppliers, who will be recovering the money they have spent for the infrastructure in the cost of fuel,” John Kistle, the senior vice-president for generation and project development at the JPS, told The Gleaneryesterday.

According to Kistle, it would be erroneous to think consumers would automatically benefit from the cheaper fuel soon, as infrastructure costs would be a significant add-on.

“Some of the things we have heard of late is [that there will be a] very short payback and that is based just on the difference in fuel sources. But it is not a short payback given the significant capital required for these terminals and pipelines and the conversion. This is not a US$15-million conversion; it is more expensive when we consider all of the other infrastructure that needs to be put into the island,” Kistle said.

Kistle said further that there are three critical things need to happen in order to convert Bogue to gas. He said first there needs to be a mechanism to bring gas into a terminal and get it on to land. That, he said, has to be a ship-receiving terminal or some method of transporting gas from the ships into a facility that can discharge the gas in either liquid or gas form to the site. The other steps involve transporting the gas from the terminal at the port where it is likely to be collected, and converting the units to receive the gas.

Meanwhile, the JPS executive said the conversion plan is causing major environmental concerns, with the location for the offloading of gas for the plant being a crucial issue.

The JPS is proposing to offload the gas at the Freeport harbour in the resort town of Montego Bay.

“The location is certainly an issue, and we are quite concerned about the environmental constraints, as well as the safety concerns, when you have to bring gas into an operating terminal where there is a cruise ship operation,” Kistle said.

As far as getting the gas into Bogue is concerned, Kistle said the JPS is currently working with the National Environment and Planning Agency (NEPA) and the Port Authority of Jamaica to find a viable solution.

“The Port Authority of Jamaica has very well-documented rules, so we are looking to work with them to bring gas into that harbour, if we are to use that harbour. We are not sure if we have to go somewhere else yet. The Port Authority of Jamaica has been working with JPS, and there are very clear guidelines on what we need to do,” Kistle said.

He pointed out that the guidelines relate to how long a fuel vessel can sit in harbour to discharge “such that we can offload sufficient fuel to run the facility”.

The senior JPS representative said the determination on the way forward will be based on the fuel storage capacity, either at the harbour or at the site, as well as how often a vessel will be required to fill the storage tank.

“There are a couple of options, and we are working with other authorities to understand which of those is an acceptable option. There are a number of constraints that would affect the type of option that we employ,” he said.

“Primarily, we are working with NEPA to make sure that we understand what their issues are,” Kistle added.

The push to convert Bogue to use a gas-based fuel is part of the Government’s plan to reduce the dependence on oil and lower electricity bills. The JPS said the conversion to gas will also save the country millions of dollars each year in foreign exchange currently spent on importing oil.

JPS said the Bogue conversion project will begin as soon as the necessary due diligence is completed and JPS gets the final approval from the OUR.

Daraine Luton, Senior Staff Reporter

Jamaica Gleaner

 

JMA President Brian Pengelley. – Rudolph Brown/Photographer

Brian Pengelley was on Wednesday re-elected as president of the Jamaica Manufacturers’ Association (JMA) for a fourth and final term, that will remain focused on unresolved issues that dominated debate last year.

On his list: the high cost of energy, the depreciation of the dollar, the impact of crime on the business environment, and tax policy.

“With the cost of energy at 42 US cents per kilowatt hour, we expect that the process of getting the construction of the 381MW plant back on track will be handled as a matter of urgency,” said Pengelley in his acceptance speech.

He said the JMA would assist Jamaica Public Service Company (JPS) in naming any local company that steals electricity, saying “This pilferage of electricity not only hinders Jamaica’s development but puts a strain on our already scarce foreign-exchange reserves.”

JPS estimates that it loses about 17 per cent of electricity supplies to theft; that the stealing of electricity cost the power company about $11 billion last year; and that eradicating theft could cut electricity costs to consumers by up to 15 per cent.

The utility has said that the problem spans residential and business customers, with the latter said to employ more sophisticated bypass mechanisms.

Regarding the value of the Jamaican dollar, Pengelley said while the association notes the benefits of the International Monetary Fund programme in the rebounding competitiveness of local products, continued depreciation will ultimately hurt competitiveness locally and intentionally, since most local manufacturers must import their raw material.

The JMD is now nudging $112 to the USD, but is expected to fall even further to around $120 this year.

“It disrupts the ability of manufacturers to cope and makes it difficult for the majority of the workforce to satisfy basic needs,” the JMA president said.

Others elected alongside Pengelley were deputy president Metry Seaga of Jamaica Fibreglass Products Limited; treasurer Jason Dear of No Brand Chemicals; and eight directors – Mark Chin of AMG Packaging; Howard Mitchell of Corrpak Jamaica; Dennis Valdez of Newport-Fersan; Radcliffe Murray of Caribbean Producers Jamaica; Stafford Hyde of Architectural Windows and Doors Limited; Michelle Smith of Chocolate Dreams; Raymond Miles of Sun Island and Kathryn Silvera of Caribbean Foods.

tameka.gordon@gleanerjm.com

With reference to your headline article, ‘Solar power risk’ in The Gleaner Tuesday, June 3, I think that our policy decisions in relation to electricity should be based on long-term considerations, such as the amount of foreign exchange spent on fossil fuels, and the threat of global warming, rather than on return on investments.

My initial observation is that we have failed to capitalise on the opportunities provided by solar energy. Neither Jamaica Public Service (JPS) nor the Office of Utilities Regulation has educated the public on the win-win situation, which is possible with net-billing. More people might be interested in applying for net-billing if the application process were quicker, and the steps involved, detailed instructions for which are given on JPS website, were less onerous. Most people are unaware that you do not need batteries to run a solar system if you have a grid-tie with JPS. In fact, going that route is more environmentally friendly and less expensive, as shown by the calculation below.

BUYING BATTERIES

On the whole, companies selling solar systems encourage purchasers to buy batteries. Their pitch is that you can cut your electricity bills and even get off the grid entirely. They also tell you that JPS pays you only half of what you pay JPS per kWh, which is true, but they don’t tell you that batteries would cost more. Also, most people use more electricity in the summer than in the winter. To get off the grid entirely, one would have to install sufficient panels to supply one’s summer needs, and then one would have excess in the winter. It would be better to be able to send the excess to the grid in the winter and draw from JPS if necessary in the summer.

My calculation is based on a monthly average of 200 kWh being sent to JPS in the day, and drawn from JPS at night. (It does not include the excess amounts being sent or drawn). Nor does it take into account escalating costs. I make the optimistic assumption that a battery bank will last for 10 years.

WITHOUT SOLAR PANELS

200 kWh x J$40 = $8,000 monthly x 12 = $96,000 annually x10 years = $960,000.00

With solar panels and net billing (cost corresponding to half of $40.00)

200 kWh x $20 = $4,000 monthly x 12 = 48,000 annually x 10 years = $480,000.00

Savings: $480,000.00

With batteries, no net-billing, cost would be $0, but cost of 16 batteries at $40,000.00 each with life expectancy 10 years max = $640,000.

In contrast, as Mr John Kistle states, JPS would be faced with the challenge of providing everybody with electricity at peak hours after sunset, or on overcast days. Some of that generating capacity would have to be turned off at peak sunshine hours, thus reducing the return on whatever investment was made in a new power plant. However, solar power would cut down on the amount of fuel needed to run the plant.

Given the importance of the cost of electricity to all of us in Jamaica, perhaps there are some other things we can do. Could there be a consensus, for example, on turning off our fridges during peak hours? Or JPS charging different rates at peak hours?

I think that all stakeholders need to be involved in making these hard decisions.

Jamaica Gleaner;

The cost of energy in the Caribbean is the highest in the world, according to the Caribbean Development Bank, but governments have increasingly been pushing renewable sources of energy, like these solar-powered road on Highway 2000 in Jamaica.

GEORGETOWN, Guyana (CMC) – A senior official of the Barbados-based Caribbean Development Bank (CDB) says the operationalising of the Green Climate Fund (GCF) provides an important opportunity for regional countries to not only adapt to climate change but also to mitigate its effects.

In addition, Selwin Hart, the Climate Change Finance Advisor with the CDB said the fund could also assist the Caribbean move towards renewable energy and energy efficiency.

“The cost of energy in the Caribbean is the highest in the world. This represents a serious strike on competitiveness, economic growth and job creation and the GCF presents a once in a lifetime opportunity for countries to have a stable source to financing to address the vulnerabilities both as it relates to importing fossil fuels as well as the impacts of climate change,” he said.

He said one of the major problems facing Caribbean countries in the past has been the lack of capacity to effectively access and use funds even when they were available.

“Many of the requirements for accessing global funds lie outside of the reach of many of the small capacity-constraint counties of the region. You have to undertake a rigorous examination in terms of fiduciary standards and social and environmental safeguards,” Hart said.

The CDB, as part of its climate resilient strategy, has been assisting countries to build that capacity. However, in some instances it is more feasible for that capacity to be built at a regional level rather than at the level of individual countries.

The bank has also been tasked by Caribbean leaders to lead the resource mobilisation effort and in this regard, the CDB is trying to position itself to serve at a regional financial intermediary.

The GCF will support projects, programmes, policies and other activities in developing countries using thematic funding windows’. It is intended to be the centre piece of efforts to raise climate finance of US$100 billion a year by 2020.

Meanwhile, the GCF for which preparations have been ongoing since 2010, has recently been finalised by its board; marking an end to a long and tedious process and giving the green light for the fund to move forward to mobilise resources.

Executive director at the GCF secretariat, Hela Cheikhrouhou, said that this is an important development which will put in place

a multilateral financing institution that is focused on providing concessional financing to both private and public sector beneficiaries in developing countries.

The Jamaica Observer;

We share the concerns of paying customers of the Jamaica Public Service Company (JPS) whose electricity will be turned off for half the day in the JPS’s latest effort to combat electricity theft. Yet, we can’t but empathise with the light and power company, the stealing of a large chunk of whose output is enabled by an irresolute State and compliant politicians.

Put another way, by maintaining an environment that insulates the thieves, the Government has up to now forced JPS to provide social welfare to dwellers of poor communities, which is like imposing a tax on the company for earnings it doesn’t make.

JPS is the sole distributor of electricity in Jamaica. It is a majority ownership by Japanese and Korean interests, representing substantial foreign direct investment – something, given Jamaica’s economic circumstance, our Government declares it is keen to encourage.

For years, JPS has been confronted with the theft of its service. Of the 28 per cent of the output that it ‘lost’ in 2013, 60 per cent went to thieves, translating to hundreds of millions of dollars of unrecovered revenue. Such thievery is often rationalised as the result of the high price of electricity and that it is perpetrated by poor people against a supposedly rich company. The Robin Hood syndrome!

That argument is an inadequate response to the fundamental issues at stake. For instance, with shareholder equity of around US$1 billion, the company’s US$9 million in profit last year represented return on investment of less than one per cent.

Moreover, in the past financial year, the company’s receivables, at 90 days or more, at US$64 million, were approximately six per cent of its operating revenue. Since other customers are unlikely to have been allowed to owe JPS for so long, we can assume that the debt is largely the Government’s, to which must be added the company’s enforced social-welfare expenditure in the form of electricity theft.

That’s not all. That overdue debt has not only cash-flow implications for JPS, but foreign-exchange risks, given that while the company’s income is in Jamaican dollars, the bulk of its expenditure is in foreign currency. Such risks are exacerbated by the company’s declining revenues, which would likely cause unease to the company’s bankers and impact its ability to borrow for new plant and equipment. JPS is hardly in robust health.

Illegal connections removed

Indeed, no company anywhere could be asked to forgo, or hand over as welfare, the value of nearly a fifth of its output. Few could survive. JPS has tried to combat the problem by having 200 employees, or about 15 per cent of its staff, dedicated to the anti-theft effort. Last year, it removed 197,000 illegal connections, approximately one-third of the amount of its registered customer base – from its system. These and other technological solutions have failed to beat the problem. And they won’t.

The solution is primarily political. Indeed, the seven communities against which the JPS has moved, in the capital’s western belt and St Catherine, like others where electricity theft is endemic, are mostly garrison communities, those zones of exclusion where our brand of politics breeds a sense of entitlement and impunity.

That perceived right to trespass on other people’s property can’t be solved by single companies taking civil action or proffering criminal charges. It demands a fundamental shift of political attitudes, combined with a resolute State, especially if the Government is serious about encouraging investment – local or foreign.

Jamaica Gleaner;

OUR wants JPS to say why power being cut in some communities

How comes

THE Office of Utilities Regulation (OUR) has summoned Jamaica Public Service Company (JPS) officials to a meeting today as public anger grows over the company’s decision to cut the number of hours that power is provided to some communities in an effort to combat electricity theft.

The regulator said it requested the meeting after being alerted about the matter by its Consumer Affairs Unit, which received complaints from the public, as well as JPS’s own news release on the issue yesterday.

According to the JPS, it took the decision as part of a strategy to get more persons in communities where more than 70 per cent of the power is stolen to pay for the electricity they use, and reduce the overall cost to paying customers.

“The communities to be affected in the initial phase of this curtailment strategy are Jones Town, Seaward Drive, Trench Town, Denham Town, Rema, Maxfield Avenue, Central Village, and Spanish Town Road,” JPS said, adding that it “has been working with these communities for some time, with limited success, and continues to encourage illegal users to take immediate steps to have their service regularised”.

“We have tried everything to reduce electricity theft,” the JPS release quoted Gary Barrow, the company’s senior vice-president for energy delivery.

“Our efforts have included a combination of initiatives, such as the removal of illegal ‘throw up’ lines, account audits and meter investigations, arrests in collaboration with the police, community intervention, and the installation of costly technology solutions. The company also has more than 200 employees working to reduce losses,” Barrow said.

The company, which some years ago launched a compliance campaign with the tag line ‘How Come?’, explained that in 2013 it removed more than 197,000 illegal lines, carried out more than 113,000 account audits and meter investigations, and facilitated the arrest of more than 1,200 persons for electricity theft.

It also said that it has installed more 7,600 Residential Automated Metering Infrastructure meters, but most of the potential customers targeted have not signed up for legal service.

According to the power company, its efforts to serve paying customers in communities with high levels of theft continue to be hampered by extensive damage to its equipment and ongoing power outages caused by illegal connections.

“Customers also suffer significant damage to their appliances and equipment as a result of the system overload caused by illegal connections,” JPS said.

As such, the company said that it “will make an effort to provide electricity for not less than 12 hours per day, and will remain sensitive to the safety concerns of the residents”.

The firm added that it “was also making every effort to minimise the impact on businesses, hospitals, and schools in these communities”.

In a letter to the JPS yesterday, the OUR asked for “critical information, such as the number of paying residential and commercial customers in the affected areas, and the alleged level of damage done to JPS equipment as a result of electricity theft in these communities”.

The OUR said it was treating this issue with the highest priority, given the impact on legitimate customers in these communities.

Jamaica Observer;

The Jamaica Solar Energy Association says there is need for critical evaluation of the barriers which resulted in what it says was an anaemic response to net billing during the trial period which ended this month.

Net billing allows renewable energy producers to sell excess power to the national grid.

According to the association the net billing policy was a good one and therefore there is need for evaluation of the reasons the offer was not taken up by more players in the renewable energy market.

The association says it has provided substantial recommendations for improvement of the next phase of net billing.

It says these include simplifying the process and improving programme coordination and removing onerous and unnecessary prerequisites for obtaining a standard offer contract with the Jamaica Public Service Company.

The solar energy association says the Office of Utilities Regulations (OUR) should increase the generation capacity, especially for commercial entities and reduce the cost barriers.

The association is urging the OUR to implement these recommendations within the next few months.

Meanwhile, the association says commercial enterprises also await the implementation of power wheeling.

It is calling for the inclusion of renewables in this initiative.

Jamaica Gleaner;