As investigations continue into the power outage that blanketed the entire island on Saturday evening, chief executive officer (CEO) of the Jamaica Public Service Company (JPS) Kelly Tomblin has promised to be open and transparent with the public about the findings of the probe.
“The only thing I know for sure is that the process was not followed one hundred per cent. I don’t know completely why that resulted in a system-wide outage. That is what my team is working on today, and that is what we are going to continue to talk to the press about. We have nothing to hide,” she said in an interview with The Gleaner yesterday.
Jamaica’s sole power distribution company said the outage was caused by a “procedural error, which resulted in a number of generating units going off-line simultaneously”.
In a release to the media, the electricity supplier said it has started its investigations and would provide further details on the cause of the outage today.
Minister of Science, Energy and Technology Dr Andrew Wheatley was swift in expressing displeasure with JPS because of the blackout.
“Let me categorically state that I am not at all happy with this latest incident and I find the inconvenience to the people of Jamaica and the many businesses affected totally unacceptable,” he said in a statement.
CATASTROPHIC FAILURE
Arguing that “islandwide power outages of this nature should not occur as there ought to be processes, procedures, and adequate redundancies in the grid to mitigate such a cascading set of events that would result in a catastrophic failure of this kind”, Wheatley said that he has requested that JPS submit a preliminary report on the cause of the blackout to his office today and a full report by Thursday.
Tomblin indicated that she was having numerous meetings with her technical team and was in the process of preparing a preliminary report to be submitted to Wheatley.
The JPS CEO was forthright in shedding light on the nature of the “procedural error”, which is believed to have caused the outage. She explained that the company’s technical team was still working to put together a more fulsome analysis of the outage.
“We know there was an operational error, but that does not explain something else, which will take some time to figure out. It looks as though there was a technical procedure done on the Hunts Bay station that was not completed one hundred per cent according to process, but that should not have resulted in the collapse of the system, so we have to look to see if it’s a design or engineering issue, but I don’t want to jump the gun and give inaccurate information at this stage,” she said.
In April, the country was also plunged into an islandwide power blackout. The light and power company later said that that outage was caused by problems because of work that was being done on two major power lines in the Three Miles area of Kingston.
The Office of Utilities Regulation (OUR) says it will ensure that power utility Jamaica Public Service Company does not increase bills to consumers based on the delay in the delivery of cheaper gas fuel.
The first delivery of liquefied natural gas – LNG – by JPS’ supplier was expected in April, but has been pushed back to August.
New Fortress Energy has developed a terminal in Montego Bay to feed gas to JPS’ Bogue plant, which has been converted to burn either LNG or automotive diesel oil.
“The OUR has moved to assure consumers that it will be vigilant in ensuring that the delay in the delivery of liquefied natural gas to the Bogue power plant will not result in an increase in the price of electricity,” said the regulator in a statement.
While welcoming the completion of the conversion of the 120-megawatt combined cycle plant, the OUR signalled disappointment with the “four-month delay” in the delivery of the overall project.
The gas supply agreement signed by JPS and New Fortress Energy on August 5, 2015, stipulated that gas delivery would commence April 2016, the OUR stated.
“Safeguards for customers were included in the agreement with New Fortress to ensure that any delay on its part would not result in negative cost implications for customers,” noted OUR Director General Albert Gordon. “The OUR has been monitoring the project closely and will continue to keep the public abreast of its progress.”
Project’s goal
The Bogue project’s goals, which are aligned to those in the National Energy Policy, were to reduce fuel cost, and lower the operations and maintenance expenditure of electricity generation. Gordon noted that the OUR’s involvement in the project began in 2008 and that the agency mandated that the plant be upgraded to burn gas in the 2014-2019 JPS tariff determination.
“To ensure this, the OUR also made provisions for the setting up of the Bogue Plant Reconfiguration Fund (BPRF), financed through the tariff, to facilitate the conversion cost,” the agency said.
The revenues for the BPRF – which totalled $15 million – were collected by the JPS through a line item in the monthly fuel rate calculation on customers’ bills, over a twelve-month period, between February 2015 and January 2016, the OUR said.
Requests to JPS for comment were unanswered up to press time.
Jamaica Private Power Company (JPPC) saw its loss position double in 2015.
Its parent, Kenon Holdings, reported US$2 million ($234 million) net loss for last year compared with US$1 million the year before.
The private power producer, which sells electricity to all-island distributor, Jamaica Public Service Company (JPS), managed to increase its revenue by four per cent from year-earlier levels to US$45 million in 2015.
This was mainly due to the company increasing its electricity generation from 425 gigawatt hours, or 10 per cent of total national grid’s needs, to 445 GWh, of which well over 90 per cent was sold, likely because it has one of the most efficient fossil fuel, or thermal plants in Jamaica.
JPS’ system uses a dispatch application that determines the best combination of operating levels for each plant supplying the grid to ensure that energy is provided at the lowest total cost to the consumer.
Last year, JPPC improved the efficiency at its 60 megawatt plant, lowering the heat rate from 8,306 Btu/kWh in 2014 to 7,989 Btu/kWh in 2015.
In other words, it increased the amount of the energy stored in the heavy fuel oil (HFO) that was converted into electricity from 41 per cent to 43 per cent. That is, it used two percentage points more of the HFO’s energy to make electricity.
This helped the Rockfort, Kingston-based power producer lower its average fuel cost from US$137 per MWh to US$69 per MWh, albeit a dramatic fall in oil prices contributed more to this improvement. Average sales price, therefore, fell from US$182 per MWh (or J$20 a kWh) in 2014 to US$101 per MWh (or J$12 a kWh).
Indeed, the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) improved from US$1 million to US$2 million, but this would not have been enough to cover staff cost, debt servicing and depreciation.
JPPC is the smallest of the power producers that use fossil fuel-based plants. Jamaica Energy Partners and its sister company West Kingston Power Plant, combined, generates about 30 per cent of Jamaica’s electricity requirements. JPS produces over 50 per cent.
Some six per cent of the country’s electrical energy is derived from hydro and wind, with another three to four percentage points expected to come from 78MW of wind and solar scheduled for commissioning by next year.
Kelly Tomblin, president and CEO of JPS.
Jamaica Public Service Company (JPS) said it wrote off $100 million in debt owed by residential and commercial customers for electricity under its year-end amnesty programme.
It offered customers the opportunity to start the new year at least partially debt free.
The power utility also said it continues to work with the Government, through the Ministry of Finance, to ensure payment for street lights on a timely basis.
In introducing the amnesty, which ran from November to December 2015, JPS said it had identified critical cases where some of its customers’ debts to the light and power provider had accumulated so significantly over time that they had been classified as bad debt.
However, for customers who wanted to regularise their accounts and in some cases restore their electricity, JPS gave residential rate 10 and commercial rate 20 customers an opportunity to negotiate up to 70 per cent debt forgiveness.
Persons qualified to apply were those owing in excess of $50,000 at August 2015 and had their service disconnected; as well as residential and small commercial customers who owed more than $100,000 up to August, but whose accounts were still active.
Last Friday, JPS President and Chief Executive Officer Kelly Tomblin, addressing a media briefing at the company’s offices in New Kingston, said more than 1,000 account holders benefited from the amnesty.
STREET LIGHT REPAIRS ONGOING
As for the issue of defective street lights, Tomblin said repairs were ongoing, while acknowledging that the utility got daily complaints.
JPS has about 100,000 street lights and last year the company replaced 27,700 of them, an average of 514 per week.
“We are replacing street lights, hundreds and hundreds every week, so it’s not that JPS isn’t aware…”, she said.
Against that background, Tomblin said: “There are two things that are going on that we have to fix.
“We are working with the Government right now to find a way for us to get paid more promptly,” she said. “I have a commitment by the minister of finance. We work with him all the time. We all know that we have a lot of different obligations and a lot of different challenges to meet and we do know today that we are working on solutions to run our street lights on, for instance, LED.”
At the same time, she said the company has to be careful how much it invests in the current solution “if we are going to have this three to four year plan to replace them.”
She acknowledged the issue is, for some, one of security, but said the street light problem is compounded by theft.
“With the level of electricity theft, we will never have first-class street lights … we cannot have street lights operating if we have a couple of hundred people stealing,” the utility boss said.
JPS is manager of the national grid and monopoly distributor of electricity supplies. The utility collects around $100 billion per year in billings.
THE Jamaica Public Service Company (JPS) says its customers will see yet another reduction in bills this month, as the light and power company continues to pass on savings from falling fuel prices.
“This month, customers will see a 4.12 per cent decrease in bills as the Fuel & IPP Charge on bills for January is $10.67 per kilowatt hour (kWh), compared to the charge of $11.83 per kWh applied to December bills. This is the lowest Fuel & IPP Charge since 2005. The total cost per kWh of electricity now stands at 21 US cents or J$25.29, for residential customers,” the JPS said in a release yesterday.
It added: “Therefore, a customer who consistently uses 165 kWh per month will be paying $182.55 less for his bill this month, compared to what he paid last month. This customer will pay $4,252.41 for the 165 kWh of electricity used, as against the $4,434.96 that was paid in December 2015 for the same usage.”
According to the JPS, it has not only passed on savings from the fall in the price of oil on the world market, but has improved efficiencies in the company’s operations.
At the same time, the company has urged customers to use energy wisely, as the final bill amount depends on how much energy is used.
The oil-fired JPS power plant in Old Harbour Bay, St Catherine is to be converted to LNG.
Spanish firm Abengoa SA has revealed the value of the upgrade and employment prospects for the 190MW power plant project amid pre-bankruptcy filings in its home market.
“The contract for the plant, which will be powered by natural gas and cooled by seawater, is worth more than US$200 million,” said Abengoa in a release.
The engineering and renewable energy firm was selected as preferred bidder by Jamaica Public Service Company (JPS), and the parties are in the process of finalising the contract for the LNG-fired power plant. JPS has said the full project cost would be closer to US$300 million.
Abengoa has about four months in which to secure deals with its creditors and restructure its debts if it is to escape full bankruptcy. JPS has said it is not ready to give up on its preferred bidder just yet, but is monitoring the situation.
Abengoa said it will be responsible for the design, engineering and construction work of the plant that will replace an existing fuel-oil facility and is expected to “create between 300 and 500 jobs during the construction phase”.
JPS wants to decommission the existing fuel-oil plant and move to a natural gas facility to create a cleaner, efficient and more reliable source of power, added Abengoa.
The more than 40-year-old Old Harbour plant remains one of the least energy efficient in the island and its upgrade would form part of the Jamaican Government’s drive to increase cleaner forms of fuel. Jamaica aims to increase renewable energy reliance to 20 per cent of the energy output within the medium term.
SEAWATER COOLING SYSTEM
“The plant will use a seawater cooling system that returns the warm water without adversely impacting the environment. Abengoa’s design will use the existing infrastructure as much as possible, requiring less power and improving the overall output of the plant,” said the Spanish firm in late November, adding that the project would extend Abengoa’s experience in turnkey combined cycle projects to the Jamaican market.
The company informed that it filed for insolvency protection on November 25 before the Mercantile Courts of Seville. The company also indicated that it would continue negotiations with its creditors with the objective of reaching an agreement that ensures the company’s financial viability, “under the protection of Article 5 of the Spanish Insolvency Law”.
The company recorded a €194 million net loss attributable to its parent over nine months ending September 2015 on revenues of €4.87 billion. It holds €6.2 billion in total debt while its earnings before interest tax and amortisation totalled €1.3 billion or 4.5 times net leverage.
Abengoa’s other major combined-cycle projects include the 640MW plant in Centro Morelos, Mexico, and the 440MW combined cycle plant in Portland, Oregon, United States, currently under construction. More recently, Abengoa was awarded two combined cycle plants in Mexico – Nuevo Pemex 680MW, and Norte III, 924MW.
LIGHT AND power providers, the Jamaica Public Service Company (JPS) said yesterday that it is getting independent advice from its lawyers on whether to proceed with a contract with Spanish firm Abengoa to construct its power plant at Old Harbour, St Catherine.
Kelly Tomblin, the chief executive officer of JPS said yesterday that its shareholders held a conference call with Abengoa to discuss the way forward.
Abengoa’s chief executive Santiago Seage resigned yesterday after it emerged the Spanish renewable energy giant was close to bankruptcy.
The JPS, with the assistance of AMEC Foster Wheeler, a consultancy firm, selected Abengoa whose package consists of general electric combined cycle frame 6B gas turbine. The light and power company was in the process of negotiating a performance contract when the matter of the bankruptcy came to light.
“We were never going to enter into a performance contract until we had some assurance about their financial abilities,” Tomblin said.
She said that December 9 was the deadline for Abengoa to satisfy JPS of its ability to undertake the project and hinted that the light and power company is getting ready to move beyond Abengoa.
“Their problem is that they have some debt coming due but they don’t have the cash to pay. They are going to try to utilise their assets and do other things but that takes too long so we won’t be able to wait out that,” Tomblin said.
The Electricity Sector Enterprise Committee, ESET, said that while it is watching the developments, it is not totally concerned at this point.
Profesor Alvin Wint, a member of the ESET, said that in addition to Abengoa, other entities had submitted detailed bids to construct the power plant and they would be in line to be considered to take on the project.
“We will be requiring that they move quickly and if they need to go to a plan B they go quickly,” Wint said.
Both major shareholders of JPS, Marubeni and Korea East West Power Company Limited have committed to each inject up to 50 per cent of the approximately US$990 million equity that is required to develop the 190 megawatt power plant by year end.
The JPS intends to raise approximately US$210 million in debt funding to help finance the project.