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GCT on electricity will cause business failure

June 4, 2012

BUSINESSES will suffer as the Government raises the general consumption tax (GCT) on electricity to help fund its $613-billion budget, said two affected associations.

The Jamaica Manufacturers’ Association (JMA) and the Micro, Small and Medium-sized Enterprises (MSME) Alliance both said the new measure will be too much for companies operating in an already difficult business environment.

GCT-free solar panels are generating huge interest among businesses struggling with electricity costs, said the Jamaica Manufacturers’ Association

JPS News

Holness: JPS Licence A Conflict Of Interest

June 4, 2012

Opposition leader Andrew Holness - file photo.

Debbie-Ann Wright, News Editor
The Gleaner/Power 106 News Centre

Opposition leader Andrew Holness says the current Jamaica Public Service Company (JPS) licence is a deterrent to generators of electricity entering the energy market.

While the JPS has a monopoly on transmission and distribution of energy, other power producers are free to operate in Jamaica.

However, Holness said under existing legislation, producers of energy in commercial quantities must sell to the JPS, which then resells it to customers through its transmission and distribution network.

Holness argued that there is an opportunity for adverse transfer pricing, which works against the interest of the consumer in receiving competitive prices for energy.

He has reiterated calls for the government to look at separating the generating assets of the JPS from its transmission and distribution assets.

Holness said this would allow all generators of electricity to negotiate on equal footing with the deregulated entity that controls the transmission and distribution assets formerly owned by JPS.

However, he cautions that the government should seek to dismantle through dialogue and negotiation.

http://jamaica-gleaner.com/latest/article.php?id=37559

 

News

Broken Promise – No Rollback Of GCT On Electricity

May 28, 2012

THE PORTIA Simpson Miller administration has reneged on its promise to abolish general consumption tax (GCT) on electricity.

Making his opening presentation in the 2012-2013 Budget Debate in the House of Representatives yesterday, Finance Minister Dr Peter Phillips announced changes to the way in which GCT is to be charged.

The minister said that, as of June 1, no GCT will be charged on the first 300kWh of electricity consumed, up from 200kWh. However, the tax will move from 10 to 16.5 per cent. The measure is expected to earn the Government $430 million this fiscal year.

In the general election campaign last year, Simpson Miller declared that her administration would remove GCT on electricity if her People’s National Party was elected to form the government. The promise was also contained in her party’s election manifesto.

Yesterday, Phillips told the House that of the approximately 500,000 JPS residential customers, 377,000 consume less than 200kwh of electricity.

He said the new tax directives will result in 90 per cent of JPS customers not paying GCT on light bills, up from the initial 76 per cent.

“The proposed measure should relieve approximately 80,000 additional residential customers from the payment of GCT on their electricity bill at the new threshold level of 300kWh, leaving only 52,000 residential customers subject to GCT,” Phillips said.

Just last month, Minister of Science, Technology, Energy and Mining Phillip Paulwell said Government intended to honour its election promise to roll back the consumption tax on electricity usage.

“There is a commitment that was given to the people of Jamaica which we intend to fulfil,” Paulwell said during a sitting of the House of Representatives.

Proposal questioned

North East St Catherine Member of Parliament Gregory Mair, who had tabled questions of Paulwell in the House, had suggested that the Government seek to raise the threshold to 300kWh instead of rolling back the tax.

Relying on data provided to the House by Paulwell, Mair said only eight per cent of residential consumers would not benefit if the threshold was increased to 300kWh.

“That would mean that 92 per cent of residential consumers would not pay GCT and the total amount of GCT collected would reduce only by $250 million,” Mair had argued.

http://jamaica-gleaner.com/gleaner/20120525/lead/lead7.html

News

Commitment Delivered? Phillips Responds To Promised Removal Of GCT On Electricity

May 28, 2012

 

Simpson Miller
Simpson Miller

Daraine Luton, Senior Staff Reporter

DESPITE DECLARING in its election manifesto that it would “remove the general consumption tax (GCT) on electricity charges to ease the burden caused by electricity bills,” finance minister Dr Peter Phillips is insisting the People’s National Party (PNP) has delivered on its commitment to Jamaicans.

Phillips, the country’s finance minister, who served as campaign director for the PNP in the last general election, on Thursday announced in Parliament a 300 kWh threshold on electricity consumption above which GCT would be charged.

“A commitment was given in relation to GCT and by raising the threshold, we have in fact relieved all except the highest consumers of electricity,” Phillips said.

The PNP, in its manifesto, listed the rollback of GCT on electricity among 18 steps to full people power.

Yesterday, Phillips argued that 90 per cent of residential customers of the Jamaica Public Service would not pay GCT on their electricity bills. He said that the move by the Government would provide protection for the working poor and marginalised.

Previously, the threshold on electricity consumption was 200 kWh. Phillips also announced that the GCT on electricity would increase from 10 to 16.5 per cent.

In the meantime, Phillips argued that the increase in the rate of GCT would not impact businesses.

“All businesses can in fact claim their GCT payments back so that for businesses that are registered taxpayers for GCT, they are able to claim back their GCT payments, so on that basis, we have fulfilled a commitment that was given to the country,” Phillips said.

PM snaps

PNP President Portia Simpson Miller, now prime minister, repeatedly snapped at suggestions that the proposal for a rollback of GCT on electricity was not properly thought through.

“Everything we say from our platform they criticise,” she said, while adding that she has come to accept the criticisms of the “uncharitable and the unjust”.

“My platform will promise nothing that we are not sure we can deliver,” Simpson Miller said in St Thomas.

Yesterday, the minister of finance said “during the election campaign, we would not have a sense of how dire the public finances of the country was at the time”.

He added: “We have a simple choice, we could remove it, including at the highest end consumers, or we could try to rescue those same high-end consumers by rescuing Jamaica.

http://jamaica-gleaner.com/gleaner/20120526/news/news5.html

News

Gov’t committed to renewable energy

May 24, 2012

PRIME Minister Portia Simpson Miller has reiterated her administration’s commitment to the integrated use of renewable energy to develop the economy and eradicate poverty.

The prime minister gave the assurance at last Wednesday’s opening of the joint University of Technology (UTech)/German Embassy Sustainable Energy Conference and Exposition at the institution’s Main campus in St Andrew

“The choices we have to make are very clear. The current level of energy consumption is unsustainable,” she said, noting that the introduction of LNG as a part of a short to medium-term plan to diversify the energy supply mix is proceeding apace.

Simpson Miller told the gathering of stakeholders in the energy industry, ministry officials and members of the diplomatic corp at UTech’s Alfred Sangster auditorium that a small developing country such as Jamaica cannot expand its productive capacity, attract business and ensure the well-being of its people, with the unprecedented increases in the cost of energy annually.

“Next to debt-servicing, the cost of energy represents our greatest outflow of foreign exchange, and the outlook is for this to worsen,” she said.

She said the Government has set itself a very ambitious goal to see renewable energy sources making up 30 per cent of the national energy mix by the year 2030.

“We have embarked on a clear path for introducing and encouraging the development of the renewable energy sector,” Simpson Miller noted.

She said that she will also be closely monitoring energy consumption in the Office of the Prime Minister (OPM) under the Public Sector Energy Efficiency and Conservation Programme, which is in partnership with the Inter-American Development Bank, and is currently underway.

Under the programme, government ministries and agencies will have set targets by which they will be required to reduce their consumption. The OPM was one of the first government buildings to be retrofitted.

Germany’s Ambassador

News

Towards A Sustainable Energy Future And Economy

May 21, 2012

 

Workmen atop a Jamaica Public Service Company pole. Jamaica must revamp its energy framework if the country is to compete gainfully with rival nations which benefit from cheaper fuel sources.- File

 

Energy is set to wreck the weak CARICOM. Energy is a ball and chain hobbling the Jamaican economy. Energy, if it is true that human action is the principal cause of global warming and climate change from global warming, is set to wreak havoc upon the entire planet.

Omar Azan, a former president of the Jamaica Manufacturers’ Association, in a blistering speech last week, said government-subsidised electricity cost in Trinidad & Tobago was giving an unfair advantage to that country’s manufacturers in CARICOM trade. At US$0.05 per kilowatt-hour, the cost of electricity in T&T is some six times lower than the cost of electricity in Jamaica. Azan has threatened to lock down the country over the issue. Others have been openly advocating that Jamaica should withdraw from CARICOM.

Meanwhile, a powerful coalition of private-sector companies has been shouting, through expensive advertisements, that the cost of electricity has increased by 135 per cent since 2001 and advising us to “pull the plug on high light bills”. Exactly how to pull the plug has been left unspecified, like the Azan lockdown of the country.

Citizens United to Reduce Electricity (CURE) has gone the unprecedented route of taking action in the Supreme Court to test the legality of the Jamaica Public Service Company (JPS) all-island monopoly. CURE is asking the court to declare null and void the licence granted in 2001 by the energy minister and renewed in 2007.

The licence, according to the claimants, is in breach of Section 3 of the Electric Lighting Act of 1890. CURE attorney Hugh Wildman is arguing that under the act, and in particular Section 3, the island is broken up into areas over which the responsible minister may grant a licence to either the local authority or a private company to generate and transmit electricity.

“What is not permissible under Section 3, or any other section of the act, is an exclusive licence over the entire island. A licensee or undertaker is confined to the particular area over which a licence is granted,” Wildman submits to the court.

“The language of the legislation,” he points out, “throughout speaks in the plural, that is, undertakers and not undertaker. The legislation clearly expressed in no uncertain terms that there must be several undertakers generating and transmitting electricity throughout Jamaica. The concept of exclusivity is unknown to the legislation.”

And with respect to the Office of Utilities Regulation, Wildman said Section 4(3)(i) of the Office of Utilities Regulations Act

News

Net Billing Licences Awarded

May 19, 2012

Paulwell

 

ELEVEN PERSONS yesterday collected the first batch of net billing licences offered by the Government that will allow them to sell the excess electricity they generate to the national grid.

Energy Minister Phillip Paulwell, who handed out the licences, said having installed a solar-energy system at his home, he intended to apply to his ministry for a licence.

“My PV (photovoltaic) system is fully up and running and I am now anticipating my JPS (Jamaica Public Service Company) bill later this month,” said Paulwell, who was speaking at a meeting of the Jamaica Energy Council held at Jamaica House yesterday.

Under the net billing system, licensees are expected to see huge reductions in their electricity bills after balancing the amount owed for energy used and what is earned from the excess energy sold to the grid.

“The bill from JPS is netted against the bill from the production and at the end of the month, the net bill to the customer,” explained Hopeton Heron, deputy director general at the Office of Utilities Regulation (OUR).

“At the end of three months, you will see whether you owe JPS or JPS owes you and a cheque is cut somewhere to settle the matter,” he added.

The system will be governed by a five-year standard offer contract that each licensee is required to sign.

Addressing concerns about the impact of adding new facilities to the grid, Heron said for the next two months, the OUR will be conducting a pilot project that will limit the new connections to two per cent of the existing capacity.

Paulwell said he hoped this would encourage more Jamaicans to come forward and apply for licences as “the Government looks to enlarge its ambition in relation to renewable energy“.

http://jamaica-gleaner.com/gleaner/20120519/lead/lead2.html

JPS News

JPS CEO Throws Down Gauntlet

May 19, 2012

Kelly Tomblin, new CEO of the Jamaica Public Service Company, was appointed at the start of April. - Rudolph Brown/Photographer

If the Jamaican government wants to break the monopoly on electricity distribution, the best way to do it is to buy out the majority owners of Jamaica Public Service Company Limited (JPS), the utility’s new CEO said Tuesday.

Concurrently, the power utility announced preliminary plans to build a US$475-million 100-megawatt petcoke fuel plant as the second phase of its liquefied natural gas (LNG) project. These projects fall under its five-year US$1.5-billion capital expenditure programme.

Liberalisation without a buy-out would send negative signals to foreign investors, JPS CEO Kelly Tomblin said in a speech to a Jamaica Chamber of Commerce (JCC) meeting in New Kingston.

JPS is owned 40 per cent by Marubeni Corporation, 40 per cent by Korea East-West Power and 19.9 per cent by the Government of Jamaica. The other 0.1 per cent is held by individuals.

“Basically, the government can buy it back from us and then they can liberalise it, and we are certainly open to that. We do not want to stand in the way,” Tomblin said.

JPS’s current exclusive licence has another 16-year run to 2027.

Tomblin’s comments are in response to energy minister Phillip Paulwell’s stated policy goal of liberalising the distribution of power to customers. Paulwell has not said how he plans to execute the strategy.

Currently, some 30 per cent of Jamaica’s 820-megawatt capacity comes from independent power producers which compete to set up generation units to sell power to JPS. They, however, cannot sell power directly to customers and Tomblin advised Government to avoid breaching the JPS contract.

“I do think it would signal a lack of contract certainty and a lack of regulatory certainty,” she told the JCC. “And as the minister, I wouldn’t want to signal that to the international community.”

Higher electricity bills

The cash-strapped Government has little capacity to buy out Marubeni and East-West Power’s stake in JPS.

The utility is one of the largest companies in Jamaica, with total assets valuing US$1.05 billion (J$91 billion). JPS had a net worth of US$371 million (J$32 billion) as at December 2011.

Government wants to liberalise the sector to reduce the cost of electricity to consumers and businesses, but Tomblin argued that it would lead, instead, to higher power bills.

“It is so counter to what I have experienced in the US markets. We used to be small utilities broken down, and we found no economies of scale with workers, with systems or with technology. Then we saw those smaller distribution companies getting larger economies of scale by coming together and getting bigger and bigger,” she said.

Joint undertaking

It was not immediately clear whether the petcoke plant is a redraft of a project announced four years ago as a joint undertaking of JPS and state-owned oil refinery Petrojam Limited. That project was billed as a US$300-million investment to be finalised in 2012, but it never got off the ground.

The new US$475-million petcoke plant will be pursued after JPS finalises the US$614-million LNG plant.

“We believe it makes good sense in the second phase of the project,” Tomblin said.

The company will also spend US$143 million on upgrading its transmission and distribution lines; US$89 million to reduce system losses, including power theft; and US$73 million on renewables.

http://jamaica-gleaner.com/gleaner/20120516/business/business1.html

 

JPS News

Paulwell Accuses JPS Of ‘Monopolistic Arrogance’

May 19, 2012

Minister of Science, Technology, Energy and Mining Phillip Paulwell.

 

Threatens sale of utility to new investors

Energy minister Phillip Paulwell says that Govern-ment can, as a last option, sell Jamaica Public Service Company (JPS) to new investors rather than allow the utility to maintain its “monopolistic arrogance”.

Paulwell did not say how Jamaica would force the sale of the power company, which would likely require its takeover if its owners are hostile to the plan, given the Government’s minority 19.9 per cent holdings.

“There are serious players coming to us and any implied threat can be responded to,” Paulwell said midweek.

Its the latest tit-for-tat surrounding the push to end JPS’ monopoly on power distribution, and follows comment by JPS CEO Kelly Tomblin Tuesday that Jamaica would likely have to buy out the majority owners of the utility if it wanted to pursue liberalisation.

JPS’ current exclusive licence has another 16-year run to 2027.

“I don’t believe that Government has to buy it back,” he said, in response to Tomblin’s assertion.

“People are salivating to take part in the energy sector. The Government won’t go there, but players are salivating to get into the market”.

JPS is owned 40 per cent by Marubeni Corporation, 40 per cent by Korea East-West Power and 19.9 per cent by the Government of Jamaica. The other 0.1 per cent is held by individuals.

The cash-strapped Government has little capacity to buy out Marubeni and East-West Power’s stake in JPS. The utility is one of the largest companies in Jamaica, with total assets valuing US$1.05 billion (J$91 billion), and a net worth of US$371 million (J$32 billion) as at December 2011.

Private negotiations

Paulwell told the

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