The continued rise in the cost of oil on the international market has triggered increases in the cost of locally produced energy, which has had a negative
The corporate headquarters of Jamaica Public Service Company Limited, Knutsford Boulevard, New Kingston.
Combustion turbines or diesel engines?
Below is JPS’ Response to the article ‘Shock Treatment: Can JPS do more to reduce energy cost?’ by Dr Densil Williams (published in
On April 12 I wrote a column titled, ‘Is JPS likely to give us the full hundred’. In response, JPS head of Corporate Communications Winsome Callum had a piece published as a letter to the editor on April 15 titled, ‘Inaccurate Mr Wignall, here are the facts’.
Space will not allow me to respond to every sentence and paragraph of the JPS letter, but I will deal with the points which appear to be the most important, plus other salient matters that were not fully highlighted in the crosstalk.
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The JPS plant at Old Harbour in St Catherine. |
As a target JPS is easy to beat up on simply because it is a monopoly. Almost every household in Jamaica has no other option but to purchase its expensive power and there doesn’t seem to be any sanctions in place if the company operates inefficiently.
One part of the JPS letter said, “Any balanced analysis of JPS’ operations will need to take into consideration the company’s continued investments in its operations. Each year, JPS spends an average of US$50 million to ensure that our power plants are operating as efficiently as possible, to improve system reliability, and to tackle the monster of electricity theft in order to create a more equitable playing field for our customers”.
It seems to me that outside of an independent audit of JPS, the entity most capable of providing a balanced analysis of JPS is JPS itself, but I would never expect JPS to make such an analysis public. The Corporate Communications arm of a large company like JPS is in the business of churning out treacle for public consumption. It is simply PR on steroids.
The first question is, what exactly has JPS done to increase the efficiency of its units, most of which are 30 years old and have reached their useable limit? Spending money on power plant efficiency and system reliability seems to me to be throwing good money after bad as, short of changing out these units, each spend is patent waste.
The company stated in its letter, “In the last five years, JPS invested US$280 million in operational improvements, while on the other hand recording US$115 million in cumulative profit.”
Great for JPS, the contractors involved and the workers, but where in all of this did the customers, the lifeblood of JPS, get a benefit? Where was the rate reduction?
The letter also said, “Mr Wignall’s article also incorrectly states that JPS does not suffer a penalty for inefficient operations. The fact is that the measures of efficiency, Heat Rate and System Losses, serve as significant sanctions for inefficiency. Heat Rate measures the efficiency with which oil is used in the generation process
The Jamaica Public Service Company (JPS) is willing to consider coal as an alternative fuel source for electricity generation, but it first wants to execute plans to develop the LNG plant to which the Government finally gave the green light just over a week ago.
A University of the West Indies think tank has conducted research which shows that LNG was a less expensive option to oil, but a more expensive alternative to coal-generated energy, which they found was the most efficient source in powering a light bulb.
JPS chief executive officer Kelly Tomblin – a 25-year veteran of the utilities business in the United States and other markets and who took up the position at the light and power supplier three weeks ago – said the company and its shareholders were interested in investing in any long term solution for Jamaica, including coal.
However: “As an outsider, if I look to where we are, I would encourage us to execute on the plans that we’ve all agreed to as a first step,” Tomblin said.
“We believe that long-term fuel diversity is a number one issue,” Tomblin told the
Transformation of the energy sector, to bring more players into the industry so as to achieve greater efficiencies and reduce costs to consumers, was the key focus of the Minister of Science, Technology, Energy and Mining (STEM), Phillip Paulwell, during the first 100 days of his stewardship.
The Minister, recognising that Jamaicans are burdened by the high energy prices, said the time has come to liberalise the sector and introduce a fully competitive arrangement that
Kelly Tomblin, the new CEO of the Jamaica Public Service Company (JPS), the light and power company, has started well. Rather, in her first interview with this newspaper, she was soothing.
But neither empathy nor intent to soften the hardened image of the JPS will be enough. If JPS is to be a player in Jamaica’s energy future, it has to be fully engaged in efforts for the efficient delivery of power to customers, which will require it to be a vastly more efficient operation.
Put another way, it just won’t do for the JPS to use two barrels of oil equivalent to generate the electricity to light a simple 100-watt incandescent bulb for a year. Nor can it be tolerated that more than 70 per cent of the fuel, mostly expensive oil, it consumes goes to waste, producing nothing.
Indeed, JPS has to convince Jamaicans that it can, and will, be a serious contributor to efforts to slash the price of electricity from around US$0.41 per kilowatt-hour to the US$0.10-US$0.15 required for the Jamaican economy to have a reasonable chance of competing with its neighbours.
In this regard, the contribution of the Energy Think Tank at the University of the West Indies, Mona, to the energy debate, by making the issue accessible to most people – such as with the light bulb example – is important.
The group bases its conclusion on the fact that the value of a barrel of oil equivalent is 1.7 megawatt hours, or 1,700 kilowatt-hours (kWh). A 100-watt incandescent bulb, burning continuously for 365 days, or 8,760 hours, would consume 876 kilowatt-hours, or 51 per cent of the electricity output of a barrel of oil equivalent.
But at the rate at which JPS converts its fuel to electricity, the company gets only 35 per cent of its energy value. Old equipment and other inefficiencies mean that 65 per cent goes up in smoke – literally.
Rethink both cost and technology
Of the electricity generated by the little more than one-third of a barrel of oil that is actually converted to power, 23 per cent is lost in transmission and distribution, a combination of technical loss and consumer theft. So, only 27 per cent of the potential energy from a barrel of oil burned by JPS reaches its consumers, or, in this case, the Energy Think Tank’s 100-watt bulb.
That’s untenable!
We note Ms Tomblin’s allusion to the 360-megawatt gas-fired plant that JPS won a tender to install, which promises to cut the cost of electricity by a third. That is a start, but hardly the full solution to an energy-competitive Jamaican economy. For while fuel type is critical, it is not the only issue relevant to the delivery of competitive power in Jamaica. Plant technology, for instance, will be important, as well its financing cost.
These matters need to be fully and honestly ventilated – from all angles. So, too, must be the matter of competition.
On the latter point, given her assertion about the inefficacy of multiple grids in small countries, we suppose that Ms Tomblin has not yet been fully briefed on the competition model for transmission and distribution floated by the Government.
We look forward to an informed discourse, but urgent action.
http://jamaica-gleaner.com/gleaner/20120425/cleisure/cleisure1.html
- OUR to re-tender second phase of project
Power company Jamaica Public Service Company and its Asian owners plan to create a vehicle to own and operate the planned 360-megawatt plant, whose output will be sold to the electricity provider once it is commissioned, but Wednesday Business has learned that the Jamaican Government is gunning for a bigger share of the plant’s ownership.
Well-placed sources have told
Come May 1, consumers will be able to apply for a net billing licence from the Jamaica Public Service (JPS) and the Office of Utilities Regulation (OUR), Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell,has announced.
Speaking at the opening of the Jamaica Power Summit 2012 at the Jamaica Pegasus Hotel in New Kingston today(April 19), Mr. Paulwell said that both commercial and residential consumers can apply for the licence.
Net billing is provided for under the new energy licence renegotiated with the JPS.
Customers of