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Using Oil, LNG Might Negligibly Affect Electricity Prices – JPS

February 17, 2016 Webmaster

The Jamaica Public Service Company (JPS) says it is unable to definitively state how the use of both automotive diesel oil and liquefied natural gas (LNG) at the Bogue power plant in St James will impact the price of electricity to consumers.

It said the power plant currently burns on automotive diesel oil “and we are doing a conversion that adds the capability to also burn natural gas. So we will end up with the ability to burn both fuels at no extra cost”.

Responding to Wednesday Business queries about the rationale for the dual-fuel facility, the JPS said natural gas will be the primary fuel on which the plant operates and automotive diesel oil will be a back-up fuel “in case we have any problems with receiving natural gas”.

It added that under normal conditions, the plant will effectively be a gas-fired power plant.

IMPACTON ELECTRICITY PRICES

As to how it will impact the price of electricity the JPS said in emailed responses that “we cannot speak to the likely impact on electricity prices given the uncertainty of prices in the future (for oil vs LNG)”.

However, it said that the impact is expected to be negligible given that Bogue only represents approximately 10 per cent of the company’s total costs.

“What we can say with fairly good certainty is that the cost of electricity today is 30 per cent lower than it was one year ago, and we expect that trend to continue throughout 2016, given that 80 per cent of our net generation (production) will still be based on oil, 10 per cent will be from natural gas, and we expect renewables to make up 10 per cent of our net generation once the three renewable energy projects currently under construction (for circa 80 megwatts) are completed before the end of 2016.”

The JPS, an integrated electric utility company and the sole distributor of electricity in Jamaica, added that “that means we continue doing a good job as a country of increasing the penetration of renewable, while also diversifying our fuel mix and reducing our overexposure to oil”.

It said that it is hoping to continue doing more of that through the 37 megawatts of renewables currently being pursued by the Office of Utilities Regulation through a request for proposal, as well as its 190 megawatt gas-fired power plant that will be commissioned in mid-2018.

IMPROVING COMPETITIVENESS

Reducing the cost of electricity is critical to improve competitiveness, according to the International Monetary Fund’s latest updated memorandum of economic and financial policies.

It said that the action plan prepared by the Electricity Sector Enterprise Team foresees replacing current oil-fired generation capacity with gas, coal and ethane-fired plants to achieve significant cost savings.

Next steps will include the conversion of the Bogue power station from oil to gas, a process which the JPS is currently undertaking.

In addition, said the memorandum, the Government has approved the construction of Jamaica’s first natural gas-fired power plant, a 190-megawatt facility to be built and operated by JPS, and to be completed by 2018. Several renewable energy projects are also under way.

The Government said it will prepare a plan to ensure that all public entities – central government, local government and public bodies – meet their financial obligations in a timely manner.

In the memorandum, the Government also pointed out that urgent actions will be taken to reduce the time needed for entrepreneurs to get an electricity connection. Plans foresee the automation of the work processes within the government electrical regulator and the acquisition of an Application Management and Data Automation (AMANDA) software to streamline procedures for scheduling, inspecting, approving and certifying electrical installations.

An action plan for implementation of the reforms and adoption of the AMANDA system are expected to be completed in fiscal year 2016/17, with support from the Inter-American Development Bank.

The Gleaner

Electricity JPS News Oil

JPS yearly profit jumps 24%

February 17, 2016 Webmaster

Light company at ease with increase in customer satisfaction

Light distributor Jamaica Public Service (JPS) has reported a 24 per cent jump in annual profits, increasing from US$23 million in financial year 2014 to US$28.6 million for 2015.

The increase in profits came despite a 54 per cent decline on year-on-year net profits for the December period, with the quarter closing at US$4.87 million ($589 million), compared to almost US$10.5 million for the same quarter in 2014.

The decline in net profit was led by a US$47.6 million dip in revenues as oil which fuels most of JPS power stations continues to trend downward and the consistent passing of the reduced rates on customer’s electricity bills, according to just released data.

Revenue for the three-month period ending December 2015 was US$176.7 million, compared with US$224.3 million a year earlier.

“It’s really great to have lower prices, yes, but what’s not great is for them to go up and down. So we’ve worked on how we do create a more sustainable environment that doesn’t have that volatility. I have to say that the one that’s right here, right now is the Bogue project,” JPS CEO Kelly Tomblin stated at a press conference earlier this month.

“The other thing that will help with this problem is an integrated resource plan (IRP), which will help us in determining what resource and where will best support sustainability and most of all affordability,” she added.

Consumer electricity rates are currently at a five-year low.

Despite seeing significant declines in net profit, JPS expressed some satisfaction with the quality of service being provided to consumers which trended upwards at 70 per cent in 2015.

JPS saw one of its lowest satisfaction rates back in 2012 at 22 per cent; however, Tomblin is encouraged by the growth in customer satisfaction and plans on implementing 10 initiatives geared towards continued growth in customer service.

“You can see how customer satisfaction has grown; it’s almost at 70 per cent. We are not happy with that but we have worked very hard to say to our customers we appreciate you and we want to be in a different conversation,” she said.

Senior vice-president for energy delivery and technology, Gary Barrow, noted that the company has already seen a 30.3 per cent decrease in the frequency of outages when compared with the previous year. The company also noted that it is working on the Government of Jamaica to improve payment for street lights, as it moves to implement LED lighting over the next five years.

Throughout 2016, JPS plans on completing the conversion of the Bogue power plant, while partaking in initiatives to lead in a ‘clean and green’ Jamaica. Additionally, the company has started the process of implementing advance smart grid, proliferate prepaid meters, improving customer engagement, and the implementation of the JPS mobile application.

JPS also plans on connecting 10 new communities during the year.

Jamaica Observer

Electricity Government JPS

JPS writes off $100m of electricity bills

February 8, 2016 Webmaster

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 Gleaner

Alternative Energy Government JPS News Solar Energy

Paulwell says net billing to resume, but solar energy providers still in limbo

February 1, 2016 Webmaster

Energy Minister Phillip Paulwell

ALMOST a year after net billing was suspended, there are indications that the programme is to resume, although Energy Minister Phillip Paulwell is yet to set a timeline.

He said recommendations have been made to the Office of Utilities Regulation (OUR) to resume processing licences. But, before that can happen, the Electricity Lighting Act must be amended and the Jamaica Solar Energy Association (SEA) raised concerns that nothing has been done to have the legislation amended.

At Wednesday’s national conference for the development of an energy services company industry in Jamaica, Paulwell said that the Government is committed to reopening net billing.

He, however, explained that while the law names the Energy Sector Enterprise Team (ESET) as the body responsible for regulating new generation capacity, it was felt that it (net billing) is not appropriately placed at ESET, and that the OUR is expected to resume processing net billing licences.

So far, more than 300 licences have been issued, but solar energy providers have not been able to interconnect to the JPS grid since May of last year.

David Barrett, president of SEA, says the association’s membership is still in a state of confusion.

“It’s static now (the sector) because people have no entity to get a licence from, they don’t know who to go to. Some persons have gone to the OUR or the JPS (Jamaica Public Service company) but they can’t do it because of the obvious reasons,” he told the Jamaica Observer last Thursday.

Over the months, entrepreneurs in the solar energy sector have complained bitterly of suffering millions in losses after the JPS stopped net billing to carry out an assessment of the pilot. The review was completed by the United States’ National Renewable Energy Laboratory and the report made public in June, but all grid interconnection for new net billing projects islandwide have still remained on hold.

Solar energy providers say the prolonged suspension has dealt their outfits a serious blow, arguing, too, that the JPS has too much power over the arrangement and that the Government needs to act decisively on the issue.

Barrett said the members are neither pleased with the pace of the process nor the new conditions that are being established.

“What has been decided is that the cap is to be five megawatts instead of 11 as it would have been in the previous phase, and that the cap for the individual locations will remain as they are. The association is not too happy about that because we feel that there is easy opportunity to increase potential for renewables in Jamaica without disturbing the grid in any way,” he told the Observer earlier this month.

Additionally, Barrett expressed disappointment that the association had not been invited to the table when the new cap was being set. “So we don’t have the information that fed into the decision-making process,” he stated.

Net billing permits JPS customers, who own renewable energy generators, to produce electricity for personal use and to sell excess energy to the light and power monopoly at wholesale prices, which are set by the OUR.

Jamaica Observer

Alternative Energy Crude Oil JPS LNG News Oil

JPS, New Fortress Pursuing Separate Parts Of LNG Project

January 25, 2016 Webmaster

The oil-fired JPS power plant in Old Harbour Bay, St Catherine is to be replaced with a gas-fired plant.

The announcement of an agreement between Jamaica Public Service Company (JPS) and a Chinese firm is expected this week for the construction of the new energy plant at Old Harbour.

JPS and American company New Fortress Energy are executing separate projects at Old Harbour – the Jamaican utility company is building a new 190 MW plant, while Fortress is financing and developing the gas infrastructure to supply the plant with LNG.

Together, the projects are estimated at around US$500 million.

JPS said it will have no ownership in the gas infrastructure project nor contribute to the cost of developing it, but will solely be a client of New Fortress, which will build its pipeline to connect to the JPS plant. The same arrangement applies to the gas infrastructure under development by New Fortress in Montego Bay, which will feed gas to JPS’ Bogue plant.

The utility company said previously that the 190 MW combined cycle plant at Old Harbour is expect to cost close to US$300 million.

The name of the Chinese contractor will be disclosed only after the deal to develop the plant is finalised, JPS said. The utilitycompany had previously chosen Abengoa to develop the plant only to be embarrassed when the Spanish firm filed for bankruptcy protection in its home country just days later.

JPS is also in final negotiations with General Electric (GE) as the primary equipment supplier for the Old Harbour plant.

“JPS is currently finalising the agreements with both GE and the ‘EPC’ contractor and coordinating the start of this new generation facility with the completion of an associated LNG facility that will be built to provide gas. These two projects will total over US$500 million and begin operation in early 2018 with full commercial operation by the middle of 2018,” said JPS via email.

EPC is a categorisation, which stands for ‘engineering, procurement and construction’ contractor.

The plant’s advance GE turbines will utilise cleaner burning natural gas, replacing the heavy fuel oil currently used at Old Harbour, and will be able to integrate increased solar, wind and hydro resources as Jamaica moves towards producing more electricity from renewable resources.

“GE will provide four turbines – three gas turbines and one steam turbine the three heat recovery steam generators, the four electrical generators and the major controls,” said JPS.

Once the new Old Harbour plant is built, the current structure will be dismantled, and the property will resort to brownfield status, according to JPS spokeswoman Winsome Callum.

New Fortress is negotiating separately with the Electricity Sector Enterprise Team regarding its gas project, Callum said.

JPS has spent some US$4 million so far in preparing for the upgrade over the past 24 months.

The Gleaner

Electricity JPS News Oil

Electricity bills getting lighter

January 14, 2016 Webmaster

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 Observer

Alternative Energy Climate Change Electricity Energy Saving News Solar Energy

Honey Bun To Invest US$250,000 On Solar Project

January 6, 2016 Webmaster

The Kingston-based bakery Honey Bun Limited is planning to spend US$250,000 to invest in its own 100-kilowatt solar-energy system at its factory in Kingston with the objective of increasing efficiency.

The project is expected to save the company, funded and run by the Chong family, up to 30 per cent on its electricity bill. The company’s strategy is to stagger the solar project over five stages with the first completed in December.

“Honey Bun strives to be more efficient while considering the impact we have on our environment. To that end, we aim to reduce our carbon footprint through Jamaica’s natural solar energy,” according to Chief Operating Officer Daniel Chong.

The company started installing solar panels on the roof of the factory since September 2015, Chong said. In the first phase,

24 kilowatts of inter-connected self-consumption photovoltaic power was installed. This will run concurrently with power supplied by the Jamaica Public Service, in order to increase energy output while lowering cost, he added. The precise timeline for the remaining stages remains undetermined.

“This will be concurrent with the expected build-out of factory space for increased output capacity,” Honey Bun said in response to Wednesday Business queries.

The project is expected to lower the $36 million spent in its 2015 financial year ($38.8 million in 2014) on an expense-line item termed rates, taxes, telephone, fuel and electricity.

Honey Bun’s property, plant and equipment, fair valued at $278 million, remains its largest asset which drives the electricity spend. Honey Bun acquired two properties in the company’s financial year ending September 2014. The acquisitions resulted in $145 million worth of additions to its property, plant and equipment during the 2014 financial year.

The company reportedly bought a 20,000-square foot property that joins its existing operations on Retirement Crescent to another piece it bought in October 2014. Its three properties combined are contiguous at numbers 22, 24 and 26 Retirement Crescent. The properties total some 1.3 acres or 57,000 square feet.

Honey Bun earned $69.9 million in profit from $885 million in sales for its September 2015 year end, compared with $22 million the previous year.

The company manufactures and distributes baked products to the local and export markets. It was listed on the junior market of the Jamaica Stock Exchange in June 2011. The profit rise contributed to the company’s stock jumping from $1.71 to $6.18 over 52 weeks.

The Gleaner

Electricity JPS News Oil

JPS Signs MOU With Chinese Based Company For 190 MW Plant

January 4, 2016 Webmaster

The Jamaica Public Service has entered into a Memorandum of Understanding (MOU) with a China-based energy company to build the 190 MW Old Harbour Bay Power Station.

The Chinese company will replace the Spanish firm Abengoa, which filed for protection from creditors a few days after it was named as the preferred bidder for the construction of the power plant.

President and Chief Executive Office of JPS, Kelly Tomblin has said that the name of the company cannot be released due to confidentiality agreements, but that the company was well known in China and within the energy sector.

“JPS, given its continuing concerns for the financial viability and strength of Abengoa and their inability to meet our financial requirements, has moved to enter into an MOU agreement with a Chinese EPC provider,” she told The Gleaner.

Meeting With ESET

She pointed out that the name of the firm and the terms of the deal will be made public once discussions are complete.

Tomblin also indicated that JPS will be meeting with the Energy Sector Enterprise Team (ESET) next week Monday to discuss the new bidder and the finer details of a possible deal between both parties.

“We plan to meet with ESET on Monday afternoon to go through final details, and we will disclose more after that meeting.”

The JPS moved to assure stakeholders that the 190 MW project remains on track for the plant’s commissioning in 2018.

JPS says it was undaunted by the financial woes being faced by Abengoa and would be looking at alternatives.

“Abengoa was selected based on its wide-ranging and impressive technical expertise. The firm has constructed several combined cycle power plants around the world, and is also well known for its construction of renewable energy power plants. JPS also had the understanding that Abengoa’s financiers were committed to the company for the long term,” the company said in a press release.

The Gleaner

Electricity JPS News

JPS To Offer Prepaid Meters Islandwide Next Year

December 18, 2015 Webmaster

A Jamaica Public Service technician at work seeking to regularize electricity supply in Denham Town, Kingston.

Utility provider Jamaica Public Service (JPS) will offer prepaid service in all parishes next year, but expects power consumption to dip slightly in the process.

The prepaid service will become available to all residential customers who opt for it, but will not initially be offered to commercial customers.

“By the end of 2016, we will offer prepaid meters to all parishes,” JPS President Kelly Tomblin told the Financial Gleaner in a telephone interview this week. “That’s our goal – to focus on residential customers.”

She explained that the service will eventually launch an app that will allow persons to top-up their accounts on their telephones or other devices.

Expectations of reduced revenues

Tomlin said the prepaid meter service is expected to reduce total revenues to JPS because of an expected reduction in consumption. However, the savings should give customers more disposable income to spend or save.

“It will help to grow the economy because if you use less (energy), then you have more money to spend, which helps the economy,” Tomblin said.

JPS introduced a prepaid electricity service as an option as part of the fulfilment of its pledge to find alternative energy solutions for all Jamaicans.

“It is intended for those Jamaicans who have asked us for a payment option that can better assist them in predicting and budgeting for their electricity bills. Although new to Jamaica, prepaid electricity is a standard service product offered by many electric utilities the world over for decades,” JPS said in response to Financial Gleaner queries.

To introduce the service, JPS opted to do a limited pilot of the programme across Kingston, St Andrew and St Catherine, which the company intends to use to tweak the product before a wider roll-out across the island in 2016.

JPS added that the service is currently available to all residential and Rate 20 (general services/small commercial) customers and potential customers across Kingston, St Catherine and St Andrew.

“Prepaid electricity service was never designed, and is not intended, as a tool to fight electricity theft,” the JPS said.” It has, however, proved to be a very effective tool for budget-conscious customers who want more control to tailor their consumption to match how much they have to spend at any given time,” the company added.

JPS made US$23.7 million in net profit over nine months ending September 2015 on revenues of US$583 million, which nearly doubled the US$12.5 million in profit earned a year earlier. The light and power provider said that it requires a new tariff to be approved by the Office of Utilities Regulation (OUR) as prepaid is a new and different service from the normal post-paid payment solution.

“Designing and developing a new tariff for a new utility service can be a complex matter and JPS and the OUR have been in discussions for many months on the subject,” said the JPS communications department. “This involved JPS making submissions to the OUR, showing different forecasts of what we believe the demand for the new service will be over time and the impact this will have on revenues, depending on the rate and structure of the tariff design,” it added.

The Gleaner

Electricity JPS LNG

JPS Closing Negotiations With Alternate Bidder For 190mW Project

December 18, 2015 Webmaster

The Jamaica Public Service Company Ltd (JPS) has made good on its pledge to activate alternative plans to ensure the execution of the proposed 190-megawatt power plant at Old Harbour in St Catherine.

Yesterday, the light and power company said it was now in the final stages of negotiations with an alternate bidder to provide engineering, procurement and construction services, for the plant to be built in Old Harbour, St Catherine.

The original preferred bidder, Abengoa, was selected through a competitive tender process, with the assistance of two international consulting firms, AMEC Foster Wheeler and Power Engineers Collaborative LLC.

In November, the Spanish firm filed for protection from creditors – a possible first step towards filing for bankruptcy.

With the announcement of Abengoa’s financial challenges, JPS has been closely watching the progress of the Spanish company’s financial-restructuring plan.

However, Abengoa has not been able to provide the financial assurances required as a normal part of the process of confirming a bidder.

Kelly Tomblin, JPS president and chief executive officer, said: “We are very close to concluding key terms with one of our alternate bidders. Throughout this time, we have been working closely with the Electricity Sector Enterprise Team (ESET), so they are embedded in the process.”

Commenting on the importance of the project to Jamaica, Tomblin said: “We want to make it very clear that this project is not, and has never been, in danger. JPS shareholders (EWP and Marubeni) are the ones who have committed to bringing equity to the project, and there is keen interest and indicative commitment from a variety of financing sources. I want to make it very clear that the bidder on this project is not the financier. They are an engineering, procurement and construction firm, who will be subject to significant oversight and potential penalties for non-performance. We need to clear up any confusion on their role.”

The Gleaner

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