Phillip Paulwell
Jamaica Public Service Company headquarters on Knutsford Boulevard in New Kingston. – File
The Office of Utilities Regulation has formally cancelled its agreement with JPS for development the 360 MW liquid natural gas plant, but the power company said Tuesday that the decision does not mean an end to the energy project.
Jamaica Public Service Company presented a modified version of the development to the OUR last Thursday, but would not say whether that plan still banks primarily on LNG for the plant ahead of feedback from the regulator on its proposal.
Company spokeswoman Winsome Callum told
We are sick and tired of Mr Phillip Paulwell’s approach to energy policy formulation that appears to us to be an amalgam of stalking horses, three-card tricksters, and loquacious bravado.
So, it is time for the minister to end the drawing room charade and come clean with the Jamaican people. There is far too much at stake for anything less.
We here refer to what, at a glance, seems to be a public difference between the energy and mining minister and Mr Zia Mian, the outgoing head of the Office of Utilities Regulation (OUR), over whether the agreement for the Jamaica Public Service Company (JPS), the light and power provider, to build a 360-megawatt power plant will be, is, or has been rescinded.
Ask us: It’s all a contrivance. It has been an open secret for weeks, especially in circles where energy matters are discussed, that JPS’s successful bid for the plant would be abrogated and another route sought. The deed, the OUR has now reported, is done. Prior to that, the issue was how to announce a policy lurch on energy to the public and how breaking the contract would be achieved without inviting lawsuits from JPS.
The background to this matter is – Minister Paulwell’s obfuscatory palliative notwithstanding – on Jamaica’s energy crisis. We described the energy situation as such because at more than US$0.41 per kilowatt-hour, the cost of electricity in Jamaica is not only high, but destabilising to the economy. It helps to make our firms uncompetitive in the global market.
Indeed, it was this problem that the new JPS plant, to be fired by natural gas, was aimed at curing. Gas is cheaper than the expensive oil that now accounts for more than 90 per cent of Jamaica’s energy.
At the time of the bidding, during the former administration, after more than a circumlocutory discourse on the energy question, the Government undertook to source liquefied natural gas (LNG) for the facility. The problem is that it could not find LNG at a price that allowed for a one-third drop in electricity prices.
The administration backed out of the undertaking to procure the fuel and gave the task to JPS. It was soon apparent that JPS was not having any better luck. In the meantime, Mr Paulwell was floating new, untried gas transportation/delivery technology to achieve this end. His effort seems to have failed.
FORK IN THE ROAD
All this seems to have played into Mr Paulwell’s preference of coal as Jamaica’s best, and most economic, fuel option. It was Mr Mian’s preferred option, too, nearly a decade and a half ago when he first advised Jamaica on energy. Later, in line with government policy, he worked on the LNG option, but says that Jamaica missed the window. Mr Mian now says that the OUR will retender the power plant, but this time with an open fuel option.
Mr Paulwell, in ‘responding’ to Mr Mian’s comments, says that while “we have been in discussions with the OUR”, there was as yet no formal submission to take to the Cabinet. He knows, too, that JPS has made “a revised submission” on the plant. What that entails, we were not told.
These statements were being made only hours before the OUR’s formal declaration that it had pulled the plugged on JPS.
So, after a zigzag run, the energy question slowed at another fork in the road. What we need is some damn honesty on the matter. We won’t tolerate hazy backroom dealing on this.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
Read more:
Paul Mullings’ picture that ‘speaks volumes’ about an islandwide blackout. – Contributed
Gary Spaulding, Senior Gleaner WriterEnergy Minister Phillip Paulwell has admitted that the country could return to a period of frequent power outages if steps to replace the ageing and inefficient Jamaica Public Service Company (JPS) generators are not done by 2015.
“In about three years you are going to see degradation in the generating capacity and units are going to start to fail
Paul Mullings’ picture that ‘speaks volumes’ about an islandwide blackout. – Contributed
Gary Spaulding, Senior Gleaner WriterEnergy Minister Phillip Paulwell has admitted that the country could return to a period of frequent power outages if steps to replace the ageing and inefficient Jamaica Public Service Company (JPS) generators are not done by 2015.
“In about three years you are going to see degradation in the generating capacity and units are going to start to fail
Phillip Paulwell, Minister of Mining, Energy and ICT
Arthur Hall, Senior News Editor
After a decade of expensive flirting and the expenditure of some US$4 million, the Government has finally ended its attempt at introducing liquefied natural gas (LNG) as the solution to the country’s high electricity prices.
Energy Minister Phillip Paulwell last week blamed the unavailability of the supply of LNG at reasonable prices as the reason for the reversal of a decision which had found favour with successive administrations over the past decade.
“Last year, in the middle of all that we were doing, I went to Angola to try to find gas. I recently went to Nigeria. I have been trying to find gas that makes sense,” Paulwell told a Gleaner Editors’ Forum as he noted that the original source for the gas, Trinidad and Tobago, has now officially been abandoned.
“2010 with Exmar would have been the best time to pursue an LNG deal. At that time, the market situation was right, Exmar had a number of projects going so they could benefit from the volume.
“Since then, the price of LNG has gone up, largely due to the demand out of Asia,” said Paulwell as he noted that the price of LNG has more than doubled since the Exmar agreement was abandoned.
According to Paulwell, he always favoured coal over LNG and had made a recommendation to that effect to the Cabinet shortly before the People’s National Party was voted out of power in 2006.
Mullings favoured coal
Clive Mullings, who replaced Paulwell as energy minister in the Jamaica Labour Party administration, also favoured coal and is believed to have lost his place in the Bruce Golding-led Cabinet because he bucked his colleagues who agreed that LNG was the way forward.
With Paulwell now done with LNG, coal will be in the fuel mix but gas remains highly favoured as the main alternative source of energy for the Jamaica Public Service Company (JPS).
“I am not going CLG (compressed liquid gas) and I’m not going LNG,” Paulwell told the Gleaner editors even as he refused to say exactly what would be the option.
Instead, the energy minister said major discussions are slated for tomorrow which could determine how quickly Jamaican consumers will get cheaper electricity.
He said officials of the JPS, the major players in the bauxite industry, the Government and an international investor are to meet in Kingston in an attempt to iron out an agreement.
“If that agreement is reached, the natural gas project is on,” said Paulwell as he refused to provide any further details on what he described as sensitive negotiations which have been taking place over the last two months.
Close to recommendation
Paulwell declared that after all the discussions and negotiations which took place last year, he is close to being in a position to recommend a firm position to the Cabinet.
He said if there is no agreement out of tomorrow’s meeting, his backup plan will include the introduction of interim solutions of small generation facilities, including renewables while moving towards the introduction of coal.
“Coal won’t come for about four years, even though the Chinese have said they could bring it in two years,” said Paulwell who is adamant that the price of electricity to the Jamaican consumer must move to between 15 and 18 US cents per kilowatt-hour (c/kWh) instead of the present 40-41 US c/kWh
Paulwell had previously announced that the JPS would be introducing LNG at its soon-to-be constructed 360-megawatt plant in Old Harbour, St Catherine.
“The Government of Jamaica decided it was no longer going to be the procurer for gas and it put the ball back in the court of the company that received the licence but it did not mean we would be sitting ideally by, so we have been very engaged in the process,” said Paulwell.
While admitting that it will not be his call if the JPS accepts the gas project now on the table, Paulwell said he would be urging the parties to find common ground when they meet tomorrow as this could lead to lower electricity prices at the earliest time.
- Paulwell’s 3-step plan for cheaper electricity
Energy Minister Phillip Paulwell is staking his political career on cutting the cost of electricity to Jamaicans by more than 50 per cent.
Last week, during a Gleaner forum, Paulwell listed the steps he plans to take to ensure that electricity from the Jamaica Public Service Company (JPS) becomes much cheaper over the next three to four years.
1. Fuel diversification
Plan:
Phillip Paulwell, Minister of Mining, Energy and ICT
Arthur Hall, Senior News Editor
After a decade of expensive flirting and the expenditure of some US$4 million, the Government has finally ended its attempt at introducing liquefied natural gas (LNG) as the solution to the country’s high electricity prices.
Energy Minister Phillip Paulwell last week blamed the unavailability of the supply of LNG at reasonable prices as the reason for the reversal of a decision which had found favour with successive administrations over the past decade.
“Last year, in the middle of all that we were doing, I went to Angola to try to find gas. I recently went to Nigeria. I have been trying to find gas that makes sense,” Paulwell told a Gleaner Editors’ Forum as he noted that the original source for the gas, Trinidad and Tobago, has now officially been abandoned.
“2010 with Exmar would have been the best time to pursue an LNG deal. At that time, the market situation was right, Exmar had a number of projects going so they could benefit from the volume.
“Since then, the price of LNG has gone up, largely due to the demand out of Asia,” said Paulwell as he noted that the price of LNG has more than doubled since the Exmar agreement was abandoned.
According to Paulwell, he always favoured coal over LNG and had made a recommendation to that effect to the Cabinet shortly before the People’s National Party was voted out of power in 2006.
Mullings favoured coal
Clive Mullings, who replaced Paulwell as energy minister in the Jamaica Labour Party administration, also favoured coal and is believed to have lost his place in the Bruce Golding-led Cabinet because he bucked his colleagues who agreed that LNG was the way forward.
With Paulwell now done with LNG, coal will be in the fuel mix but gas remains highly favoured as the main alternative source of energy for the Jamaica Public Service Company (JPS).
“I am not going CLG (compressed liquid gas) and I’m not going LNG,” Paulwell told the Gleaner editors even as he refused to say exactly what would be the option.
Instead, the energy minister said major discussions are slated for tomorrow which could determine how quickly Jamaican consumers will get cheaper electricity.
He said officials of the JPS, the major players in the bauxite industry, the Government and an international investor are to meet in Kingston in an attempt to iron out an agreement.
“If that agreement is reached, the natural gas project is on,” said Paulwell as he refused to provide any further details on what he described as sensitive negotiations which have been taking place over the last two months.
Close to recommendation
Paulwell declared that after all the discussions and negotiations which took place last year, he is close to being in a position to recommend a firm position to the Cabinet.
He said if there is no agreement out of tomorrow’s meeting, his backup plan will include the introduction of interim solutions of small generation facilities, including renewables while moving towards the introduction of coal.
“Coal won’t come for about four years, even though the Chinese have said they could bring it in two years,” said Paulwell who is adamant that the price of electricity to the Jamaican consumer must move to between 15 and 18 US cents per kilowatt-hour (c/kWh) instead of the present 40-41 US c/kWh
Paulwell had previously announced that the JPS would be introducing LNG at its soon-to-be constructed 360-megawatt plant in Old Harbour, St Catherine.
“The Government of Jamaica decided it was no longer going to be the procurer for gas and it put the ball back in the court of the company that received the licence but it did not mean we would be sitting ideally by, so we have been very engaged in the process,” said Paulwell.
While admitting that it will not be his call if the JPS accepts the gas project now on the table, Paulwell said he would be urging the parties to find common ground when they meet tomorrow as this could lead to lower electricity prices at the earliest time.
- Paulwell’s 3-step plan for cheaper electricity
Energy Minister Phillip Paulwell is staking his political career on cutting the cost of electricity to Jamaicans by more than 50 per cent.
Last week, during a Gleaner forum, Paulwell listed the steps he plans to take to ensure that electricity from the Jamaica Public Service Company (JPS) becomes much cheaper over the next three to four years.
1. Fuel diversification
Plan:
THE 360-megawatt (MW) electricity generation plant to be located in Old Harbour, St Catherine, is now expected to come on stream in early 2016.
What’s more, commercial scale renewable energy projects won’t get the go-ahead until preferred bidders are selected from an ongoing request for proposal, which is scheduled to end in April.
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The commissioning of the 66-MW West Kingston Power Plant last year would have led to more efficient generation, allowing for a reduction in the overall fuel bill of Jamaica. |
Bringing it closer to the home or business also doesn’t appear to make solar-powered generating systems, or photovoltaic systems, any more feasible, given the sluggish process involved in getting them into net billing contracts.
And while electricity rates are at historical highs in Jamaica and it appears that Jamaica Public Service Company’s (JPS’s) customers won’t see a dramatic reduction in rates for years to come, some businesses still stand to benefit from power wheeling as early as this year.
Wheeling would give private entities access to JPS’s distribution lines to provide its own electricity at several sites across the island.
The OUR is now conducting a public consultation on a wheeling framework that would determine how self-generators would be charged for use of the national grid and aims to publish a determination notice on February 15.
Even then, wheeling has been a long time coming for some companies.
“The Jamaica Broilers (JB) Group has, over the years, invested considerable sums in its co-generation power plant with the hope that 2012 would have been the year that “power wheeling” became a reality in Jamaica,” said the company’s assistant vice-president of energy, John Carberry. “After a firm commitment by the nation’s leaders that this would be in place for 2012, the group was disappointed by several postponements and revisions of previously communicated launch dates.”
The uncertainty constrained the group’s further planned investments, but now JB hopes the framework and logistics will be unveiled early in 2013.
The commissioning of Jamaica Energy Partners’s (JEP’s) 66-MW West Kingston Power Plant last year meant more efficient generation, allowing for a reduction in the overall fuel bill of Jamaica, according to JEP’s managing director, Wayne McKenzie.
“This would have resulted in a lower heat rate system-wide,” he said.
The OUR also raised efficiency requirements, through the lowering of the heat rate target, that should have resulted in a 2.6 per cent reduction in fuel charges, which coupled with a 1.1 per cent increase in non-fuel tariff allowed to JPS, should have led to an overall reduction in electricity rates.
Nevertheless, JPS fuel rates ended last year 13 per cent higher than at the start, albeit slightly lower than the peak of $24 per kilowatt-hour (kWh) in May, and was on average six per cent higher than the average in 2011.
JB said it took a leadership position in the use of renewable energy in its poultry operations last year. It embarked on a solar photovoltaic (PV) energy programme “that sees its contract farmer network making the single largest investment in renewable solar energy in the Jamaican manufacturing sector”, according to Carberry.
“This programme continues to roll out through 2013 and is expected to be completed by the second quarter of 2013,” he said.
But participating farmers have expressed grave concerns as their efforts to expedite the standard offer contract (SOC) with JPS has been challenged by “the slow pace of the required administrative support to facilitate the necessary Grid -tied connections and metering”, according to the JB
vice-president.
“It is hoped that 2013 will see this process being streamlined as it threatens to derail the progress made thus far,” he told the Jamaica Observer.
The OUR said that in order
to facilitate a smooth implementation process, a sub-committee including members from the Bureau of Standards, MSTEM and JPS has been established by the National Energy Council to deliberate and resolve issues related to its implementation.
Twenty-six licences have been issued since the project was implemented at the end of May.
On a larger scale, investors wanting to build out renewable energy capacity in the latest round of investments in Jamaica will have to do so by early 2015.
Up to 115 megawatts (MW) are up for grabs.
The regulator is pushing for renewable generation plants to be up and running by May 2015.
Currently, approximately 64 MW of the 930 MW installed generating capacity in Jamaica is made up of wind and hydroelectric generators.
Another 6.4 MW hydro plant in Magotty, St Elizabeth, is set to come on line next year. Adding another 115 MW to that amount would substantially increase the proportion of electricity generated by renewables.
However, JPS’s owners are bringing 360 MW of capacity to be fired by natural gas on stream by 2015, to replace older and less efficient plants, which are rated at 292 MW, and add 68 MW to the grid.
The new liquefied natural gas (LNG) plants are now expected to come on line by the first quarter of 2016, instead of mid 2014 as originally required, or 2015 as was projected up to late last year.
The delay in implementing the largest single power generation project in Jamaica was due to uncertainties in the delivery date and price for procurement of natural gas through the GOJ Steering Committee led LNG Project.
However, last year the Government dropped the LNG Project, opting instead to leave the procurement to the private sector, or more specifically the owners of the new power plant.
“2013 may be a watershed year for generation in Jamaica,” said McKenzie. “The status of the natural gas project decides how pricing of energy and development will be done going forward. One must be mindful that a true fuel mix is required for generation and not just a majority switch from heavy fuel oil to natural gas.”
Read more:
State Minister in the Ministry of Science, Technology, Energy and Mining, Hon. Julian Robinson (2nd right), examines information in a resource document November 28, 2012 opening of a two-day energy workshop at the Knutsford Court Hotel in New Kingston. Also looking at the document are (from left): Principal Director of the Energy Division in the Ministry, Fitzroy Vidal; Facilitator, Dr. Yvonne Barton; and Edgar Wiggins, also from the Ministry.
The Ministry of Science, Technology, Energy and Mining (MSTEM), has brought together stakeholders from a wide cross section of public and private sector agencies, to participate in discussions on the introduction of natural gas as a means of diversifying Jamaica