Former Energy Minister Phillip Paulwell says consumers who have been benefiting from reduced electricity rates from the Jamaica Public Service (JPS) over the last 12 months could see a hike in the cost of energy with the Government’s imposition of new taxes on heavy fuel oil and liquefied natural gas.
The JPS recently concluded work to convert its Bogue Power Plant in Montego Bay, St James, to dual-fuel capability.
United States-based New Fortress Energy is expected to bring liquefied natural gas into the island by August, at which point the newly converted Bogue power plant will begin to use the more environmentally friendly fuel.
Paulwell’s concerns came as he spoke with journalists yesterday at the end of Shaw’s opening contribution to the Budget Debate.
“Currently, the JPS does not pay taxes on heavy fuel oil. Government has now imposed a tax both on liquefied natural gas, which will arrive in August of this year, and on heavy fuel oil, so it means a significant increase in the price of electricity that has been trending down by almost 50 per cent over the last year.”
At the same time, Opposition Leader Portia Simpson Miller is taking the Government to task for “breaking its promise” by imposing new taxes to fund the tax-relief plan.
“All I can say is that they have broken their promise to the Jamaican people – no new tax – but, from all indication of what Minister Shaw said today (yesterday), it is the poor that will suffer,” she said.
Central Manchester MP Peter Bunting argued that the increased taxes would affect everyone, but have a more significant effect on those who earn under $600,000 per annum, and who will have to face increased transport and electricity costs.
He described the tax measures as regressive, noting that persons at the bottom of the society are being burdened to give relief to those earning at a higher level.
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.
Although Abengoa, the Spanish company selected as the preferred bidder to build a major power plant in Jamaica, has initiated steps that could lead to a bankruptcy declaration, Jamaica Public Service Company CEO Kelly Tomblin is not yet ready to call it quits on the multinational corporation.
Reacting to news of the bankruptcy proceedings initiated by Abengoa, Tomblin said she was monitoring the situation of the Spanish renewable-energy company.
It was only last week that JPS announced Abengoa as the preferred bidder to build the 190-megawatt combined-cycle plant in Old Harbour, St Catherine.
Despite fears that Abengoa may not be able to fulfil the requirements of the bid, given its precarious financial situation, Tomblin is holding out hope that the company will be able to make good on its financial obligations in relation to the bid.
“We have been monitoring the situation for some time. We have backup plans, but we have to wait and see what Abengoa shows us. But pot can’t call kettle black because JPS, as you know, has had its own financial difficulties, and we are just now emerging from those, so we know what it’s like, so we want to make sure that we don’t overreact,” Tomblin told The Gleaner last evening.
In the event that Abengoa folds completely, Kelly Tomblin pointed out that JPS has several alternatives.
“There are other vendors. We have many vendors who were poised to build the plant, so if, in fact, Abengoa can’t show, then other people can build the power plant. As you know, we have shareholders who have deep expertise, but we don’t want to jump the gun. Of course, Abengoa will have to give us financial assurance, but, again, pot can’t call the kettle black. It wasn’t very long ago that JPS, too, was facing insolvency problems,” she said.
Energy Minister Phillip Paulwell, in reacting to the news, said there was no need to panic and that JPS should be given the space to continue the procurement process.
When asked if the situation vindicates him in respect of the Energy World International (EWI) bid, Paulwell said, “There will be vindication when the gas is here because that, for me, is the most important aspect.”
Paulwell was in charge of overseeing the Government’s 391-megawatt project, which awarded a bid to EWI, a company which faced financial woes, leading to questions about its ability to deliver on the bid. This was before responsibility for the project was handed over to the Vin Lawrence-led enterprise team.
Now, with news of Abengoa’s bankruptcy filing, Jamaica’s renewable-energy plans may be delayed yet again.
Abengoa’s latest financial woes sent shockwaves through the banking sector and financial markets in Spain yesterday, fuelling concerns that the country’s lenders may be left with heavy losses.
According to international media reports, Abengoa has been having financial challenges from as far back as 2013, when Spain instituted energy reforms, which reduced subsidies to renewable-energy providers. This affected Abengoa’s capital base significantly and further exacerbated its pile-up of debt.
The Financial Times has said that a possible default by Abengoa could count as the largest bankruptcy in Spanish history, given that as of September, Abengoa carried gross debt of £8.9 billion.
The filing for preliminary creditor protection yesterday came after a potential investor cancelled plans to inject £350 million into the company.
While he could not comment on questions of whether due diligence was done on the Abengoa bid, Private Sector Organisation of Jamaica CEO Dennis Chung said news of the filing does not mean the company will go under, as bankruptcy proceedings often give a company an opportunity to rebuild.
“I couldn’t comment on due diligence. I have to believe that proper due diligence would have been done, so that question should be put to the person who actually did the due diligence,” Chung said.
The lush green Malvern hills in the distance is in stark contrast to parched lands at Red Bank, St Elizabeth. Almost everywhere, farmers are busy pouring water on their plants, which are, for the most part, fighting an uphill battle against a wicked drought that threatens to bring everyone to their knees.
At Red Bank, there is no piped water, the catchments are dry, and the sun stands overhead like a wicked overseer. But it is not all bad. One man, Denroy Evans, has, for the past year, plugged into the element and is using solar power to drive his businesses.
Evans told The Gleaner that high electricity costs had threatened the survival of his business.
“One day I went to pay my bill and the lady looked at me and said, ‘Mr Evans, wait, a weh yu a burn up deh suh?'” Evans recalled.
He had gone to a bill payment agency in Junction, five miles from Red Bank, to pay a Jamaica Public Service (JPS) bill of $100,000.
“That is when I started to think. I said to myself, ‘If I could save that $100,000 per month, it would be $1.2 millon per year. So why not muscle up and put in the system and save it?'” Evan said.
Invested $4 Million
That was just over two years ago. Since then, he has invested roughly $4 million in a solar lighting system, and hardly has to deal with the JPS.
“With the high cost of energy, you have to find alternative sources. With the introduction of the solar system, we are now paying, depending on the time of the year, $6,000 to $12,000 per month. We have saved 85 to 90 per cent by installing solar, [the cost of] which will be recovered in about three to four years,” Evans told The Gleaner.
The system, which has been mounted on the top of a building that serves as home for a farm store, a supermarket and a variety store, consists of 63 solar panels, 56 batteries, a 6,000 watt inverter, and three controllers for the charging system. It runs some 10 refrigerators, lights, computers, cameras and fans.
“On the average, I pull down about 80-kilowatt (kw) hours per day and use about 75kw hours daily. We get good weather. We don’t get any rain and the sun is always out,” Evans quipped.
He said that the use of renewable energy is definitely the way to go, but cautions that anybody who wishes to invest should first of all educate himself/herself about the system.
“I have seen many people install it and they don’t even go into the battery room to check anything. What results is that the battery runs out of water … you need to be integrally involved in your solar system,” said Evans, who is a trained farmer and one-time teacher.
Light and power company JPS said that it is in favour of Jamaicans maximising the potential of solar and other renewable power. The company said, however, that the regulatory authorities must pay attention to the fact that the cost of operating the national grid is not dependent on the number of users.
“If you come on for one hour, I have to do the same exact generation that I have to do if you are on for one day,” Kelly Tomblin, JPS president and CEO told The Gleaner.
“If you have solar and you come on my system for 10 minutes, I have to build the same amount of infrastructure. If you are going to go solar, go completely solar, or if you are coming on my system, price it so that it reflects the fact that I have to build an exact same power plant and exact same infrastructure,” Tomblin added.
KINGSTON, Jamaica (JIS) –The Government has changed the name and mandate of the Rural Electrification Programme (REP), to the National Energy Solution Company Limited (NESCL), with an expanded role to achieve energy efficiency.
Making the disclosure, Minister of Science, Technology, Energy and Mining Phillip Paulwell said the company, while bringing electricity to the 2.5 per cent of the island that is without the commodity, will also play a major role to reduce energy losses.
He noted that thousands of houses across the island are not properly wired, and working with the Jamaica Public Service Company (JPS), and the Jamaica Social Investment Fund (JSIF), the problem will be finally solved.
“The NESCL is going to take that on. We are going to be working with the JPS (to cover) over 100 communities indentified by JSIF, where we have to do regularisation,” the minister said, while addressing the opening of an energy forum today at the Jamaica Pegasus Hotel in New Kingston.
“My role is to ensure that when we go through communities, we do not see this phenomenon. It is dangerous, it causes fires, deaths, and we are going to regularise the situation, once and for all,” Paulwell emphasised.
The minister also pointed out that much of the services offered by the Government Electricity Inspectors (GEIs) will be privatised, so that persons can get timely certification to access regular electricity.
The workshop is being held over three days, and will hear from representatives from six countries on their experiences to reduce energy losses.
Partners in the workshop are the United States Agency for International Development (USAID), Office of Utilities Regulation, and the JPS.
The REP was incorporated in 1975, with the specific mandate to expand the reach of electricity supply to rural areas, where the provision of such services would not be economically viable for commercial providers of electricity.
It constructs electrical distribution pole line in electrified areas and provides house wiring assistance through a loan programme to householders.
Jamaica is to be darkness-free by 2017. Well, almost free of darkness, according to Phillip Paulwell, the energy minister who says the Government is prepared to use solar energy to power houses in remote rural areas that are not currently connected to the grid.
“We expect that, by 2017, some 99.99 per cent of the country will be covered,” Paulwell told The Gleaner yesterday.
At present, 95 per cent of the country is covered, which Paulwell said is due in the main to the role of the Rural Electrification Programme (REP) established in the 1970s.
“We believe that we are in sight of completing the work of REP, based on what we have left to be done. I believe that sometime during this year or the first year during the new term, we will be able to say 99.99 per cent, because you could never get to 100 per cent, has access to electricity,” Paulwell said.
The Government has allocated $374.7 million in this 2015-2016 Budget for the REP to carry out its functions. The target includes the construction of 30 kilometres of pole line extensions in 10 parishes and the wiring of 1,000 houses to facilitate formal contracts with the Jamaica Public Service Company.
Paulwell told The Gleaner yesterday that, by 2017, “we should no longer have REP in the way we do now”, adding that if the Government finds it too challenging to run power lines into communities, it will use solar.
See more details at jamaica-gleaner.com
ENERGY Minister Phillip Paulwell
ENERGY Minister Phillip Paulwell is seeking legal advice from the solicitor general with a view to taking Contractor General Dirk Harrison to court over his report on the bidding process to implement the 381-megawatt energy project, according to a well-placed source.
Consultations, the newspaper was informed, are already underway between the solicitor general and the embattled minister, who is fighting to clear not only his name, but to repair any reputational damage that occurred to the country with the Inter-American Development Bank (IDB) reversing its position to support the 381MW project as a result of the contractor general’s report.
The Jamaica Observer was, however, unable to reach Paulwell last night for a comment.
The basis on which the minister can seek judicial review of the contractor general report lies in the legal response of the Office of Utilities Regulation (OUR) to the Office of the Contractor General’s special investigation report, the source said.
The OUR legal response, posted on its website, contends that the OCG erred in using the Government of Jamaica guidelines for consultancy tenders during its probe, whereas it should have used guidelines for Works Tenders. This, the source contends, is a serious error in law.
The OUR legal response further contends that the OUR conducted two distinctly different processes: an informal exploratory process in which expressions of interest were received, followed by a formal legal tender.
The source said that Energy World International (EWl), the company that eventually emerged as the preferred bidder to undertake the project, received Cabinet approval to be included after the deadline of the informal preliminary process but well before the commencement of the formal tender.
The sources said these two facts provided the foundation to apply for judicial review.
The project is to be built with a mix of EWI equity and multilateral funding. The imprimatur of the IDB is key to receiving the go-ahead for that funding.
It was Harrison’s first major report since assuming office in 2013. The report was issued on the same day that he issued the long-awaited Richard Azan report. But this isn’t the first time in recent years that a Government minister will be taking the OCG to court.
Transport Minister Dr Omar Davies last year sought leave for judicial review of a decision by the contractor general to monitor an oversight body set up by the minister to advise on the award of contracts to a public body.
The minister, however, withdrew the challenge.