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JPPC knocks ESET - But Lawrence pushes back on claims of IPP neglect

Published:Wednesday | September 17, 2014 | 9:00 AM
Dr Vincent Lawrence, head of ESET.
Ingrid Christian-Baker, CEO of Jamaica Private Power Company.
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Avia Collinder, Gleaner Writer

Dr Vincent Lawrence, consultant in charge of the Electricity Sector Enterprise Team (ESET), said Tuesday that fears expressed by independent power providers (IPPs) that they will be excluded from the planning process for future energy generation are unfounded.

His assurances come amid concerns raised by Jamaica Private Power Company Limited (JPPC) that while the ESET report is due for submission before monthend, Lawrence's team has not reached out to the IPPs, nor acknowledged its proposals.

ESET was established earlier in the year to reformulate Govern-ment's energy programme after another failed effort at getting the LNG project off the ground.

Lawrence told Wednesday Business that ESET will make a submission to Cabinet this week, but he indicated that this was just the starting point.

After Cabinet is briefed, he said ESET will bring the IPPs into the process.

But CEO of JPPC, Ingrid Christian-Baker, said Tuesday that while there have been indications that there would be consultations with Jamaica Public Service Company Limited, the IPPs and other industry groups, it has not happened yet.

She said this latest oversight is part of a pattern of exclusion of IPPs from discussions about the industry at a national level.

"We are part of the industry, and from time to time, decisions have been made without the IPPs being considered," said Christian Baker.

"There have been changes to the GCT Act in 2013, which have seen advantages to JPS, which have not been passed on. Based on how the legislation is worded, it ignores the fact they are a generator just like us," she said.

consultations

Lawrence told Wednesday Business that the IPPs were communicated with several weeks ago and "advised that they will be invited to meet with the team during September 2014 upon completion of the initial rapid assessment which was completed last Friday".

He added: "After review today and reporting to Cabinet this week, full consultations will be held with the IPPs to get their business view and thereafter make a determination as to how they fit into the Integrated Resource Plan (IRP) which will emanate from the rapid assessment. Once ESET has reported to and receives Cabinet endorsement, the public will also be briefed through the medium of a press conference."

CEO of Jamaica Energy Partners, Wayne McKenzie, the other large private power supplier, said he received communication from ESET inviting him to a meeting in the "week of September 15th".

"We have been given an option of when to meet," said McKenzie, adding that he will be able to present his contribution on reducing energy costs to ESET.

One of the concerns of the IPPs is said to be a proposal under the LNG project, which will reclassify their supplies as peak load, and therefore subject to variable payments. IPP capacity is now classified as base load.

Lawrence addressed that concern by dismissing it.

"There is no intent or consideration being given to changing any of the contractual terms of the IPPs. Their current power supply to JPS is based on their production being dispatchable and no reasons for any changes have been ascertained," he said.

The head of ESET noted that his team has received several offers for construction of interim power supply facilities until the LNG plant is constructed, but said that these proposals would have to wait their turn in the review process.

The LNG programme has previously been dubbed the 360 MW project, the 381 MW project, and the base load project.

"Recommendations for new generation requirements will be determined upon completion of the integrated resource plan and when approved by Cabinet. Thereafter, Cabinet is also expected to approve and stipulate the procurement process," he said.

no formal proposal

Christian-Baker of JPPC confirmed that her company is among those offering to develop interim generating projects until the ESET programme is executed.

"We have not made a formal proposal, but we have indicated," she said.

"Some of the concerns which came up in the last round of discussions was ability to build. While we acknowledge of a large portion of what is on the grid, a large portion of JPS plants needs to be removed because of inefficiency. While we are doing these long discussions about fuel and who should do it [the LNG plant], what should be ensured is that there is the capability and the financing to deliver a plant."

She declined to name the price at which JPPC would provide the interim power, saying only that "it would be a good price."

The financing would come from JPPC's parent company, "which has been building large power plants - 800 and 600 MW plants - all over the world. They have the capability to do that here," Christian-Baker said.

JPPC is owned by IC Power, an international subsidiary of Israel Corp Group, which increased its stake in the Jamaican company to 100 per cent earlier this year.

It said then that it had a strategic plan to establish itself as a major player in the power generation business in Central America, the Caribbean, as well as in South America."

avia.collinder@gleanerjm.com