Sat | Oct 21, 2017

New front in energy debate

Published:Sunday | March 1, 2015 | 12:00 AM

After the debacles of the recent past, it appears that Jamaica is on well on its way to sorting out how it will deliver new, cheaper electricity-generating capacity.

The Electricity Sector Enterprise Team (ESET), the Cabinet-appointed task force mandated to clean up the mess, has an agreement with the Jamaica Public Service Company (JPS), the transmission and distribution monopoly, to develop 190 megawatts of replacement generating capacity. UC Rusal has planned a 140-megawatt cogeneration plant at its alumina refinery in St Elizabeth. The new owners of the Jamalco refinery are committed to a 40-megawatt plant at their facility. The build-out of a number of renewable plants has begun.

These developments, however, do not mean that all is settled on the electricity front. For as a sector growing larger and more complex, its regulation, as is increasingly obvious in the tariff determination squabbles between JPS and the Office of Utilities Regulation (OUR), is an area of potentially great friction. This is something to which Jamaica must pay attention and get right if we are to realise what is on promise.

A new electricity law now before Parliament, but which is yet to get serious public attention, provides a platform from which to engage this necessary debate. For, if passed in its current form, the bill, on the face of it, portends substantial changes in the way electricity enterprises, particularly JPS, conduct their business, in which consumers should have an interest.

 

SIGNIFICANT ASPECT

 

Among the more significant aspects of the bill is a requirement at Section 19 that an electricity sector operator "separate its dispatch activities from its transmission activities and its activities relating to generation, distribution and supply" of electricity. In the case of the "single buyer" of electricity, which at this time is JPS, it would have to "establish a discrete system operator department whose staff shall be employed in undertaking dispatch activities and the head of which department shall report to the single buyer's board of directors". Some are likely to interpret this provision as a back-door attempt at splitting the company into two separate operating entities, fulfilling a policy promise which it was assumed the Government had caused to lapse.

Then there is the matter of how baseload generating capacity is to be procured in the future. ESET inherited the job by default because of the perception of the OUR - the baton having been passed to it after the energy ministry had incompetently managed previous initiatives - was inept in its turn.

The plan now is to return procurement to the minister. In the case of JPS, the idea is for it to be able to replace capacity, in accordance with guidelines set by the minister, failure to meet which would lead to the procurement going to public tender. However, there is in this bill automatic right of appeal against a ministerial assertion of breach. Similarly, there is no declared right of appeal in the bill against the suspension or revocation of a licensee deemed to be in breach of operating obligations.

First, ministerial responsibility should end at policy. Commercial activity, including procurement, should be the province of another competent, ESET-like body. Further, appeal is a fundamental right that should be declared in the law, rather than being left to an operating licence.