Mullings chides OUR - Accuses regulator of sleeping on the job
Published:Sunday | July 31, 2011 | 12:00 AM
Daraine Luton, Senior Staff Reporter
UTILITIES REGULATOR, the Office of Utilities Regulation (OUR), has been accused by Energy Minister Clive Mullings of dereliction of duty.
Mullings, who was addressing a Gleaner Editors' Forum on Thursday, said the OUR has failed to protect the consumer from unnecessary electricity costs.
"I have serious questions of the OUR as to whether they are monitoring the dispatch of the units. I am concerned that there is an IPP (Independent Power Producer), which has a unit, they are paid for capacity but it is not brought on line," Mullings said.
He told the Editors' Forum that the unit in question utilises cheaper energy and, thus, if it is brought on line, would help reduce the cost of power to Jamaicans.
"It is something that we need to look at," the minister said, while noting that the OUR is an independent body which is not subject to the direction of external forces.
Blaming the OUR for dereliction, Mullings said, "You have, for instance, a plant such as Bogue in St James. It's a very efficient plant, but very expensive.
"In order to meet the demand or having stability in the system, you run the Bogue plant and you are running diesel, while at the same time you may very well have a plant, for instance, Jamaica Energy Partners, that is not brought on line.
"It means that [as it relates to] the dispatch of your plants, there is a big question mark over that. That has an impact on your bill," Mullings said.
The energy minister was also fiercely critical of the OUR for the manner in which it handled proposed amendments to the power-purchase agreement between the JPS and Wigton Wind Farm.
Based on a formula agreed by the Government in 2001, Wigton earned only US$0.05 per kWh in 2010. William Saunders, head of Wigton Windfarm, has said the JPS agreed to review the power-purchase rates between Wigton and JPS. He said both parties agreed to adjust the rate to US$0.08 per kWh to be effective on July 1, 2009. This rate adjustment, however, was subject to approval by the OUR. The OUR did not approve the adjustment, saying it would set a precedent for all IPPs.
Mullings noted that Wigton has been losing millions of dollars because of the power-purchase agreement with the JPS, where the prices were not competitive to allow it to make a profit.
Wigton bearing losses
He noted that at the time when Marubeni, majority shareholder in JPS, was selling shares to the Abu Dhabi National Energy Company PJSC and needed the government's consent, new terms were being negotiated under the power-purchase agreement to make Wigton profitable, if not break even.
"But the OUR objected and took their time about arriving at a pricing arrangement, and Wigton continue to lose money," Mullings said.
He also pointed to the bid for additional generating capacity for 480 megawatts of electricity in which only the JPS participated.
Mullings said based on the way the RFP was done, an argument can be made that a monopoly exists on the generation side of electricity.
"Issues arose as to whether the requirements for other persons to bid were too onerous," Mullings noted.
"Is the regulator, in putting the request for proposal, placing too onerous of a restriction so that you keep other persons out - wittingly or unwittingly?
"When you look at the sector and the role of the regulator, is the regulator doing what is required?" the minister questioned.
In the meantime, director of consumer and public affairs at the OUR, Michael Bryce, said that the regulatory agency could not comment on Minister Mulling's assertions.
"We are unable to provide you with a response on this matter at this time, as there are certain specifics which have to be ascertained before we can do so," he told The Sunday Gleaner.