EDITORIAL - Energy too critical for a stand-off

It is time for all sides to end the public posturing and begin substantive and mature discussions on policy, strategy and tactics for lowering the cost of energy to Jamaican consumers. An important element of this approach, of course, has to be the setting of priorities and the establishment of timelines.

We have returned to the topic of energy against the backdrop of last weekend's remark by Dan Theoc, the chief financial officer of the electricity utility the Jamaica Public Service Company (JPS), that if, and how, it proceeds on a 360-megawatt natural gas-generating facility will be dependent on whether the Government can provide assurance of the long-term supply of the fuel.

Mr Theoc's polite bluntness may have surprised many, being coincidental with ads hailing its plans for a natural-gas power plant that would lower the price of electricity by 30 per cent.

It's no mystery. He was adverting to the adage that the grass tends to seem greener on the other side, and hinting to the Government, rightly, that it must get its priorities right.

It is absolutely impervious to contrary argument that at around US 40 cents per kilowatt-hour, electricity in Jamaica is not only expensive, but severely undermines the competitiveness of the island's economy. Lowering that price is a potential game-changer for the economy.

Breaking the JPS's monopoly

Phillip Paulwell, the energy minister in the new administration, believes that this can be best achieved by breaking the JPS's monopoly in retail distribution of electricity, reckoning if that were to happen, it would also lead to new investment in power generation and a drop in price by up to 60 per cent. He is yet to publicly share the technical basis of these assumptions.

And there are doubters about the efficacy of liberalising the grid. The view here is that concentration should be on lowering price of fuel used for power generation, which, in this case, means substituting expensive oil for natural gas, or perhaps coal.

In this regard, JPS has the go-ahead for a natural-gas-powered plant predicated on a top price for liquefied natural gas (LNG) of US$12 per one million British thermal unit (a measure of energy) equivalent, against the US$17 and US$24 the company now pays for oil. Additionally, the new facility - generating nearly half of Jamaica's peak electricity - would use the fuel with far greater efficiency than the existing old plants.

The problem, however, is that the Government is still to finalise bids for an LNG floating storage and regasification facility as well as find suppliers of the gas. Meantime, JPS and its principals fear that the Government's signal of its intention to end the company's distribution monopoly will weaken its ability to raise capital, at the best price, for the US$600-million facility.

Not only is the programme for LNG much further advanced than any other, but far quicker to deliver than coal, although that fuel is cheaper and available.

All energy options must be explored. But the crisis insists on an immediate concentration on LNG and the appropriate sequencing of other projects.

The situation calls for serious, measured dialogue, which the Government should lead. Mobilising the masses comes only if there is stalemate and intransigence.

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.