EDITORIAL - Incompetence with energy

The Office of Utilities Regulation (OUR) must quickly decide whether it is up to the job it is mandated to perform. If it is not, it must move over and let someone else get on with it.

We especially refer to the agency's ability to determine Jamaica's future energy needs, the fuel mix that will meet those requirements at the cheapest cost, and to evaluate bids that will deliver power most economically.

To be frank, this newspaper is not now sanguine of the OUR's capacity to deliver. Nor are we any more convinced that the Government is appropriately seized of the importance of the urgency with which the matter needs to be resolved.

Or, maybe it is that our people are playing games, or have motives understood only by themselves. For when seemingly rational people engage in irrational behaviour, it is cause to wonder.

There, long ago, appeared to have been consensus on the energy question: that the cost of electricity, at around US$0.42 per kilowatt-hour, makes Jamaican businesses uncompetitive and is a major drag on the country's economy. So, a substantial lowering of the cost of power, it was agreed, or so we thought, was a national priority.

NATURAL GAS AND HOT AIR

The issue was what would constitute a reasonable lowering of the price of energy, and how this was to be achieved. After more than a decade of haggling and procrastination, it was finally agreed, as official policy, that natural gas would be the fuel of choice.

In 2010, a 480-megawatt gas-fired plant, with appropriate facilities for the storage and regasification of liquefied natural gas (LNG), was put to tender. But that arrangement was abandoned when it was determined that the bidding process may have been affected by conflicts of interest and/or inappropriate behaviour.

Towards the end of 2011, the Jamaica Public Service Company (JPS), which has a monopoly on the transmission and distribution of electricity, was the sole bidder and selectee to build and operate a 360-megawatt plant. But by February this year, the OUR was withdrawing from the arrangement during differences over bond payments and the inability of JPS to source LNG at price points the regulator felt were tolerable.

PROPOSAL EXTENSIONS

In early February, the OUR announced it would accept unsolicited proposals for the power plant.

Five entities filed bids, comprising 14 proposals. The OUR shortlisted three companies, and a final recommendation to the Government should have been done by April 15. But before that time, the process was reopened to allow the consideration of a bid to the Government by a latecomer.

Since then, there have been two extensions to accommodate changes by the OUR to the instructions to the bidding entities. So, instead of completing an evaluation of the bids by August 28, the OUR now says that will happen by September 9.

Overall, the projection for completing negotiations with the successful bidder, by the OUR's estimate, will be delayed by only a few weeks, thus allowing the construction of the facility to begin in early 2014. This newspaper, however, is not convinced.

At the very least, the entire process has been messy, overlaid by a whiff of amateurism - or worse.

Energy is too crucial to the economy for such sloppy management. Perhaps there is more that people should know than meets the eye.

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.