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Power hopes surge - OUR announces preferred bidder for 360MW plant - Paulwell expects significant cut in electricity costs by 2016

Published:Thursday | September 19, 2013 | 12:00 AM
From left: Hopeton Heron, deputy director general of the Office of Utilities Regulation (OUR); Maurice Charvis, interim director general of the OUR; and Cheryl Lewis, general counsel, speaks to members of the media at a media briefing at the regulator's offices in New Kingston yesterday. - Rudolph Brown/Photographer
Energy Minister Phillip Paulwell

Livern Barrett, Gleaner Writer

DESPITE A bold pronouncement from Energy Minister Phillip Paulwell that Jamaica is on the way to cutting its energy cost by half in the next five years, the Office of Utilities Regulation (OUR) and Azurest Cambridge Power say they have not done any modelling to make such a forecast.

The OUR yesterday announced Azurest Cambridge, which is believed to have proposed to provide energy to the national grid at US$0.1390 cents per kilowatt-hour, as the preferred bidder for the 360-megawatt power project.

"We have not done that analysis yet," the interim director general of the OUR, Maurice Charvis, told journalists during a press conference at his New Kingston offices.

Kenneth Allen, an executive with Azurest Cambridge, also refused to make any predictions, noting that the issue of energy cost is something that Jamaicans have grappled with for years.

"It is really hard to say. I mean I can tell you whatever price I want, but that might have no relation to the price people see," Allen told The Gleaner after the announcement.

This comes in stark contrast to the pronouncements Allen made during a press conference in August, when he promised that should Azurest Cambridge win the bid, it would cut the cost of electricity in half by 2015.


The 360-megawatt power plant is a critical component of the Government's plans to slash energy cost from the current rate of US$0.42 cents per kilowatt hour.

"Until we get to between US$0.15 and US$0.18 cents, Jamaica has no future, and this 360-megawatt plant is critical to that," Paulwell told The Gleaner on Tuesday.

Yesterday, the energy minister said he believes electricity cost in Jamaica will be cut in half over the medium to long term (2016-2018), based on the price quoted by Azurest Cambridge as well as a raft of other measures being implemented to lower the cost of energy.

"The price that has been put on the table will enable a significant reduction in the price of electricity by 2016. That will see us closer to our objective of between US0.15 and US$0.20 cents," Paulwell said.

"This will represent a significant reduction of the price of electricity, when it becomes operational, largely because you are taking out of the current system 292MW of old, heavy fuel oil-burning capacity, which runs at US$0.25 to US$0.30-odd cents," Paulwell said.

With the price at which the winning bidder is proposing to sell to the national grid now known, Charvis said it is going to take "a little while" to analyse the savings Jamaicans can expect in the electricity bills by 2015-2016.

"I hear 30 per cent being bandied about … . I don't want to throw out any numbers, but the US$0.1390 cents is lower than even the fuel price alone. So we will see a reduction," he insisted.


Azurest Cambridge, a United States-based consortium, has 15 days to pay over to the OUR a bid security of US$6.9 million or one per cent of the total cost of the project.

The OUR's director of regulation, policy, monitoring and enforcement, Ansord Hewitt, said if the consortium fails to post this bond, the project will be offered to Energy World International out of Hong Kong, which came in second.

In the meantime, Paulwell told The Gleaner yesterday that he expects the OUR to announce, the preferred bidder for a 115-megawatt renewable-energy power plant later this month.

According to Paulwell, the Government, in moving to cut energy costs, is tackling the problem from various angles.

He said, for example, that it is intended to transform the combined-cycle plants like the Bogue and west Kingston plants into gas plants, so they would not be burning diesel oil, which is very expensive.

"We also expect improvements now on the distribution and transmission system, so that the element of theft and heat losses can also be significantly reduced," Paulwell said.

He noted that at least one of the independent power provider contracts will end by 2017, and signalled that in negotiation for renewing new capacity, the price will have to be significantly reduced.