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EDITORIAL - Coordinating energy

Published:Monday | November 17, 2014 | 12:00 AM

Jamaicans will welcome last week's announcement by the light and power provider, Jamaica Public Service Company (JPS), that they will have a reduction of around eight per cent on their electricity bills for November, compared to the previous month. That's a result of the continued fall in the price for oil that has recently provided energy consumers with a bit of a respite.

But it's not the time for either whooping or complacency. Oil prices can turn again. And in any event, the cost of energy in Jamaica is, at more than US$0.33 per kilowatt-hour, still expensive, to which the need for a solution is urgent if the island is to develop a competitive economy. That is why we feel that the fragmented, piecemeal approach to energy policy coordination and implementation needs to be put right.

Several months ago, following the fiasco with Energy World International's (EWI) inability to finance the 381-megawatt, gas-fired power plant, for which it was the preferred bidder, the Government, as was suggested by this newspaper, named a so-called Energy Sector Enterprise Team (ESET) to oversee the development of a new/reconstituted project. Led by Dr Vin Lawrence, a politically connected technocrat with a sharp mind and the capacity to get things done, that group includes skilled people from academia and the private sector.

We expect that they will soon unveil their replacement proposal, centering on a recommendation of direct negotiations with JPS for a replacement of some of its old, inefficient generators rather than a public tender for new capacity. Of course, JPS would have to be capable of delivering power at a price consistent with Jamaica's growth objectives.

But since ESET's establishment, events have moved fast on the business/economic front, demanding greater clarity on energy policy and for its implementation at a faster speed. For instance, several proposals have been put forward by individual companies for solving their own energy problems, but with excess power to be sold to the national grid.

BASELOAD CAPACITY

Further, the Office of Utilities Regulation (OUR), which previously managed the tender process for additional baseload capacity, has approved 78 megawatts of renewable energy to private commercial generators, at rates that would offer them returns on equity of up to 18 per cent. At the same time, the OUR is to soon rule on the JPS's application for new electricity tariffs. The company asked for an average 21 per cent increase, which we expect it will argue is necessary to keep the company profitable, allow it to pay its debts, and invest in new projects, like the one on the table with ESET.

It is against the backdrop of these developments that we believe that it would make sense that, for a time, ESET be charged with full oversight and implementation of the energy programme and policy development, coordination and implementation. The group would work with the various agencies and ministries to review all projects and energy pricing at all levels. In that regard, ESET's recommendations on these matters would, by agreement, be treated the same way as those by the Electoral Commission to the political parties and Government are handled - with a direct move to implementation.