Editorial | Wheel and come again on electricity review

Daryl Vaz, the energy minister, owes Jamaicans a fuller, and more compelling, case for pulling the plug, temporarily he said, on a parliamentary committee that was reviewing the Electricity Act and the likelihood that it will further delay the introduction of additional renewable capacity of the island’s electricity grid.

In fact, Mr Vaz, or perhaps Prime Minister Andrew Holness, should say if the Government is still committed to having at least half the country’s power delivered from renewables by the early 2030s, as was promised by the PM.

The current Electricity Act – passed in 2015 – provides the broad framework under which electricity generation, transmission and distribution companies operate in the island. A clause in the legislation called for its review after five years, which is what a joint select committee of both houses of Parliament has been doing for several months, albeit the process started late. The committee has been poring over and debating a raft of submissions from a wide range of interests, including the companies that operate in the sector and regulator, the Office of Utilities Regulations.

But in a little-noticed development at a July 6 sitting of the committee, Minister Vaz, the committee’s chairman, surprisingly announced his intention to pause its work, or, as he put it in Jamaican parlance, to “wheel and come again”. He blamed the COVID-19 pandemic and war in Ukraine, which disrupted global energy markets and caused many countries to rethink their energy policies.

“When we were doing this originally (preparing for the legislation’s review), there was no COVID, no Ukraine war and no global energy crisis, which we are in now,” Mr Vaz said. “All that has changed and we have seen a massive readjustment in how the (world) is viewing energy.”

Added the minister: “Consequently, we, I believe strongly, and I hope my colleagues agree with me, have to review our premises and review all our assumptions, based on current trends, against what we used originally, in relation to the matrix that we are using.”

SERIOUS CONCERNS

The minister’s statement is, on the face of it, quite reasonable. But it raises several serious concerns.

First, while Mr Vaz spoke of the urgency of having a holistic energy plan, and legislation, “to guide generation for decades”, he gave no timeline for the committee to resume its work. Indeed, he highlighted the shortage of technical and other capacity in his ministry and said that he had engaged international partners for assistance. He was also only now pulling together a domestic stakeholder group to oversee the recalibration.

There are, however, two other critical factors that call into question the basis of the administration’s policymaking and why it should be, at this stage, caught so badly offguard and out of step with global events. Admittedly, the committee began its work before the deep thrall of the energy crisis. However, the world was well into the throes of the pandemic and the disruption of global supply chains. There were the signals, too, from the early recovering economies that growing global demand would exert pressure on prices.

Russia’s invasion of Ukraine in February, and the resulting sanctions by the West on Moscow, obviously exacerbated a crisis that was already manifest and responses to which were incorporated in many of the submissions to the parliamentary committee. In any event, the process is expected to be in stasis. The committee, and the technocrats servicing them, should be expected to have the capacity to respond to changes in the global environment without having to place the entire exercise on “recess”, as Mr Vaz promises to do.

SIGNIFICANT POINT

The more significant point, though, is that the crisis validated, or so it seemed, the Government’s plan to accelerate the use of renewables, which currently accounts for 17 per cent of Jamaica’s generating capacity. The price of fossil fuel (including natural gas which accounts for 39 per cent of the fuel used for power generation) has soared.

Indeed, in reporting on the work of his ministry to Parliament in June, Mr Vaz boasted of the prescience of the Holness administration’s plan to accelerate renewables, especially solar energy, for which tropical Jamaica is quite suitable.

“[E]ven before this very unfortunate occurrence (the war in Ukraine) Jamaica’s energy transition, diversity, and ultimate energy security was high on the list of national priorities for this ministry,” he said. Which makes Mr Vaz’s reference to those countries that have, in the midst of the crisis, re-embraced dirty fossil fuels, including coal, particularly worrying. He should clarify those comments and what implications they may hold for Jamaica.

Further, it is not clear how the policy of prioritising renewables is advanced by the shutdown of the committee. For instance, Jamaica Public Service (JPS), the monopoly transmission and distribution company, which is also a power generator, has, in law, the first right of refusal on replacing its own power plants that become obsolete. Its competitors question that capacity. However, JPS has 180 megawatt of generating capacity that is up for replacement. There is, however, no policy clarity on how the Government intends to proceed. Further, the kinds of technologies to be employed in renewables, and whether their price also has to cover the cost of fossil generators to cover intermittence, are matters that have been long on the agenda of the Government.

Maybe there are deeper issues that haven’t been grasped. Which is why Mr Vaz should wheel and come again.