JAMAICA | Paulwell says JPS Plan Could Cost Higher Electricity Bills

KINGSTON,  Jamaica, April 12, 2022 - Opposition Spokesman on Energy Phillip Paulwell is not happy with the right of first refusal that JPSCo has in relation to the addition of new generation capacity to the grid, “as this could have a negative impact on us both for the short and long-run periods.”

Making his contribution to the Sectoral Debate in the House of Representatives on Tuesday, Paulwell has expressed concern that Jamaicans could be saddled with higher electricity costs if the Jamaica Public Service Company (JPS) moves ahead with plans to replace 171.5 megawatts of existing capacity.

Paulwell noted that ”in the Joint Select Committee  reviewing the 2015 Electricity Act, one issue that has arisen is the right of first refusal that JPSCo has in relation to the addition of new generation capacity to the grid, that was conceded to them in 2015 because of the urgency to diversify fuel sources.

They want the Right of First Refusal clause in the electricity licence to the JPS removed, he said.

That clause grants the JPS the right to replace its generating units when they become due to be retired.

Mr. Paulwell has questioned the move by the JPS to replace the generating capacity ahead of the amendments to the Electricity Act, arguing that it could result in further financial burdens for JPS customers.

"The demand for electricity has been falling, especially since COVID-19. It is likely to continue to fall as many customers move their business to other sources," he pointed out, asking whether there would be enough demand to justify the addition of this new capacity to the grid.

The Opposition Spokesman on Energy posed a number of questions to Parliament:
Will there be enough demand to justify the addition of this new capacity to the grid (albeit replacing existing capacity)?
Will the already overburdened JPS customers have to pay the fixed capacity charges; even if this plant is not called upon to produce any electricity?
Will the JPS customers have to meet the commitment for fuel charges as another “take or pay” arrangement is institutionalized?
Why would the alternative fuel be ADO when HFO has proven to be a cheaper source?
Why would the company be rushing this process when the Joint Select Committee is addressing this very issue in the review? Mr. Paulwell queried. 

Paulwell is also wary about reports that Automotive Diesel Oil (ADO) is the proposed alternative fuel to be used.  He wondered why ADO would be chosen when heavy fuel oil (HFO) is a cheaper option. Furthermore, he raised concern about the apparent rush by the JPS at a time when the Joint Select Committee is addressing the issue.