My Thoughts on Technology and Jamaica: Ministry of Energy Clive Mullings alters the JPS Co License for Energy Sector Liberalization - Jamaica and The Sun Salutes You

Thursday, October 20, 2011

Ministry of Energy Clive Mullings alters the JPS Co License for Energy Sector Liberalization - Jamaica and The Sun Salutes You

The glorious Sun
Stays in his course and plays the alchemist
Turning with splendor of his precious eye
The meager cloddy earth to glittering Gold

Shakespeare, King John, III, 1          

Minister Clive Mullings of the Ministry of Energy, Mining and Telecommunications has made an announcement that is sure to make a lot of Jamaicans happy and prick the ear of Local Investors and FDI (Foreign Direct Investors) eyeing Jamaica’s as-yet deregulated Energy Sector. This as Minister Clive Mullings of the Ministry of Energy, Mining and Telecommunications has effectively announced the coming of Energy Sector Liberalization.

Jamaica, bear witness to these Energy Sector Liberalization changes which herald the coming of competition from Local Investors or FDI’s in the Residential Solar PUC and IPP Markets in the year 2012AD and lower prices for consumers!

Again, another about-face by Minister Clive Mullings after making a retrograde step earlier in July 2011AD where Minister Clive Mullings announced that the breaking of the JPS Co monopoly would result in Electricity price increases as stated in the article “Energy Flip-Flop - Government Backtracks On JPS-Monopoly Policy”, published Wednesday July 20, 2011, Daraine Luton, Senior Staff Reporter, The Jamaica Gleaner.

This was based on the say-so of a Washington DC-based Energy consultant Castalia, arguments for which are neatly encapsulated in my blog article entitledMinister Clive Mullings retrogade step on Energy Sector Liberalization - JPS Co's Monopoly An Inconvenient Truth”.

This recent news indicates that his Ministry has negotiated changes to the JPS Co (Jamaica Public Service Company) License that will allow:

1.     Net Billing
2.     Power Wheeling
3.     An increase on the cap on the amount of Electricity that can be generated by PUC (Power Utility Companies) via Alternative Energy sources and sold to the JPS Co from 10MW to 15MW.

All laid out in the article “New Terms OK'ed In JPS Deal”, published Thursday October 20, 2011, The Jamaica Gleaner.

What I like especially was the way it was done, which was via negotiations during the contract signing process with Korean-based EWP (East-West Power Company Limited) as stated in the article “Korean company will improve operations at JPS — Mullings”, published Wednesday, July 20, 2011 BY ALICIA DUNKLEY Observer senior reporter, The Jamaica Observer. This began in July 2011AD and took nearly three (3) months to complete.

So quite plainly, this was something that was already in the offing and being tracked by my blog and has now come to fruition. It also seems that JPS Co has also won this round, as they have secured Net Billing as opposed to Net Metering as per the arguments of former CEO Damian Obligio as stated in the article Want to sell light back to JPS?”, published Friday, March 18, 2011, The Jamaica Observer and the article  The Truth about Net Metering”, published Sunday March 20, 2011 by Dan Theoc, Contributor, The Jamaica Gleaner.

So an explanation of the above three (3) and their significance to Residential and Commercial customers is necessary.

Net Metering, which is what the Public had demanded, would have seen Customers of JPS Co who generate Electricity via Alternative Energy sources such as Wind Turbines and Solar Panels or Residential Solar PUC (Power Utility Company) and Alternative Energy IPP (Independent Power Producers) with such installations as described in my blog article entitledAlternative Energy and Residential Solar Power - The Social Network” being paid cash (cheque please!) for Electricity generated and redistributed back on JPS Co’s Power Lines.

That’s how it is in US States that have Net Metering, such as California: their Utilities PAY YOU CASH for generating Electricity and redistributing it back to their Grid, as it helps reduce the cost of generating Electricity. As such, they pay homeowners and business under Net Metering at a rate less than that paid out to large scale IPP (Independent Power Producers) to remain economical and maintain their bottom line.

Net Billing is the same as Net Metering, save for the fact that you do not get paid in cash, but via a discount on your Electricity Bill. After all, even if you are using Alternative Energy Sources, be it your own or from a Residential Solar PUC (Power Utility Company) or an Alternative Energy IPP (Independent Power Producers) as described in my blog article entitled “Google invests US$75 million in Residential Solar PUC - Aliens in future Energy Market Shakeup, once you maintain a JPS Co Meter, you have to pay rental for that Meter.

So Discounts, albeit not live raw cash, still is some consolation to Residential and Business Customers who have Alternative Energy running their homes.

Drat. Foiled Again!

I originally suspected JPS Co stance on Energy Sector Liberalization and their Opposition to Net Metering were based on loss of profitability due to their inefficient generating and Electricity Distribution Capacity as concluded in my blog article entitled Minister Clive Mullings retrogade step on Energy Sector Liberalization - JPS Co's Monopoly An Inconvenient Truth”.

But it would appear that with the coming “secret” installation of Smartmeters, despite the soothsaying of JPS Co Corporate Communications Manager Winsome Callum as explained in my blog article entitled “JPS Co New Digital Meters are all Smart Meters - Winsome Callum's A Simple Twist of Fate”, JPS Co preference for Net Billing as opposed to Net Metering is in anticipation of the coming of competition in the Residential Solar PUC  and Alternative Energy IPP Market.

Certain to unseat JPS Co’s Dominance in Residential and Commercial Solar without having to have Energy Sector Liberalization and would explain in part JPS Co CEO Damian Obligio decision not to renew his contract with JPS Co as stated in the article “JPS CEO steps down”, published Friday, October 14, 2011, The Jamaica Observer.

This as the coming of Residential Solar PUC and Alternative Energy IPP competition translates to lower profitability in the future for JPS Co as Oil Prices and thus Energy Prices rise as stated in my blog article entitled “Alternative Energy and the Caribbean - Peak Oil in 2015 and The Day After Tomorrow”.

Even if Alternative Energy were to be the major source of energy in the future as noted in my blog article entitled “Dr. Taylor's states Global Warming increasing Jamaica's Energy Bill - Vybz Kartel's Summertime Soylent Green”. Competition such as Google, a major US Investor, whose wearied All Seeing Eye may be on the lookout for foreign countries in which to invest after their successful trials in the US Mainland as described in my blog article entitled “Google invests US$75 million in Residential Solar PUC - Aliens in future Energy Market Shakeup”.

Power Wheeling also paves the way for Energy Sector Liberalization and the coming of Residential Solar PUC’s and Alternative Energy IPP’s as it allows for the redistribution of Electricity generated at one location to be transmitted and utilized at a different location. This would therefore imply that if your Alternative Energy rig places power back on JPS Co’s Grid, you can reuse the equivalent amount of power elsewhere at no cost to you.

Provided of course that you can prove that the second premises is using the exact quanta of electricity that you are putting on JPS Co Grid, with any excess attracting additional Billing! This would also explain again why JPS Co is so much in favour of Net Billing as opposed to Net Metering, as it is less hassling to recover money for electricity used via Power Wheeling if the money representing the power generated by your Alternative Energy rig is already in the form of a discount.

The current installation of Digital smartmeters by JPS Co as explained in my blog article entitled “JPS Co New Digital Meters are all Smart Meters - Winsome Callum's A Simple Twist of Fate” certainly makes Power Wheeling and Net Billing possible, as precise calculation of Electricity used is necessary to make this possible. MPU (Mobile Power Units) are an example of Power Wheeling, but with the Electricity generating facility mobile.

Somewhat like Telecom Provider Digicel CreditU, where you can share Pay-As-You-Go Credit with someone else, with the only cost for sharing being incurred being a JA$1 charge per ever transfer of Calling Credit to someone else!

This coming of Residential Solar PUC and Alternative Energy IPP partially explains the increase of the cap on Alternative Energy Derived Electricity from 10MW to 15MW, the final piece to the puzzle. It is the Government of Jamaica’s mandate according to the National Energy Policy, a subset of the bipartisan Vision 2030 to significantly increase Jamaica’s use of Energy from Alternative Sources in the following steps:

1.     11% by 2011AD
2.     12.5% by 2015AD
3.     20% by 2030AD

This as mentioned in the article “In Five Months, Wigton Saves Jamaica $229 Million”, published Sunday September 25, 2011, The Jamaica Gleaner, which uses the Wigton Wind Farm as an example. Wigton Wind Farm, which has 38.7MW of Generating capacity representing 4.5% of the National Grid Generating Capacity, only partially fulfils this mandate, contributing only 2.6% to Generated Electricity generated.

Supplying an equivalent of 46.32 million Kilowatt hours thus far to the Nation Grid between the period April to August of 2011AD, Wigton Wind Farm resulting in a realized of savings of US2.96 million or JA$229 million pieces of silver in terms of Oil Imports. But it is their installed capacity of 38.7MW that is all wind power derived that may have seemed unfair to potential Local Investors and FDI’s, as economy-of-scale in terms of generating capacity affords Wigton Wind Farm the luxury of being the lowest energy producer at US$0.107 per kilowatt-hour.

It thus necessitated the increase of the cap from 10MW to 15MW so as to level the playing field for other IPP who wish to enter the field Residential Alternative Energy PUC as well as fulfill the mandate of the National Energy Policy mandate, in effect killing two birds with one stone.

Thus the obvious is clear.

Given the nature of the coming competition in the Residential Solar PUC and Alternative Energy IPP Market, this option of Power Wheeling, Net Billing and the increase of the Alternative Energy Cap is now a necessity which the ongoing JPS Co smartmeter upgrade makes possible.

JPS Co, therefore, may soon announce in a few coming months not only a successful field trial of the six thousand (6,000) Digital Smartmeters but also an expansion to the rest of the island to stave off coming competition from Alternative Energy IPP’s and Residential Solar PUC’s as described in my blog article entitled “Google invests US$75 million in Residential Solar PUC - Aliens in future Energy Market Shakeup”.

Senator Clive Mullings, Minister of Energy, Mining and Telecommunications has redeemed himself as The Sun Salutes You!
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