VIDEO: 40% drop in light bills unrealistic

VIDEO: 40% drop in light bills unrealistic

BY INGRID BROWN Associate editor special assignment

Tuesday, November 13, 2012

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Head of the Jamaica Public Service (JPS) Kelly Tomblin said the power company can no longer guarantee that customers will see as much as 40 per cent reduction in their electricity bills when it begins using liquefied natural gas (LNG) to operate its planned 360-megawatt power plant.

In February this year, JPS's then Chief Financial Officer Dan Theoc had said that the company expected the country's first 360-megawatt project to deliver savings of 30-40 per cent on electricity bills based on the plant operating on cheaper LNG while using diesel fuel as a backup.

But yesterday, Tomblin said past estimates projecting reductions of between 30 to 40 per cent are no longer realistic, as this was based on a number of factors, one of which was fuel diversity.

"Nobody can guarantee 30 per cent when factors are so out of control with the fuel procurement, growth and lost factors," Tomblin told reporters and editors at the weekly Jamaica Observer Monday Exchange held at the newspaper's head offices in Kingston.

The estimates, Tomblin said, were also based on LNG being sold at US$8.50, as well as the sales growth of the power company.

However, all these factors have changed as Tomblin said no one can source LNG at that cost since the March 2011 tsunami in Japan has driven up the cost of the gas all across the world. In addition, JPS, she said, is also experiencing a sales decline.

"I think 40 per cent is unrealistic, 30 per cent is a stretch... 20 to 25 per cent reduction would be a great achievement for the company and the country, although [I'm] not saying that is where we are," Tomblin said.

Meanwhile, Tomblin said the commissioning of the 360-megawatt plant to be constructed in Old Harbour, St Catherine is now scheduled for the second quarter of 2015.

"The LNG process was delayed so we are now working with [the] Government and [the] regulator to materialise an LNG source by the end of the year," Tomblin explained.

Last month, Energy Minister Phillip Paulwell said that JPS will now be responsible for sourcing the LNG needed to fuel the new generation plant. His announcement came after the Administration backed out of an earlier plan for the State to source the gas, on the premise that private electricity and alumina producers would have much more flexibility in procuring fuel supplies and that they could use their international leverage to get the best possible prices.

Yesterday, Tomblin said she has been somewhat surprised by the reaction that "JPS got another gift from the Government", which is not the case.

With the rising LNG cost, Tomblin said it is going to take some creativity for JPS to bring in LNG to the country below that which the Government would have been able to source it.

"We are working very hard and we have a meeting tomorrow (today) with another provider. We have asked the OUR (Office of Utilities Regulation) and they have permitted us to finish those discussions within 60 days," she said.

Tomblin explained further that the company has not yet identified an infrastructure provider or a fuel supplier.

"We are taking up the process where the Government left off, so we are trying to make up some time very quickly," she said.

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