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Parliament liberalises renewable energy

BY BALFORD HENRY Observer senior reporter balfordh@jamaicaobserver.com

Sunday, October 07, 2012    

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PARLIAMENT completed the task of breaking the Petroleum Corporation of Jamaica's (PCJ) control of the exploitation and development of renewable energy resources on Friday.

The Senate unanimously — showing bipartisan support for a diversified energy environment — followed last week's action of the House of Representatives by approving the Petroleum of Corporation of Jamaica (Extension of Functions) (Amendment) Order, removing the PCJ's exclusive right to exploit and develop renewable resources in Jamaica.

This follows an undertaking given by Minister of Science, Technology, Energy, and Mining, Phillip Paulwell, earlier this year that steps were being taken to remove the exclusivity of the PCJ in the developing of renewable energy in Jamaica.

"The removal of the exclusivity will mean that the renewable energy market in Jamaica will be fully liberalised and open to competition," Paulwell had announced in his July sectoral debate presentation.

The Office of Utilities Regulation (OUR) has also been empowered to seek competitive bids for the addition of major renewable energy capacity to the local grid.

This followed on pronouncements by one of his predecessors, James Robertson, in March 2011 that Jamaica would be looking towards alternative energy sources to meet its needs, with oil prices zooming past the US$100 per barrel mark.

Following that announcement, the Government's only renewable energy project, the Wigton Wind Farm in Rose Hill, south Manchester, which is a subsidiary of the PCJ producing some 20 megawatts of power for the Jamaica Public Service Company (JPS), got a US$49 million upgrading

But Wigton, ironically, was the reason a previous Portia Simpson Miller-led government decided to give the PCJ exclusive rights to the exploration and development of renewable energy resources in Jamaica through a Ministerial Order issued in 2006.

As Minister of Justice Mark Golding, who piloted the amendment through the Senate on Friday, explained, Wigton grew out of global concerns about the emission of carbon from fossil fuels and petroleum products consistent with the increased use of renewable sources of energy by other countries. The PCJ incorporated Wigton as a wholly owned subsidiary in 2000, and the wind farm started generating energy in 2005. However, it was soon realiSed that PCJ really didn't have the right to establish a subsidiary involved in producing energy from sources other than petroleum, for which it had exclusive rights.

That bump in the road was addressed by Parliament approving the Ministerial Order in 2006, extending PCJ's exclusive right to explore and exploit local renewable resources.

However, as the Government increased its thrust to increase the energy mix since last year, it became obvious that they would have to remove the exclusivity introduced by the Order, and create a legal and regulatory environment for the diversification of energy solutions.

Golding explained that the 2006 Order had created two issues: (1) Only PCJ had the right to exploit and develop renewable resources in Jamaica; and (2) the exclusivity of the order was shown to be inconsistent with other regulatory and legislative provisions, especially the Office of Utilities Regulation Act, which says that the OUR is to encourage competition in the provision of prescribed utility services.

He said that the interpretation of the provisions of the Order by then Solicitor General, Douglas Leys, was that there could be no competition in the exploration and development of renewable energy resources, since the Order mandated that there should be only one player; the PCJ. It meant that the 2006 Order and the OUR Act could not function harmoniously.

In addition, a condition of the All-Island Electric Licence, issued to the Jamaica Public Service Company 2011, says that "save to the extent that the Office agrees, or as provided in this licence, the licensee shall not contract for new capacity other than pursuant to a competitive tending procedure".

Therefore, while both the OUR Act and the JPS licence have been promoting competition in the exploration and development of renewable energy resources in Jamaica, the Ministerial Order blocked it.

On Friday, the Senate removed the word "exclusive" from the first order, paving the way for entities other than the PCJ to explore and exploit Jamaica's renewable energy resources.

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