WHILE the cost of energy to produce potable water is expected to drop by some $1 billion annually, National Water Commission (NWC) customers should not expect reductions in their bills in the short term, as the Government wants to use these savings to tackle the critical infrastructure and supply issues which have plagued the utility provider for decades.

The savings from the recently commissioned 45-megawatt-peak floating solar project at Mona Reservoir in St Andrew are anticipated from reduced evaporation losses at the reservoir, and decreased the need to treat algae build-up. The system should also provide some stabilisation to the Jamaica Public Service (JPS) 20 megawatts per hour of battery storage energy for up to nine hours daily.

Outlining details of the project in the Senate on Friday, and responding to questions by Opposition Senator Peter Bunting about a pass-on of the benefits to NWC customers, Government senator and Cabinet Matthew Samuda pointed out that when the NWC’s monthly energy costs went up to over $1 billion earlier this year, those increases were not passed on to customers. “What took the hit were projects that were projected to be done which we are now only able to put to procurement, as the prices have generally stabilised in recent months,” he said.

He pointed out that the Mona Reservoir floating solar project would help to start the process of rectifying some of the legacy financial issues which the NWC has been struggling with for decades.

“There is an eventual benefit that is to come in terms of the price to persons who pay for water, but the decision is whether or not the money should be invested in connecting the other 22 per cent of citizens who do not have connection, whether it should be spent to reduce debts and legacy issues which have bedevilled the institution, or whether or not it should be a simple pass through. My view is that it should be spent to connect citizens and upgrade the infrastructure that isn’t fit for purpose in 2022,” Samuda argued, stressing that the reservoir project presents the opportunity to address the infrastructure problems.

He said the project will not reflect in short-term reduction in bills, but will prevent the need for the NWC to ask the Office of Utilities Regulation (OUR) to grant rate increases: “We weathered the energy storm in the earlier part of the year without taking those increases, this gives us the opportunity to put in place the systems that it is unlikely we shouldn’t have to have increases anytime soon.”

In April, the OUR granted an 11.7 per cent hike in the base rates for the NWC’s Price Adjustment Mechanism (PAM), which the regulator stressed did not have any new impact on customers’ monthly bills.

The 45-kilowatt floating solar project, which the Government commissioned in September, is being implemented under a US$62.4-million investment arrangement with Derillion Energy Jamaica Limited, the Aten Group, and REIL Energy Investments Limited.

Bunting said the Opposition welcomed the multimillion-dollar initiative, but says it raises wider policy issues which will come to bear on poor consumers, due to the increasing number of large commercial and residential consumers deflecting from the JPS grid, opting for less costly energy sources.

“What is going to be happening, if your best residential or commercial customers are coming off the grid [is that] the overheads of the JPS will be spread over a smaller base, so the per kilowatt hour cost will increase. That is going to create a squeeze from the bottom, because the poorer JPS consumers who are now struggling to pay their bill, it will become unaffordable for them,” he argued, adding that over the long-term big consumers such as the NWC will continue to reduce their consumption.

Bunting pointed out although this may not become an immediate issue, it should be examined carefully, as it could result in excessively high rates for the average customer.

Samuda said there has to be an orderly transition to renewable energy, which incorporates potential increases in the distribution costs, in order to ensure that there is a net decrease in cost, while honouring environmental obligations. “You almost have to out-invest and out-deploy renewables that give you cheaper energy, faster than the increases in the distribution space,” he said.

He added that even with larger customers leaving the JPS grid, there is still some marginal growth in its customer base, pointing to the start of the country’s transition to electric vehicles, which will present more opportunity for stability in the energy market.