Gov’t can address JPS power purchase breaches, says OUR
THE Office of Utilities Regulation (OUR) has noted that there are a number of options available to the Ministry of Energy to address breaches of the power purchase agreements (PPAs) between the Jamaica Public Service (JPS) and independent power producers (IPPs).
This while the regulator monitors activities under those arrangements, to ensure compliance with the terms of licences.
General counsel for the OUR Chenee Riley on Wednesday advised the joint select committee (JSC) which is reviewing the 2015 Electricity Act that although the OUR is not the custodian of PPAs, it has access to these agreements under its obligation to approve the terms and conditions of the PPAs.
“There is also expressed power in the OUR Act, for the regulator to request information from licences pertaining to their operations, which allows the OUR to request and gain access to the agreements, including PPAs,” she said.
Riley was detailing the OUR’s position on proposed amendments to the Act. At a previous meeting of the JSC, members were concerned that the portfolio minister would need to request access to PPAs whenever there is a breach of contract. They argued that Parliament and the public should have access to the PPAs, and that policy direction should be taken on the issue now.
On Wednesday, Riley pointed out that under the OUR Act, the regulator is obligated to maintain confidentiality of information, with the expectation of information which fall under the Access to Information (ATI) Act.
“So we do not readily share information except where we are permitted to, under the ATI Act. It is a suggestion that MSET [Ministry of Science, Energy and Technology] may wish to take legal advice in terms of its authority to be able to request information from its licenseesâ€¦there is the possibility that the minister has this power in light of the very broad planning and licensing functions that it has under the Electricity Act,” she said, adding that some generation licences do in fact have provisions to provide records as may be reasonably requested by the energy minister.
The attorney-at-law pointed out that there are also provisions under the Telecommunications Act that can be utilised, to assist with any impediment to accessing the PPAs.
The discussions followed on the OUR’s proposal that only unresolved breaches of PPAs between the JPS and IPPs should trigger the basis for suspension or revocation of an electricity licence.
On the question of whether a breach of the agreement constitutes a breach of licence, Riley pointed out that the generation licences issued to IPPs since the promulgation of the Electricity Act do have such provisions.
“Those licences do in fact make reference to that potential breach that is made mention of in the Electricity Act,” she said.
Government senators had argued at the April 13 sitting that it was not automatic that a licence would be suspended or revoked due to a breach, and that the OUR recommendation would create a regime where agreements are breached repeatedly, with no penalty, as long as those breaches are resolved.
Furthermore Riley said while the recommendation did not consider PPAs which existed prior to 2015, Parliament has the latitude to make the clause applicable to older licences.
She explained that the OUR has a range of avenues to trigger enforcement processes in its monitoring of PPAs, including verifying fees paid to the JPS by the IPPs, reviewing technical compliance, and examining change in commercial arrangements as they arise. She stressed that recommending that a licence be revoked or suspended would be an act of last resort, as pulling a generation licensee or the JPS itself would have serious consequences for the sector.