ENERGY Minister Daryl Vaz on Wednesday rejected the Jamaica Public Service’s (JPS’s) reasons for the significant hike in electricity bills some customers are now seeing.

He said JPS has indicated that the increase is as a result of high fuel costs and the billing exchange rate.

The company explained that it had to switch to automotive diesel oil (ADO) to generate electricity just before the arrival of Hurricane Beryl as the usual natural gas (from LNG) was not available for a period. It said there was a significant tariff impact from the switch to ADO to generate electricity as the ADO price is markedly higher than LNG, and there is an appreciably higher special consumption tax (SCT) applied to ADO since November 2021 (from $4.5611 per litre to $44.90 per litre).

But Vaz argued that under these circumstances, based on internal calculations, the cost of electricity should have only increased by six per cent and not the 50 to 150 per cent hike many customers have been complaining about.

“My internal figures that I’ve gotten from my technical people, which includes Petrojam, is that there should have been no more than a six per cent hike in electricity bills, based on the fact that the LNG was only out for five days,” he said during a press conference at his Trafalgar Road office in St Andrew.

“I reject the assertion given by JPS that the cost of ADO fuel is the reason for the increased bills being sent to Jamaicans. And I urge them to recalculate. I urge JPS to recalculate and recalculate, and recalculate, and get it right,” he said.

Referencing a July 1, 2024 letter which was sent to the Minister of Finance and the Public Service Nigel Clarke by JPS’s Chief Financial Officer Vernon Douglas, Vaz said it was explained that South Jamaica Power Company, the JPS Bogue 114 megawatt combined cycle power plant in Montego Bay and the New Fortress Energy Jamalco power plant would be affected by the relocation of the New Fortress Energy’s Floating Storage and Regasification Unit (FSRU) ahead of the passage of Beryl.

The relocation, Douglas said, was to avoid storm damage. The FSRU was decommissioned on July 1, 2024 at approximately 1:00 pm and recommissioned five days later on July 6, 2024 at 9:00 pm.

“Using this information, this means that the South Jamaica Power Company would have had access to LNG as of July 6, 2024, the same for the NFE Jamaica Power plant which JPS stated in the letter, was unable to switch to ADO and therefore was unable to supply energy until the FSRU was back in operation. The July 1st letter also stated that JPS Bogue Power plant in Montego Bay had five days of stored LNG at the plant and would need to switch to ADO upon exhausting the stored fuel,” Vaz said.

“Again, bear in mind that FSRU was out of use for five days. At best, the only plant that would have used ADO, would have been the South Jamaica Power Company for a period of five days, at a worst case. This raises several questions, that JPS and OUR must now take into consideration and provide responses to the government and the people of Jamaica,” Vaz said.

Vaz noted, too, that despite FSRU being out of commission for five days, the JPS was granted a 91 per cent reduction on SCT for fuel for the entire month of July. This, he said, amounted to just under $400 million.

He said the Government is, therefore, interested in knowing how much ADO was used over the period for which the FSRU was relocated.

Turning to the billing exchange rate, Vaz said this moved from 0.8 per cent or $1.23 between July and August 2024 month over month. He noted, however, that this is not the largest increase for the April to August period, pointing out that in May 2024, the billing exchange rate jumped from $2.23 or 14 per cent.

“In other words, a month-to-month impact of the exchange rate is not as severe as JPS is attempting to have customers believe, and therefore would not have such a dramatic impact on their current bills when compared to their previous bills. Given that this 32 per cent increase in the fuel rate was unprecedented, it raised concerns for me as minister as to why the Office of Utilities Regulation (OUR) did not investigate the cause for such an anomaly in the fuel rate provided by JPS.

“Bearing in mind that no information has been provided to suggest that JPS had to operate using ADO for fuel for a prolonged period of time, given that the supply was disrupted for five days and that based on communications from JPS, only one plant would have been utilising ADO for the period of disruption,” he said.

Vaz stressed that these are questions must be addressed as they are factors that raise great concern for him as minister and for the Government, and all well-thinking Jamaicans regarding the billing practices of the JPS and the level of oversight being provided by the OUR to protect customers.

He said that going forward, it is not acceptable to have a regulator which has conducted itself in a manner which has raised valid concerns in the public that it is not vigilant enough to hold the utility company to account “while allowing the utility to pass through a 30 per cent increase in rates in the aftermath of a hurricane, while having a US$50-million disaster fund sitting in the bank in reserve.

“This should never happen again and I am of the view that the lethargic response of the OUR to the JPS’s abysmal handling of the Beryl issue has made it patently clear that the OUR will have to be reconstituted to ensure that it operates in a more effective and efficient manner and in a way which ultimately protects the people of Jamaica,” Vaz said.