Fuel Policy Must be Addressed Urgently – OUR Head

Director General of the Office of Utilities Regulation (OUR), J. Paul Morgan has said that the island’s fuel policy needs to be addressed as a matter of priority, adding that all the existing generating plants at the Jamaica Public Service Company (JPSCo) may need to be retired within the next ten years.
Against this background Mr. Morgan expressed the view that the matter of the introduction of Liquefied Natural Gas (LNG) to Jamaica must be dealt with quickly, as fuel oil is not a viable option for future power generation in the island.
He was addressing a luncheon jointly hosted by the OUR, the Montego Bay Chamber of Commerce and the Kiwanis Clubs in Montego Bay, at the Wexford Court hotel, yesterday (September 10).
“As we speak, significant investments will be required in the electricity sector over the next ten years, and I mean ten years starting now. So our concern is that as we look towards these investment requirements, we have to ensure that the environment is investor friendly, but also as risk free as we can possibly make it in order to keep the cost of money low,” he stated.
He outlined a number of concerns within the OUR and the light and power sector, particularly as it relates to adequacy of electricity generating supply, the reliability of supply and the sustainability of supply, taking into consideration the need to ensure that there is adequate capacity in the country’s generating system to meet future demand.
Pointing out that the present peak load on the JPSCo system is more than 600 megawatts, the OUR Director General stated that it is anticipated that over the next ten years the demand for electricity will grow by approximately 320 megawatts. He added that in order to meet that growth an additional 530 megawatts of additional capacity must be provided for over that period.
Mr. Morgan emphasized that the price of electricity to the user is influenced by the type of technology and the fuel that is being used on the input side for generation. “So therefore the decisions that we take about the technology and the fuel as it relates to new capacity, and also the timing in which these plants are added to the system, is absolutely critical if we are to ensure that the retail price of electricity is in fact kept at minimum levels,” he stated.
Mr. Morgan gave an estimate of between US$2.8 and US$3.1 billion, as the required capital investment for construction of one new generating plant over the next ten years, and that he said, is dependent on the type of technology and fuel used. It is with these facts in mind, he stated, that the OUR, regards the issue of improvement in generating capacity as very important.
Expressing the view that Jamaica is at a very serious cross-road as it relates to future supplies of electricity, Mr. Morgan stated, “I am convinced that fuel oil cannot and must not be considered as an option for future production of electricity.the key to solving the problem of high electricity prices in Jamaica is to address the cost of generation”.
He noted that generation cost is approximately 80 per cent of the JPSCo cost and therefore demands urgent attention.