EDITORIAL - Transparency in power pricing

There is an agreement in principle for the Jamaica Public Service Company (JPS), or some special-purpose vehicle representing it, to acquire a stake in the 360-megawatt power plant that the firm Energy World International (EWI) has the right to develop and build.

"The partnership details are now being worked on, but what it will entail is that JPS will be a joint owner," Kelly Tomblin, JPS's CEO, told this newspaper.

Nothing in this is surprising.

When it did not bid on the tender put out by the Office of Utilities Regulation (OUR), the company indicated that it was willing to partner with whoever won the bid. JPS, in this context, we had assumed to be a loose application which could evolve to mean a special-purpose vehicle representing its primary shareholders.

Whatever is eventually the case, Ms Tomblin's confirmation of the likely partnership with EWI places back on the table the issue of the price of electricity to consumers - as previously raised by this newspaper - on the completion of the power plant. And the need for answers, as well as the transparency of the process, grows more urgent.

Jamaicans now pay around US$0.41 per kilowatt-hour, a price that weakens the competitiveness of the island's businesses and, ultimately, the economy. The suggestion, up to now, is that with the new plant, representing about half of peak demand for electricity, the price of power will fall by about a third.

EWI has claimed that it will produce electricity at under US$0.13/kWh, but there is no certainty that the target price to consumers will be met. And the public lacks the information for hard analysis or informed conjecture.

Monopoly transmitter

JPS is the monopoly transmitter and distributor of electricity with which EWI had to enter a power-purchasing agreement. That agreement was completed several weeks ago, before Ms Tomblin's announcement of the partnership deal in the plant.

However, the public does not know - and it is not clear if we will be told - the price at which EWI will sell power to the national grid. Nor are we aware of how the availability of cheaper electricity from the new, LNG-fired power plant will impact JPS's broader costs. Indeed, it would be useful to know precisely what JPS is doing to enhance internal efficiency, including the transmission and distribution of power.

Such issues, we feel, have added relevance in the context of a proposed partnership with EWI. While we have no cause to question the integrity of either firm and appreciate the oversight role of the OUR to prevent transfer pricing and similar schemes, the emerging arrangement insists upon robust scrutiny.

The bottom line: The price of electricity to the Jamaican economy is too important for us to flounder around in the dark. Consumers and other critical stakeholders need information so that they can plan for the future.

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