John Myers Jr., Business Reporter

Damian Obiglio, president of Jamaica Public Service Company, Dr. Peter-John Gordon, director of economic planning and research at the Planning Institute of Jamaica and Richard Byles, chairman of Pan Caribbean Financial Services at the Pan Caribbean 'Breakfast and the Economy' forum at the Terra Nova All-Suite Hotel, on Thursday. - Ricardo Makyn/Staff Photographer

Jamaica Public Service Company (JPS) charged Thursday no approval has yet been given by the utilities regulator for the addition of new generating capacity to meet the country's consumption needs, despite expectations that demand will outstrip supply in two years.

Efforts yesterday to reach the director general J. Paul Morgan of the Office of Utilities Regulation (OUR) were unsuccessful, neither was spokesman David Geddes available.

The JPS will need to increase its electricity generation capacity to about 1027 megawatts by 2012 if it is to satisfy the country's growing energy needs.

More urgently however, it must increase its capacity by 70 megawatts by next year as energy consumption is projected to grow two per cent more than this year. The country's energy consumption has been growing at an average two per cent every year for the last five years.

But president and CEO of JPS, Damian Obiglio said the company would first have to submit a Least Cost Expansion Plan (LCEP) to the Office of Utilities Regulation (OUR), which would then analyse and approve it then forward it to the Energy Minister for final approval, after which the contract is put to tender and then awarded to the most competitive bidder.

Competitive business

The JPS head pointed out that power generation was a competitive business, as opposed to power distribution for which JPS has the sole authority.

"It is the OUR's responsibility to do the planning analysis of the Least Cost Expansion Plan and the approval of the process is governed by the regulator," said Obiglio.

"JPS has absolutely no influence on when, how or who will build the new generation (power)," he told a gathering of banking and business executives attending Pan Caribbean's annual breakfast forum on the economy held at the Terra Nova hotel in Kingston yesterday.

Efforts to get a comment from the OUR yesterday were unsuccessful as the director general, J. Paul Morgan and director of public affairs, David Geddes were said to be out of office and would be for several days.

Obiglio said his company had the option of using combine cycle (a mixture of LNG with another fuel), steam, medium speed diesel, slow speed diesel or combustion turbine technologies to boost generation capacity.

However, the JPS president said using combined cycle, the most efficient of the group, would be unsuitable as the government's plan to source LNG supplies has not materialised and would take at least 24 months to construct.

Quickest means

He said installing a combustion turbine barge would be the quickest means of boosting generation capacity to meet the short term need, but that would take at least 12 months to set up.

Together with the four Independent Power Producers (IPPs), the light and power distributor produces 817 megawatts of generating power (622 megawatts - JPS/ 196 megawatts - IPPs).

JPS, which was sold this year by Mirant to Japanese firm Marubeni, is also facing another dilemma: a serious shortfall in reserve capacity, which is presently four per cent of current demand.

Under the terms of its operating licence, JPS is required to maintain a 25 per cent reserve capacity.

But Obiglio explained that the JPS was not getting the required power capacity from the IPPs.

He noted that of the 196.99 megawatts that JPS is contracted to receive, it gets only 128 megawatts.

At least one business owner expressed concern about the JPS president's revelation.

Gassan Azan, owner of the MegaMart and Bashco retail stores questioned why it was now that the JPS was highlighting the status of the country's energy reserves.

The shortfall in generation capacity, said Azan, will have implications for the productive sector, as well as, potential investors.

john.myers@gleanerjm.com