File
Jamaica Public Service headquarters, Knutsford Boulevard, New Kingston.
Winston C. Hay, Contributor
Recently, both Jamaica Public Service Company (JPS) and the Office of Utilities Regulation (OUR) have placed the country on notice that investment in new generating capacity has not kept pace with growth in consumer demand for electricity. Electricity consumers must, therefore, expect the frequency of supply interruptions to increase in the not-too-distant future. Déjù vu!
Reliable public electricity supply is considered an essential characteristic of a truly modern society, but one which seems to continuously elude Jamaica, despite the promises repeatedly made by JPS itself, as well as by the various political administrations which have formed the government over the years.
If electricity service is not provided with the expected reliability, it is understandable that its customers will consider JPS to have defaulted on its obligations to them. How-ever, in reality, for decades the company has not been given an entirely free hand in deciding when to install new generation, and the type of generation to be installed. In fact, ever since the government bought effective control of the company in 1970, the majority of the decisions on the installation of a major generating plant have been made by the political directorate and not by the company itself. Unfortunately, the political directorate has not always received the best technical advice.
New generating units
In 1968 and 1970, the then privately owned JPS commissioned new generating units at the Old Harbour station, itself a new power station site. By 1970 plans had been developed for a third unit in that station. When the Government became the major shareholder tenders had already been invited for the new unit and the process of evaluating the bids was under way. Before completion of that process the company's management was informed by the Ministry of Public Utilities that an agreement had been reached to purchase a 'technically advanced' unit which had not been included in the bids originally submitted. The company's technical staff had not been consulted in the decision-making process.
The technology selected was referred to as a 'compact' design. Compactness is not necessarily an advantage in power generating equipment, especially when it means extracting more power from a given size than would have been obtained with conventional designs. The engine in a Formula One racing car produces about 800 horsepower from a displacement of two and a half litres, but would be quite unsuitable for taxi services where 150 horsepower from an engine of equal displacement would be considered more appropriate.
A similar comparison can be made between the then new 'compact' unit and the more generally accepted design criteria of the day. The steam-producing capacity of the boiler installed for the third Old Harbour unit is similar to that of the first boiler in the Alpart powerhouse. Yet, th of the Alpart boiler is three times that of the JPS 'compact' unit. As a result, the JPS boiler is subjected to greater thermal stresses, resulting in more frequent boiler tube failures and other unreliability factors.
The boiler is not the only piece of equipment in the 'compact' design which reflects that operational reliability was not paramount in its conception. Yet, two additional compact units were purchased for the JPS system. The unreliability of these units has made their company designation almost household names in Jamaica (e.g., 'B6', often parodied as 'be sick!'), and has unfairly prejudiced the public perception of the competence and dedication of the operations staff in the power stations.
In the 1980s JPS's internal studies, supported by analyses carried out independently by an overseas consulting company, indicated that a coal-burning station would be the most economic choice for the next major generating unit to be installed in the early 1990s.
The company was preparing to proceed accordingly, when the multilateral and bilateral funding agencies convinced the government that all new investment in generation should be undertaken by private investors who were to be selected through competitive bidding. Because it would be more difficult to attract private investment in a coal-fired steam plant than in diesels and because the lead-time for the steam alternative would be longer, the government was convinced to select diesels instead of steam-driven generators.
Contract award negotiations
The bidding process was much longer than had been originally anticipated, but produced only two acceptable proposals. A panel appointed by the Government, not JPS, conducted the contract award negotiations. Originally projected to be concluded within six months, the negotiations extended over two years. The plant was eventually commissioned five years later than the original target date. In the interim, the demand continued to grow, lack of generating capacity became acute, and JPS was forced to invest in diesel and gas-turbine generating plant, which would not have been economic choices had the investment plan proceeded as initially developed.
For the next major investment in generation JPS again selected a coal-fired steam plant. However, the company did not confine its planning to generating capacity, but extended its horizons to encompass an industrial park - complete with a cement factory, a cold storage facility, and other economic activities. In this instance, the company itself must take responsibility for the delay in finalising its plans, a consequence of its high-flown ambitions. Before any concrete steps were taken to implement the plans, control of the company was sold to Mirant, which concurred in the selection of a coal-burning station in principle, but because of the associated long gestation period, moved to install a diesel-fuelled combined-cycle plant to address the urgent need for new capacity.
Coal-burning facility
Plans by Mirant-owned JPS to install the coal-burning facility were being developed when the Government asked the company to reconsider. JPS was told that the Government would arrange for low-cost liquefied natural gas (LNG) to be supplied from Trinidad to provide fuel for public power supplies and for the Jamalco alumina plant in Clarendon, whose production capacity was about to undergo major expansion. JPS was also told that it would be required to purchase a significant block of power from the Jamalco plant as this power would be produced by cogeneration, thereby increasing the efficiency of electricity generation, and of the alumina plant operations.
The opinions of sceptics familiar with the realities of the LNG world market and who doubted the economic feasibility of the expected low-electricity costs were disregarded. The date on which the promised LNG would be made available kept receding, and JPS was again forced to make emergency arrangements for additional generating capacity, providing power at a higher cost than had been projected for generation with either coal or LNG.
Eventually, it had to be admitted that LNG was not likely to fuel any generation in the near to medium term, and the company and its consumers are now faced with the prospects of near term-power shortages and expensive 'Band-Aid' palliatives. The OUR is currently advertising for consultants to administer a competitive process to select a company to supply JPS with power from yet another gas turbine. Gas turbines can be a 'very present help in trouble' but would seldom be the technology of choice for the JPS system if generation investment planning were allowed to proceed in a timely manner.
JPS should logically be the entity held accountable for providing adequate and economic generating capacity, but it cannot discharge those responsibilities if the political directorate is always second-guessing it. Obviously, the Government cannot be fully excluded from involvement in the process. It has the responsibility to prescribe the policies under which public electricity services will be provided, and must therefore have some involvement in determining the utility's investment programme in order to ensure that issues affected by the policy are properly addressed. Such policy prescriptions ought to be publicly ventilated and not suddenly sprung on power planners in order to justify some newly developed objective.
Investment plans
The need for government review of power planning is recognised in the licence under which JPS operates. The licence requires JPS to develop its investment plans and submit these to the OUR for review. The OUR, in turn, after discussions with JPS, will forward the plans and its relevant recommendations to the minister with portfolio responsibility for energy. The minister may at that point reject the plans or require modifications to be made, in a process intended to be transparent. The reasons for rejection or modification of the company's plans must be elaborated.
Self-styled 'experts' will always approach the Government claiming to know a better, cheaper way of generating electricity. Some of these 'experts' may have difficulty in distinguishing between a 'watt' and a 'weir', but may, nevertheless, present rational sounding arguments to decision makers, conscious of their own unfamiliarity with the fundamental issues.
Effective planning for investment in the power sector is too important to be entrusted to amateurs. It is a relatively complex process, requiring intimate familiarity with the economics, technology and operations of electric power systems. The Government would be well advised to leave the planning decisions to the true experts.
Winston Hay is a former Director-General of the Office of Utilities Regulation, and a former executive of the Jamaica Public Service Company.
