Small players want JPS to lose right of first refusal
Published:Friday | June 18, 2021 | 1:01 AMChristopher Serju/Senior Gleaner Writer
The right of first refusal (ROFR) enjoyed by the Jamaica Public Service Company (JPS) is being seen a major stumbling block in the efforts to local energy market reforms, with one private-sector participant in Thursday’s meeting of the Joint Select Committee reviewing the Electricity Act (2015) warning that its retention could set back gains made in the sector since the 1990s by more than two decades.
The ROFR, which was added to the Electricity Act (2015), changed the competitive bidding energy policy, and grants the light and power company the right to replace its generating units when they become due to be retired, according to the schedule determined by the portfolio minister.
Phillip Paulwell, committee member and former energy minister, told The Gleaner that in 2010 and 2012, when the JPS was seeking to replace its generators at Old Harbour, St Catherine, and build out a new one at Bogue in St James, the country was in danger or running into a power-generation capacity deficit and it was that which influenced the decision by the government of the day.
BMR Energy CEO Bruce Levy told the virtual meeting that the ROFR is inconsistent with everything Jamaica has adopted with respect to energy-market reforms, and warned that if left unchecked, it could set back Jamaica’s energy reforms by 25 years.
He told the committee that global as well as local experiences have proven that electricity-power generation is best built, owned and operated in a non-regulated market and should be selected and implemented by competitive processes.
Levy further argued that elsewhere, competition in the sector has released a wave of technology and innovation, with competitive bidding leading to implementation of the latest proven technologies, while providing the lowest cost and achieving the highest energy generation.
In their submission, the three-man team from Jamaica Energy Partners (JEP) argued that the ROFR provision should be eliminated and that Jamaica should return to the open market for all bidding for new generation capacity.
JEP President and CEO Wayne McKenzie said that the current arrangement does not promote competitiveness or investor confidence and should be scrapped.
“The ROFR provision of the Electricity Act should be eliminated we should returned to the open market for all solicitation for all new generation,” he insisted.
Should the Government decides to retain the provision, he suggested that the ROFR be given to all generating asset holders at the date of the act in 2015.
The JPS is expected to vigorously defend its monopoly at the next sitting of the committee.