Camilo Thame, Business Reporter

William P.Von Blasingame (centre), JPS chairman and president of Mirant Caribbean Holdings in discussion with Damian Obiglio (left), president and chief executive officer of JPS and shareholder Richard J. Hopkin during the JPS annual general meeting in New Kingston on Tuesday. - photos by Rudolph Brown/Chief Photographer

Jamaica Public Service (JPS), whose net profits topped $1.4 billion, plans to build a 150 megawatt (MW) coal-fuelled power plant to cut back on the cost of generating electricity for the national grid.

But, having already purchased the land in Old Harbour, St. Catherine, where the plant will be located, the local light and power company has agreed to push back construction by nearly four years to accommodate taking on an additional 85 MW to the grid from Jamalco's liquefied natural gas (LNG) plant expected in 2009.

Yesterday, JPS said it was still in the process of pricing the development, but industry estimates would place the cost of the plant at about US$300 million.

"We (JPS) are going to construct a 150 MW coal-fuelled power plant," JPS chief executive officer Damian Obiglio told Wednesday Business after the company's annual general meeting at its corporate headquarters in New Kingston.

"We have already bought land for the plant, located beside our existing Old Harbour Power Plant and we are currently working on environmental approval."

It was unclear yesterday whether the pending sale of JPS by Mirant, which owns 80 per cent of the power provider, would affect the project.

Obriglio said it would be another year before the sale is finalised.

Information memorandum

"At this stage, the company (JPS) is still producing the information memorandum, which is a summary of all assets in the Caribbean. That has not been released to any potentially interested parties," he said.

JPS' decision to use coal stemmed from a decision made by the former P.J. Patterson administration at the beginning of 2006 to recommend the allowance of the construction of a 120 MW coal plant, in its goal to diversify energy sources used to generate electricity.

It was the Government's thrust to diversify that led to JPS pushing back the coal plant project and increasing its capacity by 30 MW.

"It was scheduled for 2008, but the Government asked us to accomodate Jamalco's LNG (liquified natural gas) plant of 85 MW scheduled to come online in 2009," Obriglio said.

"The coal power plant has therefore been pushed back to 2012."

Jamaica's energy mix is largely made up of petroleum liquid burning power plants, with only 5.3 per cent generated from renewables - hydroelectric (2.7 per cent) and wind (2.6 per cent).

Combined generating capacity has reached 817 MW, a whole 200 MW or 32 per cent higher than peak demand.

JPS' electricity sales have grown by about 2.7 per cent a year over the last six years, which means that should demand keeps in line with sales growth over the next six years, the national grid will need another 110 MW, or 25 MW more than Jamalco's LNG plant, by 2012 to maintain reserve margin.

The cost of a typical coal fired plant runs at about one and a half to two times the cost of typical gas fired combined cycle plant, or about US$1,500 - US$2,000 per kilowatt, which would place the value of the project at between US$225 million and US$300 million.

The cost of coal as a fuel is considerably less than that of petroleum liquids and LNG.

According to the Energy Information Administration - the US state agency that supplies official energy statistics - for the four months to April 30 2006, the average price paid for natural gas by electricity generators was US$7.72 ($502) per million British thermal units (MBtu), an increase of 17 per cent from the same period in 2005.

Heavy fuel oil prices rose by 44 per cent to US$7.95 ($517) per MBtu, during the four month period, when compared to the corresponding period last year.

Coal prices, by comparison, averaged US$1.68 ($111) per MBtu for the quarter, up 12.4 per cent from the corresponding period in 2005.

One MBtu is equivalent to 293 kilowatt-hour of energy.

This means that the fuel required to produce one kilowatt-hour (kWh) of electricity cost on average J$1.84 when using natural gas and $1.89 when using liquid petroleum during the first three months of 2006. For coal, the cost was 40 cents for each kWh produced.

camilo.thame@gleanerjm.com