Susan Gordon, Business Reporter

A section of the Jamaica Broiler's plant in St. Catherine. The poultry producer is hoping to 'wheel' electricity to all its plants from the electricity it generates at Spring Village. - File

JAMAICA BROILERS Group is negotiating with the utility regulatorand monopoly manager of the national power grid to 'wheel' electricity to its large plants in different locales from its co-generation plant at Spring Village, St Catherine.

The poultry producer would have to utilise Jamaica Public Service's (JPS) power lines to route the electricity to its White Marl and McCook's Pen plants, at a price.

But while that aspect of the arrangement seems easily determined on a commercial basis, the sticking point is likely to be the Office of Utilities Regulation (OUR), which is studying whether the proposal endangers JPS's exclusive distribution licence.

Director of consumer and public affairs at the OUR, David Geddes, told the Financial Gleaner that the agency was in favour of facilitating the Broilers plan, but would not subscribe to a company selling its self-generated electricity to a third party.

Wheeling not covered

Wheeling, he said, is not covered in the JPS licence agreement.

"We don't have rates set for it, but if we did it would have to be cost-based, which is looking at the cost to JPS to provide the service," Geddes told the Financial Gleaner, referring to distribution costs on the utility's lines.

Broilers already has a power purchase agreement with JPS, which buys excess electricity from the Spring Village plant at below market rates, but the poultry producer's financial controller Ian Parsard said the company would rather 'wheel' supplies to its feed mill, hatcheries, fishery divisions than sell into the national grid.

"Discussions are still in the very preliminary stages and nothing has yet been established," said Parsard.

"The power purchase agreement is different from self-supplying by other power which is self-generated. We would have to pay a distribution charge to get the electricity from Spring Village to White Marl and McCook's Pen because when you have to distribute this power there is line losses involved in this process and there's a cost," he said.

Unsure of adjustment

Wheeling involves the sale and transfer of electricity over a grid.

Retail wheeling, which is what Jamaica Broilers is proposing - and which encroaches on JPS's exclusive arrangement to transmit retail electricity - incorporates the sale of power from a generator of electricity to a home or business over transmis-sion and distribution lines.

Currently, Jamaica Broilers only supplies its chicken processing plant and largest operation at Spring Village with the electricity it generates.

Parsard was unsure whether the plan would require adjustment to existing regulations, but Geddes said no legal changes were required, simply a clarification of the licence to establish the parameters.

"Wheeling to yourself - we don't have a problem. However, if you have intent to let off this electricity to a third party we would have a problem with that," said the agency spokesman.

"The licence does not say it can be done or can't be done. It would be just a clarification." The OUR, said Geddes, will consult with the parties for them to have a voice on the cost.

JPS currently buys excess electricity from Jamaica Broilers on an "as available" basis, based on a pricing formula approved by the OUR, which is lower than market rates. The parties refused to disclose the rates, saying it was commercially sensitive information.

Parsard said Broilers' power deal with JPS has not been endangered by the utility's planned sale to a Marubeni subsidiary by 80 per cent owner Mirant.

In April, Mirant announced that Marubeni would pay US$1.082 billion for its light and power generating distribution assets in Jamaica, Bahamas, Trinidad and Curaao. Stripped of debt, Mirant will realize $354 million from the Jamaican assets.

"The change of ownership does not have an effect on the existing arrangement," said Parsard.

At the end of March 2006, JPS increased its installed generating capacity from 765 megawatts to 817 megawatts, 30 per cent of which is provided by independent power providers. The Jamaica Energy Partners contributes 20 per cent while Jamaica Broilers and the JamaicaPrivate Power Company Limited contribute the remaining 10 per cent.

susan.gordon@gleanerjm.com