JPS POLICY CHANGES
Mr. Speaker, for some time now the Ministry of Science Technology Energy and Mining (MSTEM) has been in ongoing negotiations with the Jamaica Public Service Company (JPS) on a number of matters, foremost among them, the cost of electricity to consumers.
Today I am pleased to announce that those negotiations have begun to yield early results, and JPS has agreed to take three steps that will bring some amount of relief to their customers.
The first is a reduction in electricity rates. The Government has heard the cries of the business community, and we agree that the high rate of electricity is prohibitive to growth, and that those rates make our manufacturing and productive sectors uncompetitive regionally and globally. In this regard, we approached the JPS for their assistance in finding a way to get the energy costs for commercial and industrial consumers down as quickly as possible. They have worked with us in creating a volume discount intended to spur economic development.
This “wholesale rate” will apply to the top 20 per cent of industrial customers and represents a 25 per cent discount on the non-fuel tariff. Also, JPS has agreed to adjust the time of use (TOU) discount they offer commercial and industrial consumers for their off-peak usage. These measures will greatly ease the burden on the production and manufacturing sectors.
Mr. Speaker, smaller and residential consumers will also come away with some benefits as well. The JPS has agreed to offer a $250 discount as an incentive to customers who pay their bills in full before the due date. This will help the company improve its collections, and will allow those of us who like to be early to derive some benefit for being proactive.
New Disconnection Policy
Most significantly however, is the offer of the JPS is a change in disconnection policy. As Minister I get daily complaints about the JPS’s existing policy, which does not offer any measure of flexibility to paying customers, particularly to the poorest who struggle with cash flow throughout the month. Mr Speaker, no longer will the JPS automatically disconnect consumers who miss their payment date by a day or a week. Instead, those customers will face a late payment “fine” of $250, and will only be eligible for disconnection if they are in arrears for over one month.
I would like to further inform this Honourable House that the JPS is currently working on seven new systems that will allow the utility to offer a variety of improvements in their billing and collections and customer service in general. One of these systems, which will allow for prepaid electricity service, is already being tested in a pilot project, and given our experience in the telecoms sector, I anticipate that on national rollout, it will be a resounding success.
These steps, Mr Speaker, represent a monumental shift in the way that our electricity sector operates, and I commend the JPS for working with the Government to deliver these improvements to the Jamaican consumers, both residential and industrial. We anticipate that the majority of these measures will be endorsed by the Office of Utilities Regulation (OUR) in short order, and expect to have them implemented by July 1, 2013.
TAX EXEMPTIONS FOR EEC AND RENEWABLE ENERGY PRODUCTS
Mr Speaker, I have more good news. Since assuming office last year, MSTEM has been in dialogue with the Ministry of Finance and Planning regarding the lowering of duties and other taxes that are applied to energy efficiency and renewable energy products. While we didn’t get everything we requested, those discussions did yield some positive results, and on June 1, 2012, the Ministry of Finance and Planning applied GCT exemptions to a list of 31 energy saving devices for renewable energy and energy efficiency.
We recognized that this was not enough. An anomaly remained where the tax exemptions on energy saving devices such as solar technology and lighting. In addition, the regime was not consistent, as there were cases where GCT exemptions were placed on solar water heaters and panels but not on their components and accessories.
The same anomaly existed with respect to the application of GCT exemptions on fluorescent bulbs which were not applied to light emitting diodes (LEDs). These disparities, Mr. Speaker, could have lessened the impact of our energy conservation initiatives as well as the efforts of the GOJ in promoting the deployment of renewable energy and more efficient technologies.
Mr. Speaker, for us to facilitate investment, we must create the right framework that will motivate and inspire companies and individuals to implement strategies and programmes that encourage energy efficiency and conservation. These objectives, Mr. Speaker, maybe achieved if, among other things, incentives are provided and there is access to available energy-saving products and devices. The main objectives of this approach are to reduce the country’s expenditure on imported oil, develop local expertise and employment opportunities in the energy conservation and energy efficiency and renewable energy sectors.
Analysis by the Ministry has shown that electricity demand by the residential sector for 2012 declined by two percent when compared to 2011. This reduction, translates into a saving of 16,000 barrels of oil equivalent and approximately US$1.5 million; which may in part be attributed to Jamaican’s increased awareness of the importance of energy efficiency and conservation, and indeed, the benefits of changing behaviour in this area. It is important to note that every dollar saved is a dollar that could otherwise be spent in the country to improve, for example, social services such as health, security, education, among others.
Mr. Speaker, this Government intends to take the necessary measures to ensure that by 2030 renewable energy technologies contribute at least 30% of the country’s electricity needs. This may at first blush appear to be an ambitious target, but we feel that especially given the unpredictability of the energy market and the development of new technologies, that this is highly achievable.
In an effort to stimulate the further development of an energy efficiency market and to increase the penetration of renewable energy technologies, we at MSTEM prioritized a list of 16 energy savings items for the suspension of Common External Tariff (CET).
I am pleased to report that at its meeting yesterday, Cabinet approved an amendment to the Customs Act to reflect CET exemptions that had previously been granted by CARICOM’s Council of Trade and Economic Development (COTED) for a period of five years from January 1, 2013 to December 31, 2017.
Mr. Speaker, I think all Jamaica will be pleased to know that among the items to be exempt from CET are:
- Compact Fluorescent Lamps;
- Absorption Refrigeration Systems including equipment and materials using solar;
- Air conditioning chillers; and
- Mounting accessories for solar water heating systems.
In order for us to achieve the energy policy targets, the sustained application of incentives for energy efficiency and renewable energy technologies, such as duty concessions and GCT exemption, will allow Jamaica to benefit substantially from:
1. Reductions in electricity usage;
2. Immediate cost savings in the country’s energy or oil import bill;
3. Development of a culture of energy conservation and efficiency;
4. The proliferation of renewable energy technologies and the increased use of alternate and clean energy sources;
5. Encouragement for the development of Energy Services Companies (ESCOs) and an increase in employment;
6. Trading of carbon credits generated from emissions avoided; and
7. Increased production, improved competitiveness of the economy with the possibility for increased exports and increased wealth creation.
Mr. Speaker, I believe that the Cabinet must be commended for moving to correct the disparities already outlined.
Mr. Speaker, these developments I have announced here today I feel, will move us closer to achieving the national objectives of reducing our oil import bill, improving the competitiveness of our manufacturers, and in increasing energy efficiency while encouraging our citizens to be more diligent being conscious of and managing their own energy.
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