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1/ Recently, there has been alot of discussion regarding JPS bills, oil prices and the link between the two, so I decided to do a thread that I hope is informational and adds value to the discussion with some factual info.
2/ According to the JPS website the Fuel & IPP Charge on your bill combines two factors:
1. The cost of fuel used to generate electricity; and
2. The cost of the electricity supplied by Independent Power Producers (IPPs).
https://www.jpsco.com/jps-business/fuel-rates/">https://www.jpsco.com/jps-busin...
1. The cost of fuel used to generate electricity; and
2. The cost of the electricity supplied by Independent Power Producers (IPPs).
https://www.jpsco.com/jps-business/fuel-rates/">https://www.jpsco.com/jps-busin...
3/ For residential customers, their website further says that the the fuel charge is the largest contributor, to the Fuel & IPP charge since the IPP charge is minimal (less than 1%).
4/ The graph below shows the trend of % changes in the monthly JPS Fuel & IPP charge to the % change in the monthly trailing 3-month average Brent International Crude oil prices.
5/ The graph shows that the Fuel & IPP charge tracks pretty well with the Brent crude oil index, but experiences much greater swings, in both directions.
6/ Said differently, according to the trend, the Fuel & IPP charge tends to both increase and decrease much more sharply than Brent prices do.
7/ In Jan 2016, JPS started its journey to migrate from fuel to LNG with the conversion of its Bogue Plant, one of its 4 main power stations, to operate on LNG. The plant was commissioned in April 2016.
8/ In 2017, JPS entered into a Power Purchase Agreement with New Fortress South Power Holdings Ltd, to purchase power from the LNG power plant being constructed on the JAMALCO& #39;s grounds in Clarendon and also broke ground on the construction of a new LNG plant in Old Harbour.
9/ The Old Harbour and New Fortress& #39; JAMALCO plant became operational in Dec 2019 and March 2020, respectively.
10/ With these completed projects, LNG is now expected to account for 45% of its overall energy mix, increasing to 50% by the time it decomissions its plants that run on heavy fuel oil, which is slated for the end of 2020.
11/ So today, JPS is much less reliant on heavy fuel in its energy provision as it was 5 years ago. And this trend will continue as JPS furthers its drive to diversify its energy sources to cleaner and renewable sources.
12/ As a knock on effect, as JPS becomes less reliant on fuel oil as a major input, so too will crude oil prices have less of an impact on our bills going forward.
