New diesel generators will reduce power bills

(CNS Business): The US$85 million contract to produce 36 MW of incremental generating capacity on Grand Cayman is the largest single project that Caribbean Utilities Company (CUC) has ever undertaken, President and CEO Richard Hew said following news that CUC had out bid its competitors, DECCO (Dart Group), which submitted two proposals, and the Louis Berger Group, all of which were based on liquid propane. Hew said the new diesel generators would reduce the cost of electricity for customers and bring improvements in reliability.

The need to install new generation to replace two of CUC’s retiring generating units and to accommodate customer load growth was first raised by CUC’s Certificate of Need issued to the ERA in November 2011 which kicked off a bid process, he noted.

That bid process ran until July 2013 when it was cancelled by the ERA following allegations of corruption made by the former managing director of the ERA, Joey Ebanks, in connection with the bids. However, an investigation by the Anti-Corruption Commission (ACC) found no evidence to support Ebanks claims, which were made by the former MD in the wake of his suspension and then subsequent arrest for theft and fraud. Ebanks has since been convicted and is currently serving a more than two year sentence at HMP Northward.

“With the retirements of the generators still looming,” Hew said, “CUC issued another Certificate of Need to the ERA in October 2013 for a nominal 36 MW of generation to be installed between April and May 2016, which is the earliest practical time in which a project of this nature could be concluded. In the interim CUC undertook to install 7.5 MW of temporary leased generation to maintain reliability levels.

“These temporary units are currently in place and will be decommissioned when the new plant is commissioned,” he added.

According to independent consultants ICF International, CUC’s price bid, when combining both fixed and variable costs, was approximately 22 per cent better than both of DECCO’s proposals and 33 per cent better than LBG. The biggest percentage difference between the bids was on the fixed costs but CUC also provided the proposal with the highest efficiency (lowest heat rate) by a significant margin. ICF’s evaluation report shows that CUC’s levelized per kWh costs were 4.84 cents less than the nearest competitor.

“Savings to consumers which will be gained by the improved fuel efficiency with the new units running in place of the retired and existing fleet are estimated in the region of $6.5M per year based on today’s fuel prices,” Hew said. “These savings will be passed on directly to consumers in the fuel factor.”

The company’s CEO said CUC was delighted to have won the competitive bid. “It confirms what we as a company have known and maintained for a long time that CUC’s rates are very competitive and that we utilize technologies that deliver the most efficient and reliable electricity service to our customers. Through this competitive bid process our view has been independently confirmed.

Commending the members of the ERA team who “were very diligent and professional in ensuring that the process was fully transparent and fair”, Hew said, “We now have a lot of work to do over the next 20 months to ensure that this additional generating capacity is made operational in early 2016.”

See full report by ICF International: Evaluation of Bids for 36 Megawatts of Firm Power Generating Capacity for Grand Cayman

Tags: CUC, Featured, power supply

Category: Local Business