CUC wins bid with diesel

| 03/10/2014

(CNS): Cayman’s dependency on fossil fuel has been sealed for another 25 years after CUC won the bid to supply itself with the 36MW of extra power the firm needs to meet its future obligations with a new diesel generator. Although CUC was up against two bids from DECCO (Dart Group) and the Louis Berger Group, both of which were based on liquid propane, the CUC bid came in over 22% cheaper. Announcing the decision Friday, the Electricity Regulatory Authority (ERA) director, Charlie Farrington, and his deputy, Louis Boucher, said the bids had been transparent throughout and had been evaluated by independent energy experts, ICF International. That report is now a public document.

Farrington said that after the evaluation process it was quite clear that the CUC bid was by far the best value for the consumer.

Acknowledging the diesel dependency issue, the two men said that despite requesting renewable energy, no greener bids were received. Farrington said, however, that the ERA would now be focusing on how Cayman can reduced its dependence on diesel and begin to replace the power supply with renewable energy in the future.

But he explained that in this bid the power had to be firm. Given the technological challenges that remain around solar and wind power, he said such green energy cannot yet ensure a 24-hour supply. Nevertheless, he said, as the technology improves Cayman will be looking for a more sustainable power supply and Farrington said he believed the power of the future was solar.

Following past controversies surrounding this bid, the men confirmed that CUC was subject to the same bid conditions as the other parties in this RFP.

Farrington also explained that this bid was different from the previous tender process won by DECCO before allegations of corruption were raised by the former ERAdirector Joey Ebanks (who is currently in jail following his conviction earlier this year for theft from the ERA), which had caused the cancellation of the solicitation.

Boucher added that this latest RFP was more detailed and included the issue of using and recycling the waste heat which comes from the generation of power.

Following the announcement by the ERA, CUC confirmed it will now develop and operate a new 39.7 megawatts diesel power plant on its current site that will include 2.7 MW waste heat recovery steam turbine. The project cost is estimated at US$85 million and the plant will be commissioned no later than June 2016. 

“CUC put a significant amount of effort into developing a very competitive proposal and having won we have demonstrated that CUC represents the best value for electricity consumers in Grand Cayman,” said President and CEO Richard Hew. “This project will require a significant, long-term financial undertaking by CUC to deliver the benefits of safe, reliable, and highly efficient production of electricity for consumers in Grand Cayman.”

He added that the firm would be signing agreements with the equipment provider MAN Diesel & Turbo of Augsburg, Germany, and primary construction contractor BWSC of Denmark, to build and commission the new power plant.”

The ERA bosses had said that although the winner was CUC, meaning that the generation of power in Grand Cayman remains in the hands of one supplier, the competitive bid had worked as intended and caused the rate to be pushed down. Farrington said that having two power suppliers is not what creates the competition but the bidding environment, forcing everyone, including CUC, to fight for the contract and to keep costs low.

See the evaluation report here and below along with related press release from the ERA board and CUC.

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Comments (51)

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  1. brit says:

    I would really like to know how they get away with it?  I mean my bill is rarely less than 500 dollars too but my electric usage is only say 120.00 dollars YET the fuel cost is 220% MORE than what I actually use!  Who's having a laugh now?  Come on bright sparks (pardon the pun..lol) but who makes up this crap?   I swear someone just takes a number & say's Joe Blog's will pay this much this month.  Also those new meters they installed & by the way didn't let us know they would be entering our property a while back to do so,  I have no faith in them either!  Say they read everyones from town now & don't have to dirve around. Personally I preferred the old method of actuall READING a meter!

  2. Anonymous says:

    They could run the generators on pig sh@t for all the difference it makes they still cannot provide uninterrupted power without a loss of service for more than what….a couple weeks. Power cut again Saturday night. 3rd world provider.

  3. Anonymous says:

    Why do the CUC contacts have to be for 25 years?? That's a generation! Surely they could be shorter in length. Technology is improving all the time, things could be vastly different even 5 years from now.

    • Anonymous says:

      The longer period means costs are amortised over a longer period and thus lower on an annual basis for consumers.

      • Anonymous says:

        Yes, there may be very good reasons for the benefitof the consumer, but have they taken into account the rights of the anti-CUC prejudiced moaners out there?

  4. Anonymous says:

    Love to know where CUC buys its fuel from, and at what rates. Since they can pass 100% of the costs on to the consumer there's no incentive for them to manage the buying process to keep costs down.

    • Anonymous says:



      As far as I know CUC buys its diesel from the two oil companies on the island. Maybe you can ask them where they buy their oil. 

  5. Anonymous says:

    Residents might want to look towards investing in alternative energy. this is the only way lower your CUC bill for the next 25 years!

     

    Residents planning to invest in alternative energy sources, such as solar panels, can now do so with help from government.

    The Governor-in-Cabinet recently approved an import duty waiver for renewable/alternative energy equipment.

    Brought to Cabinet by Minister of Communications, Works and Infrastructure, the Hon. Arden McLean, JP, the waiver is part of his ministry's and the Electricity Regulatory Authority's (ERA) efforts to reduce the Islands' dependence on fossil fuels.

    "There are many renewable energy sources that are economically viable for the Cayman Islands," Minister McLean explained, "and the ministry would like to prevent any further delay caused by import duties in the adoption of renewable technologies."

    Effective since 1 December 2008, the waiver allows a full exemption from import duty on renewable energy equipment for residential homeowners. Waivers on similar equipment imported for commercial use will be reviewed on a case-by-case basis by the ERA.

    Renewable energy is sourced from the earth's natural resources such as the sun, wind, ocean and soil.

    Sidebar: Applying for an Exemption

    Home owners may seek duty waivers on renewable energy equipment imported by presenting a copy of the equipment invoice to the Customs department and signing a declaration form which states the purpose of the equipment. Also, electrical contractors who import renewable energy equipment may seek refunds on duty after the equipment is sold and installed at residential applications.

    Source: Ministry of Communications, Works and Infrastructure.

    For further information contact: Kenisha Morgan

  6. Anonymous says:

    Of course they’regoing to bid lower and raise rates over time whoever doesn't see that has a lot in common with the late great Ray Charles.

    • Ray Charles says:

      Except that a) rates are set by the regulator, not the generator and b) even if there was more than one generator, the rates to the consumer would still be set by the distributor i.e. CUC. 

  7. Anonymous says:

    CUC could easily use biodiesel in their current generators to increase the renewability of their fuel source and take a step away from fossil fuels, without having to change thier infrastructure. In fact, this article in the Journal a few months ago, talks about just that , "there are significant benefits in the production of electricpower on island, as generators can burn a clean and renewable fuel source [biodiesel]"; http://www.compasscayman.com/journal/2014/04/02/New-biodiesel-company-sees-potential-in-Cayman-market/

    The powers that be are, obviously, simply not interested in taking the necessary steps to help the environment.

     

     

    • Anonymous says:

      CUC could also run some of their existing generators on LPG. The new equipment they installed back in 2007 was all multi-fuel but that option has never been used because CIG make too much money from the duty they (or should that be we?) pay on diesel.  

      • Anonymous says:

        A European directive issued in April 2009 mandated multi-fuel generators but most manufacturers in Europe had been producing them for years before that. Bottom line is you don't need diesel.  

      • Anonymous says:

        Actually, some of the bids considered, including from CUC, were for LPG/Propane power. But, if ou read the other news report on this (or the supporting documents I presume) you'll see that those bids failed because they werent' as cost efficient as good ole diesel.

        • Anonymous says:

          If you read the ICF/ERA report attached, you'll see their determination for LPG pricing (and thus reported cost) was altered to suit their needs to make it appear more expensive. They admit it's cheaper to buy, but assume it's more expensive to transport. They largely ignore the impact of economies of scale to the transport cost and also elevate the base price under the assumption US export supply cannot absorb the increased demand, so then chose to use international LPG pricing, which is quite a bit higher than US pricing. 

          It wasn't really an apples to apples comparison. 

        • Anonymous says:

          'Cost effective' seems to depend on who does the sums.

          In the UK I ran my car on LPG where petrol is currently about £5.90 (roughly CI$7.80) an imperial gallon. LPG costs half that and with it I got just over 90% of the MPG that petrol gave, the car also ran smoother. Simple maths shows that is pretty cost effective.

          Unlike my car CUC don't even have to convert most of their equipment bcause it comes from the factory as multi-fuel. LPG is also clean, if CUC used it there'd be no more smoke coming out of the stacks on Sparkey Drive.

          The reason CIG don't want LPG is to do with revenue – nothing else.      

          • Anonymous says:

            Large medium speed diesel engines do not run on LPG (propane). They are capable of running on natural gas which is not yet available on the island. Also, they do not come from the factory dual fuel, they have to be ordered specially as dual fuel.  There is a big difference between a car engine and the large diesel engines used in electricity generation.  Interesting that petrol at the pump in the UK cost so much more than in Cayman.

      • Anonymous says:

        Some of the large medium speed diesels that CUC has can be converted to run on natural gas, but not on LPG (propane).I think you will find that there is a duty on propane as well so government wouldn't necessarily lose any revenues. 

    • Anonymous says:

      If someone can sell biodiesel for the same or cheaper than reglar diesel CUC and everyone else will use it. But they can't. At least not in the quantities CUC burns. Its not a question of capability (to make it or burn it) its a question of cost (to make it and get it to CUC cheaper).

      • Anonymous says:

        There is a company that sells Biodiesel on-island for significantly less than regualr diesel pump price: Island Biodiesel https://www.facebook.com/islandbiodieselmadeincayman

        • Anonymous says:

          Yup. And ask them how much they can supply. Then ask CUC how much they need. Then see the disconnect. Remember, there are two sides to the supply issue: cost and volume.

        • Anonymous says:

          Yup. And these look like the second guys to try. Unless the first company has changed hands/frontmen. Neither here nor there. At least they have a webpage for contacting them. They'll deliver up to 500 gallons of biodiesel. Which compared to how much CUC burns is … not enough to make a difference. Technology isn't the problem – producing or burining biodiesel – its getting enough of it to CUC. If its made on-island there won't be enough. If you have to import it, well, there's a reason the importing ship is (probably) burning regular diesel.

  8. Anonymous says:

    So, cuc was able to win the bid by nearly 22%?

    wasn't it just a year ago that DART won the bid?

    didn't their investigation prove that he was right in their findings and numbers?

    if so by how much percent did he win the bid last year?

    sounds like Joey's story has some questionable items.

  9. Green Hornet says:

    OK, let me get this straight. Climate change impacts are speeding up world-wide. The primary cause? Increase in fossil fuel emissions. Ummm, yes that  does include diesel fuel. Meantime, countries like Germany and New Zealand will be independent of fossil fuels by 2025 because they realise the impact they are having on our climate.

    Meanwhile, the oil industry has purchased the US government (Canadian and Australian also) hook-line-and-sinker and uses every possible tactic to maintain their power base and profits. This, of course, includes using whatever militaristic means available to protect those oil supplies throughout the world, not to mention the destrution of clean groundwater through fracking for more natural gas in their own country.

    The list is endless and all-encompassing. In Cayman we had the opportiunity to stop adding our very own emissions by phasing out antique electrical generation and going to alterntive (solar, wind, wave) energy supplies. But, as usual, we take the old well-and-trued method of burning diesel. Guaranteed for another 25 years.

    I often wonder if we are on the same planet as people who care about what is going to happen to our children and grandchildren in the future. This sort of decision surely tells us we are not.

    • Anonymous says:

      No, you don't have it quite straight, and no I do not work for CUC nor do I own shares in the company. The emissions from 35 Megawatts of diesel power in Cayman when compared to coal-fired generators in China is like adding a bucket of sand from Seven Mile Beach to the Sahara Desert. This was for "firm" power and was 20% less than the next best bid, with negligible difference in emissions. Hopefully we can all pressure the ERA to say add 50 Megawatts of "renewable" power next. I am willing to pay slightly more per kilowatt hour to have more renewable power in the grid, and I am more than happy to keep the existing duty on fossil fuel, and even increase it to make renewable power more attractive. However, I also realise that I am in the minority in that regard.

      • Anonymous says:

        We all beat out chest about renewables and how much we want them but when it comes to if we want to pay for them, we say no.

         

    • Anonymous says:

      I agree, it’snot about the environment it’s all about the $$$$$$.$$ they ALL collect CUC is one big monopoly, they have the strong hold because there is NO competition what so ever every resident / company depends solely on them for energy. Alden needs to look into sources that provide cheaper fuel to the island like ven

  10. Anonymous says:

    Cayman just loves being stuck in the past, when everyone else is trying to get away from gas cayman is signing new deals to use it more and more yet they claim to care about the environment.

    The CUC monopoly continues.

  11. Anonymous says:

    And that my friends is the last nail in the Cayman Islands coffin. 

  12. Anonymous says:

    And government collects ridiculous duty on our electricity forever….huge surprise!…great…

  13. Anonymous says:

    Congrats,

    Best investment of my life

    This is wonderful I will buy more shares monday

     Best investment of my life

    Until no one can afford to pay their bills

    Good thing i no longer have rental units

  14. Anonymous says:

    We're gonna starve and sleep without power now won't be able to pay CUC for another 25 f******* years! After paying my mortgage I have to already choose to eat or have electricity and lunch money for my son it's the two of us and a dog (my husband passed away just so you'll know #notadeadbeat) and no ac just fans and I follow ALL of their energy saving suggestions and my bill is never less than $500.00 ($119.00 cuc's usage $285.00 fuel $56.00 govt fuel tax and a meter charge)

    • Anonymous says:

      The AMI meter will help you to better monitor what you use and manage your costs. Try.

       

      • Anonymous says:

        That’s been installed now over a year I have even shut off all the breakers except for the refrigerator, spent thousands on foam insulation(since construction of my home 2004) spent a few more thousands on insulating paint (exterior and interior) switched from tank to tankless hot water heater (that I don’t use) and from central air to window units then I went to sleeping with only fans n ceiling fan and have been monitoring thru my online account CUC’s response : it’s summer it’s hotter “people” tend to use their ac more and while kids are out of school my son spent the summer away in new Jersey no one but our dog was left at home. But thanks for your advice /suggestion/comment

        • Anonymous says:

          Window units are way less efficient then central air.  Instead of window units you should have upgraded to central system to higher sear rating.  When you get insulation it should be between the drywall and the attic.  Many of the foam installation companies are putting it between the attic and the roof.  This is not going to give you proper insulation as you want a barrier between the hot and the cold no the hot and the hotter.  I would also recommend replacment of your windows if you are able to install airconditioning units in them they probably are an older style and do not have a high R value.  Many people are being fooled into purchasing foam on the walls…yes this can help but windows are way more important in concrete construction.

          • Anonymous says:

            Did that too but then it went thru the roof Omg I had nightmares after putting the central air back returned to the window units a bit dropped on bill (nothing much) but

  15. Anonymous says:

    Mr. F, after the bid is won there are no other competitive forces compelling a monopolist to adhere to their winning quote.

    • Anonymous says:

      I think it is called a signed contract. No need for continuing competetive forces. They have alreaady been exerted. But we the users can continue to slowly but surely add renewable power to the grid. Over the next 25 years the costs for renewable will continue to fall (to where most people can afford it) while they increase in output. Note we will still have to pay for the disribution.

  16. Anonymous says:

    Well, I vote myself to be the best. No objections? Righty-ho then.

  17. Anonymous says:

    pure greed wins over the health of the people and the environment. 

  18. Anonymous says:

    I'm sure glad that Joey found God.

  19. Anonymous says:

    Oh Lord when will the CUC mess end

  20. Anonymous says:

    Given the technological challenges that remain around solar and wind power he said such green energy cannot yet ensure a twenty four hour supply. Neither  can CUC

    • Green Hornet says:

      Negative, negative….we could phase in alternative energies. Not simply rule them out. Other, very much larger countries are doing so…it ain't rocket science.

      • Anonymous says:

        Quite right. Over three decades ago the Israelis introduced building codes that required all new buildings to have solar water heaters. They're just a fairly simple roof panel, a tank and a low powered pump to circulate the water but trust me the system works. Another problem that needs to be tackled in the Cayman Islands is that even new buildings aren't insulated properly. Any building codes you have must be at least 50 years out of date.    

    • Anonymous says:

      only in Cayman, the rest of theworld that uses alternative energy employ a neat little invention called batteries.