Wednesday, August 15, 2018

Puerto Rico power company’s fiscal plan resurfaces offshore gas port

By on August 2, 2018

SAN JUAN – The use of natural gas will play a major role in the Puerto Rico Electric Power Authority’s (Prepa) transformation.

The utility’s new fiscal plan says officials are resurfacing the Aguirre Offshore Gasport (AOGP), a project that has raised concerns over its economic viability.

The location of the Offshore GasPort and 4-mile-long, 21-inch outside diameter subsea pipeline connecting the Offshore GasPort to the Aguirre Plant (Screen capture of www.energy.gov)

The plan confirms remarks made by Gov. Ricardo Rosselló about the use of natural gas as a transition fuel, along with renewable sources, to power Puerto Rico. Renewables are expected to comprise 40 percent of the energy sources.

Prepa is analyzing technologies to achieve the lowest-cost rates, including solar, combined-cycle gas turbines, wind, battery storage and reciprocating engines that use multiple fuels.

System design improvement concepts that are being evaluated by Prepa and by Siemens, the company drafting a new integrated resource plan (IRP) for the utility, include reducing the size of Prepa’s largest unit to reduce spinning-reserve procurement.

The concepts also include converting Northern plants to use natural gas, as well as “Southern plant repowering and gas supply expansion at Costa Sur Aguirre Offshore Gas Port and other natural gas supply opportunities,” the plan reads, with a chart showing all of the technologies and concepts adding to more than $3 billion.

As part of the analysis of a previous IRP, the Puerto Rico Energy Commision (PREC) paralyzed the AOGP a few years ago, allowing Prepa to spend up to $15 million in planning.

Prepa appealed, but the regulator shelved the appeal because the utility did not comply with certain requests for information regarding the project’s cost-effectiveness, but said the controversial project could be considered as part of its IRP due in October.

The fiscal plan appears to confirm information published by Caribbean Business and stateside media that Congress may be pushing for increased use of natural gas in Puerto Rico at the request of political donors.

The fiscal plan, on the other hand, calls for a cut in power rates to less than 20 cents per kilowatt-hour (kWh), even though a preliminary pact to restructure Prepa’s debt would hike power rates by 6 cents to 7 cents in 10 years.

The Institute for Energy Economics and Financial Analysis (IEEFA), a clean energy think tank, on Wednesday came out against the deal because customers will endure a 10% rate hike.

“By 2063, Prepa customers will still be paying for oil burned in 2008,” IEEFA analysts wrote. “The good news for bondholders—in the short term, anyway—is that they get paid first from the rate increase through a lock-box mechanism. The first 2.6 cents of each kWh of PREPA power sold goes to them. If there’s not enough left to pay PREPA’s operational expenses.”

IEEFA added that Prepa has “already shortchanged capital needs” by $300 million this year.

The island’s fiscal board is requiring the governor to submit by Aug. 6 a budget for Prepa that is compliant with the new fiscal plan.

See Prepa’s new fiscal plan.

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