Thursday, July 2, 2020

Electricity customers will see lower bills into 2021, Prepa chief says

By on May 26, 2020

Prepa Executive Director José Ortiz (CyberNews)

Attributes savings to March plunge in oil prices, renegotiated contracts

SAN JUAN – Puerto Rico Electric Power Authority (Prepa) Executive Director José Ortiz said Tuesday that the cost of electricity will decrease even further in July, as he assured that the island’s electrical grid was “robust” in the face of the upcoming hurricane season starting June 1.

Ortiz had announced last week that Prepa customers’ bills would decrease by an average $8 to $12 in June as a result of the conversion to natural gas of units 5 and 6 at the Central San Juan powerplant complex.

“That is going to happen. We have presented the numbers to the [Puerto Rico] Energy Bureau. The [billing] cycles that are now starting to arrive to the people, the June 1st bill onwards, will experience this decrease. I’ll go even further, in July we expect another drop that is even greater,” he said in a radio interview.

Ortiz attributed the expected electricity bill decreases to the drop in petroleum prices in March, when the barrel of crude oil plunged nearly 30 percent, to below $20, as demand dried up due to the Covid-19 epidemic crisis and a price war between Saudi Arabia and Russia. He also noted that utility customers could also see further savings after July with a recently renegotiated contract with the privately run 500-megawatt (MW) Ecoeléctrica natural gas-fired powerplant in Peñuelas.

“This is going to be constant. I expect that the drop in the cost of energy will continue well into the year 2021, almost to the year 2022. That is more or less the forecast that is being made out there…. As all of those things come in, they will help the consumer and it is a moment in which the economy needs it,” the Prepa chief said. “I believe the economy was hit hard by this Covid-19 and this [lower power prices] is a factor that can help reignite economic movement in Puerto Rico.”

On the other hand, Ortiz assured that the island’s electrical grid is “more robust” in the face of the upcoming hurricane season, which begins on Monday, June 1, and which is forecast to be above normal. He said that the public utility has inventory worth $131 million for such events, compared to the $22 million in inventory before Hurricane Maria struck the island in 2017.

“We are better prepared, [if we] compare oranges to oranges. Let’s think about a hurricane similar to Maria to compare. I certainly do not see people going 11 months without power because the conditions [now] are very different,” he said.

“I believe we have the equipment, inventory, and a better-built south to north [powerline] system,” Ortiz said, noting that the system can withstand 140-mile-per-hour winds. “And we hired two companies that will help us with the transmission lines, to unhook and prune vegetation, which was the main problem [causing] the blackouts back then.”

Regarding the 820 MW Costa Sur plant in Guayanilla, which was knocked out of operation by the January earthquakes, Ortiz said that repairs to unit 5 of the facility should be completed by July, adding, however, that testing of the unit could take until Aug. 14 before it is operational. Nonetheless, Prepa is requesting that the Puerto Rico Energy Bureau (PREB) approve a $70-million-a-month contract for the leasing of generators to cover increasing summer demand of power until Costa Sur is repaired.

Ortiz said that while the privatization of Prepa’s power distribution has been complicated by the Covid-19 crisis, an agreement with the selected company should be signed over the summer. This agreement will be presented to PREB and Puerto Rico’s Financial Oversight & Management Board (FOMB) for their approval.

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