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IEEFA calls on FEMA to reject funding new natural gas plants in Puerto Rico

By on January 28, 2021

PREPA’s 10-year infrastructure plan contradicts orders of Puerto Rico’s energy regulator

On Monday, the Puerto Rico Energy Bureau issued an order firmly rebuking the Puerto Rico Electric Power Authority (PREPA) for attempting to move forward with new projects – including a 400 megawatt (MW) natural gas plant and 330 MW of smaller natural gas peaking units. In August 2020, the Bureau had explicitly rejected PREPA’s plans for new natural gas plants and ordered the power authority to instead prioritize investments in renewable energy and storage, as part of its least-cost plan for the island’s electrical system.

PREPA proposes to cover the upfront costs of its new natural gas projects with over $850 million in U.S. Federal Emergency Management Agency (FEMA) funds, according to its 10-Year Infrastructure Plan – which, as the Bureau noted in its Monday resolution, was never submitted to the Bureau for review. 

The Bureau has called on PREPA to “immediately abstain” from investing in any power generation projects without prior approval. It ordered PREPA to modify its 10-Year Infrastructure Plan to comply with the Bureau’s previous orders by February 15, 2021 and threatened PREPA with fines for non-compliance.

“The Energy Bureau is legally authorized to regulate PREPA. The Bureau conducted a rigorous, professional planning process to arrive at its conclusion that renewable energy represents the least-cost path for Puerto Rico,” said Tom Sanzillo, director of financial analysis at the Institute for Energy Economics and Financial Analysis (IEEFA). “FEMA should not be complicit in PREPA’s flagrant abuse of Puerto Rico’s regulatory system. FEMA should withdraw its approval of federal funds for these natural gas projects.” 

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