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Prepa to Submit Integrated Resource Plan Feb. 12

By on January 31, 2019

The Puerto Rico Electric Power Authority’s headquarters in San Juan (CB file)

Editor’s note: The following originally appeared in the Jan. 31 – Feb. 6, 2019, issue of Caribbean Business.

The Puerto Rico Electric Power Authority (Prepa) is expected to submit to the local Energy Bureau a proposed Integrated Resource Plan (IRP) on Feb. 12, which is a six-month delay that has fueled concerns about the regulator’s ability to put some controls on the energy utility.

After the proposed IRP is submitted, the Energy Bureau (PREB) will give intervenors 30 days to provide feedback before putting the document through a public hearing. While that process moves forward, however, U.S. House Natural Resources Committee Chairman Raúl Grijalva (D-Ariz.) and a congressional delegation are expected to visit Puerto Rico to monitor the island’s recovery and see different energy facilities. The onsite inspection in Puerto Rico is a precursor to a hearing Grijalva is expected to hold in about a month on the subject of climate change, with a focus on renewable energy and Puerto Rico, said Carlos Mercader, executive director of the P.R. Federal Affairs Administration.

The information was revealed during the Second Puerto Rico Grid Revitalization & Investment Forum (P.R.-Grid II), in which public officials met with private investors to discuss opportunities in the energy sector. The event was co-hosted by the Puerto Rico Manufacturers Association (PRMA).

At the forum, several private companies raised concerns about the independence of the Energy Bureau and its ability to effectively regulate the utility. Last week, PREB approved the contract for the conversion of the San Juan plant’s units 5 and 6 to use natural gas even though the contract did not comply with the IRP that has been in place since September 2016, arguing that the conversion will save Prepa $1.1 billion in fuel purchases and because the state of the electrical system after hurricanes Irma and Maria, which destroyed the electrical grid.

“It is reasonable, until a new IRP is approved, that [PREB] does not remain inert before certain beneficial initiatives that do not have a significant impact on the approved IRP,” PREB said.

Ángel Rivera de la Cruz, one of PREB’s commissioners, dissented from the decision because it was not part of the analysis to approve the IRP in 2016. Rivera de la Cruz said San Juan Unit 6 has to be economically retired in 2024 and Unit 5 in 2026. Therefore, “the contract did not comply with integrated resource planning” and the Energy Bureau implicitly changed the IRP.

Private-sector officials chided PREB for allowing Prepa to go rogue. Josen Rossi, a past president of the PRMA and chairman of the Institute of Competitiveness & Economic Sustainability, asked, “Do you think Prepa today is ready to accept there is a new boss in town?” Rivera de la Cruz said progress has been made. “We now have a more cooperative entity than we had three or four years ago,” he said.

Rossi then said “some people may disagree” because Prepa has displayed a lack transparency with intervenors authorized by PREB to evaluate the contract for the transformation of San Juan plants 5 and 6 to use natural gas.

Rodrigo Masses, PRMA president, intervened to say that whenever “you have an IRP changed, it should be an open process. We want this to work properly and due process is important. If the IRP is changed, we should be heard,” he said.

Besides the creation of a new IRP this year, Rivera de la Cruz said PREB will complete new wheeling and microgrid regulations. New Prepa rates are also slated to go into effect in April.

During the forum, Mercader touted the opportunities available in Puerto Rico, most of which was declared an Opportunity Zone by President Donald Trump. A portal is slated to be put up in 14 days with a list of opportunities that may be funded through federal allocations. “You will be able to access the website and see in which areas we want to promote investment,” he said.

He also dismissed the possibility that federal funds for Puerto Rico may be diverted, noting that Trump can sidetrack some $3 billion allocated for the island to the U.S. Army Corps of Engineers to build a wall along the southern border with Mexico, if the president declares an emergency.

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