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Puerto Rico Senate passes public energy policy bill

By on November 7, 2018

SAN JUAN – Puerto Rico’s  Senate has passed the proposed regulatory framework and energy policy bill that would pave the way for the transformation of the bankrupt Puerto Rico Electric Power Authority (Prepa), as well as address the effects of climate change.

The bill was opposed by minority Popular Democratic Party Sens. Cirilo Tirado and Rossana López, as well as minority Puerto Rican Independence Party  Sen. Juan Dalmau. Majority New Progressive Party (NPP) Sen. Migdalia Padilla abstained from voting.

The bill is now expected to go to the House for a vote. Senate President Thomas Rivera Schatz included language in the bill to ensure the acquired rights of Prepa workers are protected if they transfer to another government agency or move to another entity.

The legislation calls for Puerto Rico to generate power using only renewable energy by 2050 and would end Prepa’s monopoly. It also establishes energy-saving requirements for all agencies, noncompliance of which could result in the violating agency having its budget cut.

When the bill was introduced last month, Senate Vice President Larry Seilhamer (NPP) said that if the island’s Financial Oversight and Management Board “wants to help,” it must lobby Congress to have it exempt Puerto Rico from the maritime cabotage laws that require goods to be shipped on U.S.-flagged vessels. The objective of which would be to reduce the cost of transporting natural gas, whose use as a fuel will serve as a transition to the use of renewables.

The bill would eliminate the use of coal by 2027, as well as phase out bunker C oil, which no longer complies with federal environmental standards. The legislation does not address Prepa’s $9 billion debt because the issue is in an in-court, bankruptcy-like process, but the measure “calls for the agreement with creditors to be honored,” Seilhamer said.

The bipartisan bill takes into account the effects of climate change and would require the island to aggressively transition to renewables. It defines the responsibilities of all energy providers, which would be regulated by the Puerto Rico Energy Bureau (PREB).

The regulator will have operational and fiscal autonomy through certain fees levied on energy providers. The legislation will grant PREB the power to impose fines for violations, which could be charged as misdemeanors, and to enforce the bill’s mandates.

“PREB will have more money and more teeth,” Sen. Minority Leader Eduardo Bhatia had said. “This bill is the result of months of meetings, collaborations, studies and the input of different groups and people who contributed to what should be the transformation of the electrical system. The purpose is to have a Puerto Rico with a robust, resilient, affordable and reliable system.”

Seilhamer said the measure will tackle “the reconstruction, modernization and updating of the transmission and distribution system of the network. The monopoly is put to an end as we know it today to make way for competition in power generation and fuel diversity.”

The legislation calls for a new portfolio of renewable energy, “which states that by 2025 we will have 20 percent of the energy coming from renewables; by 2040 it will be 50 percent and by 2050 it will be 100 percent. This goal of renewable energy was worked on with the executive branch, and the governor asked us to include 100 percent by 2050,” Seilhamer said.

Bhatia stressed that the bill introduces the concept of prosumers, or those who combine the roles of producer and consumer. For instance, electric grid customers who also produce power and could share the surplus of energy with other users.

“Since 2014, advances in technology have been tremendous, and will allow more and more Puerto Ricans to become energy prosumers, that is, that we can have the capacity to produce energy as well as consume it,” Bhatia added. “The concept of being prosumers should be embraced by all of Puerto Rico and have thousands of families taking advantage of the concept.”

The measure stipulates that all electrical service companies, including Prepa, are required to comply with the integrated resource plan approved by the Energy Bureau. It also facilitates interconnection to the transmission and distribution network by “any available mechanism,” including distributed generation, renewable sources, net-metering and the use of microgrids.

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