Wednesday, May 22, 2019

Puerto Rico’s legislative chambers agree on regulatory energy framework

By on March 5, 2019

SAN JUAN – At a time when the government is in the process of putting under concession the Puerto Rico Electric Power Authority’s transmission and distribution system and sell its powerplants, there is still no energy regulatory framework in place.

As of Tuesday, the passage of a regulatory framework had been delayed by almost three months from the original December 2018 deadline. These delays and uncertainty regarding the final legislation make it even less likely that Prepa will be able to achieve the concessions and privatization at an established deadline.

Puerto Rico Senate Vice President Larry Seilhamer said the island’s House and Senate have already settled their differences and created a single version of Senate Bill 1121 in conference committee after both chambers passed different versions of the legislation in January.

“It is a very complex bill but I trust it will be passed over the next couple of weeks,” he said.

What does the final version of the bill contain? After much discussion, the conference committee eliminated a House amendment that would have imposed a 20 cent cap on the power rates as of 2020.

“It is not a good idea to impose rates from the Legislature. That is truly the job of the Puerto Rico Energy Bureau,” he said.

Another amendment made by the House that Seilhamer said hindered the goal of depoliticizing Prepa was one that would have given La Fortaleza control over Prepa’s governing board. The amendment would have allowed for five members nominated by the governor and subject to confirmation by the Senate and House. Of these five members, the House proposed allowing the governor to pick three, and the other two would be recommended by the Senate president and the House speaker. In addition, the governing board would have had one member picked at the governor’s discretion, and one elected member representing customer interests.

Seilhamer said the final version will leave the current members until their terms expire. In the future, three of the board members will be selected by the governor from a talent list prepared by the private sector: One will represent the private sector, and two will represent the public interest.

The final version of the bill also eliminated language that would have permitted fast-tracking solar projects by allowing their permit without a location consultation.

“That could have hindered farming land and we did not want it,” Seilhamer said.

Another amendment allows the replacement of coal-burning plants with any other fuel as a transition to 2028, when burning coal for energy will be banned. It also allows for certain contracts, such as AES Puerto Rico’s, that generate 17% of the island’s electricity using coal to be amended if the plant is modified to use renewables.

The final language also establishes that an agreement with creditors cannot be superseded by the public policy, Seilhamer said. During the House vote on the bill, lawmakers eliminated language that would have allowed waste-to-energy plants and the use nuclear energy.

Another important amendment to promote renewables is the repeal of proposed solar and wind taxes.

“The bill will not have any discriminatory fee,” Seilhamer said.

The fact that the legislation calls for the use of renewables by 2050, leaves the proposed Aguirre Offshore Gasport being eliminated from the plans.

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