PREPA to begin implementing $2.4B capital plan

Written by  //  September 28, 2016  //  Government  //  No comments

PREPA officials believe that the PREC decision supports its ongoing operational and financial restructuring efforts, which will remain on track. (Credit: © Mauricio Pascual)

PREPA officials believe that the PREC decision supports its ongoing operational and financial restructuring efforts, which will remain on track. (Credit: © Mauricio Pascual)

The Puerto Rico Electric Power Authority (PREPA) announced Tuesday it will immediately proceed with the implementation of the Integrated Resource Plan, as modified by the Puerto Rico Energy Commission (PREC), which adopted key elements of its $2.4 billion capital investment plan.

At the same time, PREPA will approach the CEPR to clarify certain findings of fact and provisions of the order.

PREPA officials said the utility is focused on moving ahead with the approved investments and operational improvements, and will also address PREC’s concerns and additional information requests.

PREPA believes that the PREC decision supports its ongoing operational and financial restructuring efforts, which will remain on track, utility officials said. Also, the additional requirements imposed by the Commission will not affect the objectives of PREPA.

“We’re very pleased that the order approved relevant elements of PREPA’s $2.4 billion capital plan. We will continue working towards the most feasible route to achieve the critical investments required for the infrastructure, in such a way that we can turn the corporation into a modern and self-sustaining utility, benefiting the people of Puerto Rico,” said Javier Quintana-Méndez, executive director.

According to the final resolution and order, the PREC approved PREPA’s transmission and distribution program, generation unit retirement plan, and key new generation and generation repowering projects were approved.

Among the major components of PREPA’s capital plan that were modified, is not AOGP project and related natural gas conversion projects. For the AOGP project, the PREC approved a cap of $15 million for PREPA to continue its planning efforts, permitting, and engineering.

Similarly, the related conversions also may proceed as to permitting subject to the cap. PREPA is confident it can be responsive to the PREC’s requests for further support of the projects.

“The decision acknowledges that PREPA’s IRP complied with the Energy Relief Act and also complied with a majority of the applicable IRP rules. As we have said before, due to the current condition of the infrastructure and the lack of flexibility of the system, the need for investing in the electric system and the immediate implementation of the relevant elements approved by the Order become more important,” added Quintana-Méndez.

Other key determinations included in PREC´s order can be summarized as follows:

  • Approval of continued permitting, engineering, and planning related to AOGP, and a request for proposal as to the conversion of existing Aguirre steam and combined cycle (“CC”) units to natural gas but only up to a $15 million spending cap;
  • Approval for PREPA to initiate permitting of a new dual fuel capable CC unit at Aguirre;
  • Approval of permitting for three small dual-fuel capable CC units at Palo Seco and construction of one of the three units;
  • Approval of the retirement of Costa Sur 3 and 4, Palo Seco 1 and 2, and San Juan 7 and 8, which should be completed as soon as feasible;
  • Approval of the designation of San Juan 9 and 10 as “limited use” under the federal Mercury and Air Toxics Standards (“MATS”);
  • Direction to PREPA to pursue those investments in its transmission and distribution system;
  • Direction to PREPA to conduct an audit of all existing renewables contracts for projects, which are not yet operational, and to pursue renegotiation of the contracts to the extent that is lawful and appropriate.
  • Direction to PREPA to commence a competitive bidding process for new renewables contracts that are eligible for inclusion in Puerto Rico’s “Renewable Portfolio Standard”;

Increasing the use of renewable energy is important for PREPA and therefore, continues to renegotiate renewable energy contracts according to PREC´s directives. PREPA’s goal is to do produce energy efficiently, and the Corporation adopts the recommendations expressed by the Commission.

Notwithstanding, the current financial situation, as well as the lack of flexibility of our generating fleet,  and the goal of minimizing costs to customers, creates special challenges for integrating renewable energy into the network.

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