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Op-Ed: IEEFA — P.R. in ‘perilous rush’ to natural gas dependency

The Institute for Energy Economics and Financial Analysis is urging the Financial Oversight and Management Board for Puerto Rico to halt the rush to natural gas infrastructure development in Puerto Rico.

We’ve sent an open letter to board members warning this ill-advised strategy after recent news reports of Puerto Rico Electric Power Authority discussions around potential new liquefied natural gas import terminals — at San Juan, Mayagüez and Yabucoa — new natural gas power plants at Cataño and Yabucoa, and the conversion of two units of the San Juan power plant to natural gas.

Additionally, the Puerto Rico Senate has recently passed a resolution asking for a waiver of the Jones Act in order to facilitate the transport of liquefied natural gas from the U.S. mainland. And in testimony to the Puerto Rico Senate, the CEO of PREPA promoted an island-wide transition to natural gas.

Renewable energy and investment in distributed energy infrastructure remain on the back burner, as has historically been the case in Puerto Rico, despite legislative mandates to the contrary and although common-sense policy would have the island harvest its abundant sunshine rather than continuing to rely on imported fossils fuels for electricity generation.

Ignoring the value in resilient, renewable, decentralized energy technologies.

The aggressive investment in natural gas that PREPA is contemplating would crowd out investments in renewable energy and distributed generation, and it stands in sharp contrast to high-level policy consensus in favor of renewable energy — policy endorsed by the FOMB by way of its approval of PREPA’s fiscal plan.

Our letter lays out why the proposed natural gas developments will not result in the 40 percent reduction in electric bills claimed by PREPA leadership. Barring truly meaningful contracting reform at PREPA, ratepayers are likely under the proposal to be burdened even more than they already are by high-priced power.

As Puerto Rico modernizes its obsolete generation infrastructure in the coming years, it has an opportunity to move away from the fiscally destabilizing, centralized infrastructure of the current system — infrastructure that is poorly configured to withstand severe hurricanes — and toward one rooted in resilient, renewable, and decentralized energy technologies.

Prioritizing 20- to 25-year contracts for natural gas generation, including new infrastructure at Yabucoa near the southeastern coast of the island and far from northern load centers, would also stifle the kind of investment needed to create a resilient and renewables-based electrical system.

The current push for natural gas development also the risk in the electric system privatization process that Gov. Ricardo Rosselló signed into law this summer.

By leaving decisions on which assets to privatize, which requests for proposals to issue, and how to negotiate contracts entirely under the control of the governor, PREPA, and the Puerto Rico Fiscal Agency and Financial Advisory Authority, privatization promises to open the door to more politically-driven business, rather than resulting in a professionally planned and financially viable electrical system.

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This story was written by our staff based on a press release.

1 Comment

  1. Richard R. Tryon September 19, 2018

    The good new leader produced the answer that appeals to the bankrupt government and AEE . Its appeal is to the two entities that want to survive as is- all decisions and values to belong to the existing organizations. Trouble is simply a matter of being bankrupt! Alas! Nothing better than a ‘bail-out’ by money printed by the U.S. leaders that also are bankrupt but know how to print money that is still good in the whole world! Send about $200 billion to PR and it can build all those terminals to turn LPG into gas and build pipe lines that people don’t want in their back yards, and the establishment survives along with its advocates. The good José Ortiz had to propose as he did.

    As soon as all realize that the Democrats may not get the chance to do as the plan requires because even if they take control of the Congress, President Trump is not going to be impeached so Hillary can be declared President by default, then PREPA can look for the same emergency response as came to restore the falling aquifer on the S. coastal area of Santa Isabel, millions received for twelve years and still the threat of salt water incursion is increasing.

    Most within the next five years will have gone off-GRID by choice or just because AEE has no more credit for buying oil. It might let some areas create regional solar/wind combinations with limited capacity driven by battery limits or other high tech means of storing energy; but, if not it will happen anyway but in a more limited way.

    Someday a new PR will emerge without debt as the old one will just sell its assets to pay creditors a small portion and then shut-down. Municipalities will have to support a far more limited role or create a new state that may be associated with dual citizenship and some alimony from its former owner.


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