Behind on legal requirements PREPA submits to PREB its list of green energy projects totaling 150 MW

By The Star Staff

The bankrupt Puerto Rico Electric Power Authority (PREPA), after months of deliberations, has submitted to the Puerto Rico Energy Bureau (PREB) the list of projects from which it says it would get 150 megawatts (MW) of renewable energy after negotiations to increase the use of renewables had been put on hold by the federal Financial Oversight and Management Board.

PREPA also sent a previous version of the list to the oversight board earlier this month, and is seeking information that the board requested. PREPA is far behind on legal requirements to enhance the use of renewables. Currently, it is only drawing 3% of its energy from renewables, far behind in complying with a 2019 law that says the power utility must draw 40% of its power from renewables by 2025.

The list of potential projects was taken from 16 renewable energy projects that PREPA had put on hold last year amid orders from the oversight board. In August of last year, the board told PREPA it was not going to give the 16 projects the green light because they went against the fiscal plan, which seeks to prevent high energy prices for consumers as part of an effort to jumpstart the economy.

Despite achieving improved prices during negotiations, the oversight board said the contracts negotiated by PREPA would result in overall retail energy rates that are higher than the average retail energy rates projected in the 2020 Certified Fiscal Plan.

“Specifically, the 2020 Certified Fiscal Plan assumes new utility scale solar generation prices of 8 cents per kWh [kilowatt-hour] in FY23 [fiscal year 2023] (1 July), increasing to 9.7 cents per kWh in FY49, while the proposed contracts, on average, start at 9.9 cents per kWh, increasing to 14.1 cents per kWh by FY42,” the oversight board said at the time.

“Consequently, if PREPA were to integrate all of the proposed 593 MW solar capacity at the renegotiated price, projected energy rates in FY35 would be 33.6 cents per kWh, 0.5 cents per kWh higher than the energy price forecasts in the 2020 Certified Fiscal Plan.”

The oversight board said it was only going to approve 150 MW of renewable energy capacity at the current negotiated pricing.

While the board had rejected the projects, the PREB had allowed PREPA to pursue proposed projects in what appeared to be a power struggle with the oversight board over control of the power utility.

The PREB approved the projects individually and not in a group. In each of the rulings, PREB ignored the oversight board’s remarks and insisted that it was the “regulating entity in charge of overseeing and ensuring the full execution of the energy service public policy” and the entity in charge of establishing the public policy norms related to electricity service.

The PREB, however, imposed conditions for approval, including the addition of provisions in the contracts that ensure nothing in them will limit the PREB’s authority under Puerto Rico law. The PREB also asked for the inclusion of a provision requiring disputes to be resolved before the PREB, a reduction to eight months of the time to begin construction of the projects from the time contained in the each of the different contracts, the inclusion of limitations to PREPA’s ability to grant extensions of the operation dates, and a requirement to provide monthly updates to the PREB.

The 16 projects were part of a larger group of 60 projects negotiated nine years ago under the administration of then-Gov. Luis Fortuño. Since then, some of the projects have been rejected and others never got beyond the planning stages. PREPA renegotiated 16 of the projects to obtain lower rates for customers and asked the PREB to approve them. The projects would have provided 593 MW of renewable energy, or less than one-fourth of PREPA’s energy capacity.

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