• The San Juan Daily Star

PREPA official tells congressional panel of major system overhaul in the works

Puerto Rico Electric Power Authority Governing Board Chairman Fernando Gil-Enseñat

By The Star Staff

Puerto Rico Electric Power Authority (PREPA) Governing Board Chairman Fernando Gil-Enseñat told the U.S. House Natural Resources Committee at a hearing Wednesday that PREPA has embarked on one of the most ambitious efforts being undertaken anywhere in the United States to procure new renewable generation and energy storage resources.

Gov. Pedro Pierluisi Urrutia granted PREPA a waiver that relieves the utility of the process established by the Office of Management and Budget to buy goods and services. However, PREPA reported that the utility is in the administrative process of declaring a state of emergency in the Authority to expedite the acquisition of goods and services essential for the work required for the generation fleet.

In his testimony before the congressional committee, meanwhile, Gil-Enseñat blamed PREPA’s bankruptcy for restrictions hindering maintenance and upgrades of the current power plants and in turn leading to power outages.

He said PREPA’s fleet of power generation facilities is old, outmoded, inefficient and expensive to run. PREPA’s approved Integrated Resource Plan envisions that most of those units will be retired over the next 10 years, in favor of new generation from renewable sources as well as energy storage, he said.

“PREPA’s newest baseload units are 25 years old, and the rest average over 40 years old. PREPA’s ability to expend funds on maintenance and upgrades has been constrained by the Title III process, liquidity challenges and the need to address damage resulting from hurricanes and earthquakes,” Gil-Enseñat said. “The execution of maintenance and repair work has also been affected by measures required in response to the COVID-19 pandemic. Over the past 45 days, several of PREPA’s largest steam generating units were forced out of service. This, along with some faults in the transmission system and the limited availability of backup generation, meant that there was less generation available than was required to meet demand during peak periods. To address the generation resource shortfall, [electricity transmission and distribution operator] LUMA [Energy] was required to shed load to allocate the limited electricity supply.”

Over the next three years, to comply with Puerto Rico Energy Bureau directives, PREPA will seek commitments from third party developers to permit, construct, own and operate a total of 3,750 megawatts (MW) of renewable energy generation resources and 1,500 MW of energy storage resources.

Gil-Enseñat said PREPA issued a request for proposals (RFP) for renewable generation and energy storage systems on Feb. 22 of this year.

“This was Tranche 1 of 6 Tranches; in this first Tranche, as the Energy Bureau directed, PREPA sought commitments to develop at least 1,000 MW of renewable generation and to develop energy storage systems having capacity of at least 500 MW,” he said. “The response to PREPA’s first RFP has been encouraging. Quantities of both renewable generation and energy storage offered were greater than the targets PREPA identified for the first Tranche.”

Last Thursday, PREPA communicated to participants in the first Tranche its decisions as to which proposals have been selected to advance to “Phase III” of the RFP process. More than three dozen project proposals will be considered and given the opportunity to be awarded contracts in the third and final phase.

“This could result in over 40 individual contracts with generation, storage and virtual power plant project developers,” Gil-Enseñat said. “PREPA and its advisers will complete system impact studies and facility studies addressing the interconnection of each project to the transmission and distribution grid, and PREPA will make interconnection cost estimates based on these studies available to each project proponent. It will then invite each proponent to make its best and final price offer.”

PREPA expects to complete the documentation process with individual project proponents this month, and complete the process in November and December of this year, the utility’s governing board chairman noted.

“The Energy Bureau-mandated target is for the selected projects to commence commercial operation within 24 months of contract execution,” Gil-Enseñat said. “PREPA will issue its Tranche 2 RFP by mid-October. In this second Tranche, as the Energy Bureau has directed, PREPA will seek to procure at least 500 MW of renewable generation capacity and at least 250 MW of energy storage capacity. The remaining 4 Tranches will be issued at six-month intervals over the next couple of years.”

Besides Gil-Enseñat, also testifying at the hearing were Edison Avilés Deliz, chairman of the Puerto Rico Energy Bureau; Wayne Stensby, president and CEO of LUMA Energy Puerto Rico; Fermín Fontanés Gómez, executive director of the Puerto Rico Public-Private Partnerships Authority; Manuel Laboy Rivera, executive director of the Central Office for Recovery, Reconstruction and Resilience; Ruth Santiago, a community and environmental lawyer; and Agustín Irizarry, a professor of electrical engineering at the University of Puerto Rico at Mayagüez.

At the outset of the hearing, which was titled “The Puerto Rico Electric Power Authority After the Implementation of the Contract with LUMA for Transmission and Distribution,” island Resident Commissioner Jenniffer González Colón advocated for an affordable, reliable and resistant energy service for consumers on the island.

González Colón, who serves as leader of the Republican delegation on island affairs in the Natural Resources Committee, made the following statement at the outset of the hearing.

“This hearing is timely because, since the summer, Puerto Rico has faced extreme instability with its electrical system, with extensive and prolonged blackouts, due to an almost total collapse of the generation fleet that is in the hands of PREPA, the state-owned public services company,” González Colón said. “As of Sunday morning, only 38 percent of its charging base was nominally operational and only 42 percent of its peak and backup capacity were available for dispatch.”

This means, the resident commissioner said, that running at full capacity and with backup units, the system is still more than 1,000 megawatts below the estimated daily load, which is almost the full capacity of the two private generators.

“The electrical system barely meets demand, so any increase in consumption causes it to collapse,” she said. “This generating capacity is possible only because units requiring repair or maintenance have been kept online, creating a time bomb. That is why a large part of the installed capacity is not available at the moment.”

González Colón noted that the situation also creates the paradox that as costs increase for both PREPA and the distribution operator LUMA Energy, consumers see their bills increase when they are not receiving electricity.

“Four years after Hurricane Maria, a year since over $10 billion in various funds were obligated to build a better network, and three months after a much-touted transmission and distribution contract, our patience has run out,” the resident commissioner said. “How long is this going to continue? LUMA and PREPA must answer that: explain what is happening, what will be done in the short and long term, [and] how they are preparing to rebuild something better. The people of Puerto Rico want electricity in their homes TODAY, for costs to stop rising and for them [the power service providers] to be held accountable for what is happening.”

“The Puerto Rican people don’t want to know how wonderful and good the new plans are, we want the service to improve,” González Colón insisted, and “if it can be objectively demonstrated that an operator is failing, that the necessary steps are taken according to the law and the contract to rectify it.”

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