PREPA to federal regulator: LNG storage limit undercuts grid stability
By The Star Staff
The Puerto Rico Electric Power Authority (PREPA) urged the Federal Energy Regulatory Commission (FERC) to repeal a limit on the level of liquefied natural gas (LNG) that can be stored at a facility owned by EcoEléctrica because the cap threatens grid stability.
The dispute with the FERC is one of several PREPA is having with energy regulators. Currently, PREPA is also in disputes with the Puerto Rico Energy Bureau (PREB), which refuses to allow PREPA to transform certain units in its legacy power plants so they can operate on natural gas to stabilize the system. Earlier this week, the PREB allowed some $18 million in investments to San Juan unit 7 but warned that it won’t allow any more investments, noting that the Integrated Resource Plan calls for the island to increase the use of renewable energy sources.
In the Oct. 21 letter addressed to FERC Chairman Richard Glick, PREPA Executive Director Josué Colón Ortiz said EcoEléctrica’s LNG supply is of the utmost importance for Puerto Rico’s electrical system. EcoEléctrica’s power plant, together with PREPA’s Costa Sur power plant, supply almost 40% of the island’s electricity demand with clean and reliable energy, which is of critical importance to the people of Puerto Rico, the PREPA chief noted. Both plants depend on the fuel supplied from the EcoEléctrica LNG storage tank for their generation.
“FERC’s limitation of the fuel level of the EcoEléctrica LNG storage tank places the island’s reserve margins and stability at risk,” Colón Ortiz said.
The limitations are also costly for PREPA, which is currently in bankruptcy to restructure its $9 billion debt. The cap imposed by FERC is slated to cost PREPA more than $250 million this year if it must continue burning Bunker C fuel oil at its 820-megawatt Costa Sur power plant instead of gas supplied by EcoEléctrica, Colón Ortiz said.
After earthquakes with epicenters near EcoEléctrica’s LNG terminal hit Puerto Rico in early 2020, FERC ordered the company to not fill its storage facility above 63 feet, a level that represents about 60% of its capacity, while analysis was done on the structure to make sure it was safe. In April, FERC rejected EcoEléctrica’s request to raise the storage level to 91 feet because the company had failed to show the storage facility could withstand severe earthquakes, FERC records show.
EcoEléctrica’s LNG supply is of utmost importance for Puerto Rico’s electrical system, in part because the power plants the storage facility serves provide baseload power and ancillary services that help maintain the island’s grid, Colón Ortiz said.
The EcoEléctrica and Costa Sur units are also essential for maintaining the required operational reserve, which is key for the reliability and safety of Puerto Rico’s electrical system, he said. A reduction in the available capacity of these units would adversely affect the reliability and safety of the electrical service. As an example, he noted the prolonged number of outages last year during the summer months after the reserve margins were closed to zero.
The increase in the frequency of deliveries created by limitations of EcoEléctrica’s LNG storage tank, along with the global fuel supply crisis and supply chain disruption, have exponentially complicated the scenario for Puerto Rico, the PREPA chief said.
When Hurricane Fiona damaged EcoEléctrica’s LNG supply terminal last month, the Peñuelas and Costa Sur power plants weren’t able to fully run on gas while the terminal was being repaired, forcing the power utility to use more expensive diesel fuel in its plants, Colón Ortiz said.
“In the final balance of interests, the possible (not probable) risks are overwhelmingly outweighed by the fact that, considerably reducing the fuel storage limitations will allow both Costa Sur and EcoEléctrica to comply with emission regulations, maximize electricity production, provide much-needed frequency regulation for the system’s stability, and minimize costs to the people of Puerto Rico,” Colón Ortiz said in the letter.
Separately on Tuesday, LUMA Energy warned about spot outages in the evening because of generation problems at PREPA.
“We want our clients to be aware that technical problems in [PREPA’s] generation installations are creating a generation shortage,” LUMA said on its social media sites. “Due to this shortage, clients could experience interruption of service.”
LUMA appealed for energy conservation to minimize the impact of the outages.