An increase in the cost of electricity looms ahead due to the 6.4 magnitude earthquake that rattled Puerto Rico last week, following days of seismic activity, and plunging the U.S. territory into darkness, again.
“Definitely [we are going to see a hike] because during the emergency we are using generators that run on diesel like Cambalache, Aguirre and the San Juan unit ,that has not been converted to gas and run on diesel, a more expensive fuel,” indicated Tomás Torres Placa, the consumer interest representative to the utility’s governing board and the executive director of the Institute for Competitiveness and Sustainable Economy.
“In the next billing cycle, the Puerto Rico Electric Power Authority (Prepa) will do a balance of costs. All generating costs are transferred to customers. But we can’t forget that fuel prices are going up in response to the instability in Iran,” he added.
The islandwide power outage and the collapse of buildings and houses prompted Gov. Wanda Vázquez to declare a state of emergency. The situation raised concerns about the fragile condition of the electric grid knocked out by the Hurricane Maria’s unrelenting winds back in Sept. 2017.
Firstly, authorities explained that the blackout was triggered by automatic emergency response systems, which shut off power plants as a safety mechanism. However, after minimizing the quake’s impact on the grid’s infrastructure and predicting that power would be restored by midday on Tuesday, the executive director of Prepa, José Otiz, finally admitted that the tremor had severely damaged Costa Sur, the electrical network’s largest power plant in Guayanilla, a municipality near the earthquake’s epicenter.
Ortiz, who has been under fire for offering unreliable information about the system’s recovery process, also said to CBS NEWS that Costa Sur could be out for over a year. However, Ángel Perez, the operations manager at the plant, told the network that if his team worked for 24 hours around the clock it could be back in service within a month.
Despite several requests from THE WEEKLY JOURNAL, Ortiz declined to comment for this story.
While Prepa engineers began restoring electricity to some parts of the island within hours of the quake, two-thirds of the utility’s 1.4 million customers remained without power for two days.
A week after the earthquake, only one percent of islanders don’t have electricity, and power outages have become an everyday occurrence throughout the island. Authorities have warned it could take weeks to stabilize the system, which, according to Ortiz, suffered an estimated $50 million in damages, but no assessment of losses was presented to the governing board prior to publicly sharing the figure.
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After Maria, concerns centered around the grid’s capacity to sustain gusty winds since the brunt of the losses and the repairs concentrated on the transmission and distribution lines, but the earthquake inflicted damage to the infrastructure, affecting the system’s ability to produce electricity.
“The quake brought to light other risks that Prepa was not prepared to handle. We need to study the situation and develop an Integrated Resource Plan (IRP) that takes into account these vulnerabilities for the future. One option, to deal with these risks, could be to decentralize the generation, move part of it to the north, as we have recommended in the past, but these measures require time and money and, as you know, Prepa is bankrupt,” stated Sergio Marxuach, policy director for the Center for a New Economy (CNE), a think tank that has been closely monitoring the island’s energy transformation.
Most of Puerto Rico’s power is produced by plants located on the south of the island, but the highest demand accumulates in the northern region, which includes the capital city, San Juan.
Marxuach recognized the anxiety and the uncertainty that power failure causes, but cautioned against quick fixes that in the long run could cause another major breakdown.
“We have to repair the system gradually and do it right,” he continued.
Torres Placa agreed that the utility has to revisit not only the IRP submitted to the Energy Bureau for approval, but also the Restructuring Support Agreement (RSA) reached with bondholders and backed by the Financial Oversight and Management Board (FOMB).
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Last Thursday, at the FOMB’s request, federal judge Laura Taylor Swain postponed until March 31 the hearing on the final approval of the RSA as to allow the commonwealth’s Legislature to approve the $8.3 billion restructuring deal. The legislation is widely rejected by diverse sectors of society due to the damaging consequences it could have on the economy as a result of the rate increases it includes for debt serving.
“These events have created a new paradigm that canceled any benefit that the agreement with the bondholders could’ve had. It was not viable before and now there is just no possibility of viability,” Torres Placa pointed out.
“There is a limit on how much we can pay in rate increases, but we should also ponder how much of the increase should be used to pay an old debt owned by two vulture funds that bought it in a secondary market, and how much of Prepa’s income should be allocated to modernize the system and address these risks,” added Marxuach in a separate interview.
Torres Placa also warned about pitfalls in the Integrated Resource Plan that, far from complying with the clean energy policy that pledges to produce 40 percent of the territory’s power from renewable sources by 2025, leans towards natural gas terminals, a risky proposition with quakes, and recognizes hikes in energy rates.
“The proposed plan creates eight regions, but it doesn’t produce enough power for the entire island... With that plan, we would have been without energy right now and that cannot happen,” Torres Placa indicated.
Both Marxuach and Torres Placa proposed an energy overhaul of the electric system with an emphasis on renewables.
According to Torres Placa and Marxuach, this experience should move Puerto Ricans into an earthquake preparedness state of mind and toward accepting the reality that the island sits at the edge of the Caribbean tectonic plate and is prone to quakes.
The organizations document deficiencies that lead to erroneous projections about the energy future proposed by the public corporation
They document deficiencies that lead to erroneous projections about the energy future proposed by the public corporation
Aside from learning how to cope with this newly discovered way of life, like residents in California, Mexico and Chile do, in the short-term, the government should provide the affected communities with portable illumination, such as solar lamps, equipment to charge mobile phones and basic necessities, Torres Placa insisted.
“After Maria, the Institute for Competitiveness and Sustainable Economy distributed 10,000 solar lamps so people could have lighting at night,” he said.
To mitigate the impact of power outages, people should install solar panels on their roofs or have Tesla batteries as a backup plan to run critical medical equipment, the refrigerator and provide illumination.
“The government must facilitate these initiatives through federal CDBG funds or other funds. In the case of indigent people, the government should provide them with the backup system, but in the case of people that can purchase it, Prepa should be able to finance it through the public utility,” asserted Torres Placa. “We have to revise the IRP and the RSA because they don’t promote a true transformation of the electric system.”