Puerto Rico to Declare Power Emergency to Avoid Blackouts

(Bloomberg) -- Puerto Rico’s public power company plans to declare a state of emergency to speed up repairs of aging plants that have repeatedly left tens of thousands of customers without electricity and spurred protests. 

The island’s generators are in “critical condition” and an emergency designation would help expedite “the acquisition of needed goods and services,” Josue Colon, the executive director of the Puerto Rico Electric Power Authority, or Prepa, said in an emailed statement late Wednesday.

The poor state of Puerto Rico’s power generation plants increases the risk of blackouts at a time when energy crises in Europe and Asia are rippling across the globe, sending fossil fuel prices surging. Roughly 97% of the island’s power generation comes from imported petroleum, liquefied natural gas and coal.

Only 39% of Prepa’s 4,714 MW power-generation capacity was online as of Oct 3. Hydroelectric capacity was at 22%, the company said in a report.  

Most of the utility’s problems are due to antiquated infrastructure, Fernando Gil, president of Prepa’s governing board, told the U.S. House Committee on Natural Resources Wednesday. Prepa’s newest base-load unit is 25 years old and, on average, Prepa’s power plants are 40 years old, he said.

“Prepa’s generation fleet is old, outmoded, inefficient and expensive to run,” Gil said. 

Puerto Rico residents pay roughly 21.4 cents per kilowatt-hour for electricity, more than double the average rate in Texas. The prices are set through Dec. 31 but could go higher in January, if approved by regulators. 

High light bills and frequent power outages have spurred protests and demonstrations against Prepa and Luma Energy, the U.S.-Canadian joint venture that began managing and operating the grid on June 1.

“Consumers are stuck paying higher prices and receiving worse service and that’s bad for both the people and the economy — they’re paying a higher rate for less energy,” said Federico De Jesus, principal at the consultancy firm FDJ Solutions LLC. 

Renewables only make up 3% of the Puerto Rico’s power mix but the island’s government set a goal to get a quarter of its electricity from them by 2025. The commonwealth wants all of its power from clean energy sources by 2050.

So far, 30,000 island homes and businesses have installed a combined 150 megawatts of solar and backup battery systems that can keep lights during a power failure, according to figures from the Solar & Energy Storage Association of Puerto Rico. Houston-based Sunnova Energy accounts for two-thirds of those systems. Interest in systems has grown during the blackouts, said Meghan Nutting, the company’s executive vice president of government & regulatory affairs

“Energy is more front and center for people in Puerto Rico than elsewhere in the United States,” Nutting said. “People are worried about their food spoiling or medicine that needs to be kept cold from going bad, if the fridge goes out.” 

With some 1.4 million clients, Prepa is among the largest U.S. public power utilities, but it’s notoriously fragile, particularly after Hurricane Maria knocked out electricity to the entire island in 2017.

“The Puerto Rico electrical system is arguably the worst in the United States and has been for a very long time -- even prior to the devastating hurricanes of 2017,” Luma President and Chief Executive Officer Wayne Stensby told Congress Wednesday. 

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