Undersea power-cable plan would only eliminate Prepa’s need to worry about electrical generation
The CARIBBEAN BUSINESS thinking-big plan to bring electric power to Puerto Rico from the mainland U.S. via undersea cable would mean the end of sky-high electricity bills on the island, but not the end of the Puerto Rico Electric Power Authority (Prepa).
If the plan goes through, there would still be plenty of work for Prepa and its main Irrigation & Electrical Workers Union (Utier by its Spanish acronym) to do. And the plan is very viable to go through because a CARIBBEAN BUSINESS investigation found it to be not only technologically and economically feasible, but also provide major benefits to Puerto Rico.
The plan would provide power to Puerto Rico that was generated off-island, in Florida, but Prepa and Utier would still face mammoth tasks in other areas to bring the quality of the island's electric service to world-class standards and make the industrial, commercial and service sectors competitive with other destinations.
Much of the work would involve making the present transmission and distribution network better, which is a big factor in the high cost of electricity here, as well as improving customer service and administrative efficiency, and increasing the fight against power theft and power losses.
Transformational projects such as burying critical powerlines under ground to improve electric reliability during hurricanes and flooding, deploying more smart-grid technology and rolling out new business services should also be on the horizon.
"The cable from Florida will bring the energy revolution to the Caribbean, but you will still need utilities everywhere," said David Lewis, vice president at the Washington, D.C.- based Manchester Trade, who has 30 years' experience working with business and governments in the U.S., Caribbean and Latin America. "Getting power from Florida isn't going to resolve Prepa's inefficiencies. That would still be a challenge."
In fact, Prepa Executive Director Juan Alicea Flores told CARIBBEAN BUSINESS the weakest part of the Prepa system isn't its generation network, but its transmission and distribution system.
"Right now, the greatest weakness that Puerto Rico has isn't in its power generation; it's in its transmission and distribution system," Alicea Flores said. "It isn't worth anything to generate electricity at 10¢ per kilowatt-hour if you can't bring it to the clients and if power interruptions increase." Not having to worry about generating power, trying to convert our old power-generating plants would allow Prepa to concentrate on transmission, distribution and service.
Concerned about increased power interruptions, Alicea Flores dedicated his first six months in office to undertaking a detailed X-ray of the entire power grid, which provided a sector-by-sector, community-by-community accounting of the current state of the electric system.
"The system is more than 50 years old, and there are many communities that have grown a lot during this time. In some places, the system was designed for communities with 2,000 families, and now there are 6,000 families," Alicea Flores said.
"In some places, the system has to be expanded. We also have to increase maintenance, which is overdue in many areas, and we also have to make a lot of improvements to the infrastructure," he added.
Most urgent is upgrading distribution lines so the lowest voltage line in the system is 13,000 volts. This will require replacing all 4,000-volt, 7,000-volt and 8,000-volt lines. "We have begun doing this, but we have to be more aggressive about it. This is important because the lower the voltage, the greater the electricity losses," Alicea Flores said.
Losses don't just occur as the electricity is delivered through the lines. When higher voltage powerlines break, or come into contact with another object, they automatically shut off. However, the smaller lines will continue to release electricity, and clients wind up paying for the waste.
Former Prepa Board Chairman José Ortiz also acknowledged the need to dramatically improve the utility's distribution and transmission system, and told CARIBBEAN BUSINESS last year that 115-kilovolt and 230- kilovolt transmission lines should be substituted with 500-kilovolt lines. Any powerlines below 38 kilovolts in Puerto Rico are considered part of the distribution system and any powerlines higher than that are considered part of the transmission system.
"This is engineering and everyone at Prepa knows this, yet its capital-improvements plan doesn't address the problem. There are a lot of misplaced priorities," Ortiz said. "There are literally thousands of lines across the island making contact with posts and trees."
Currently, Prepa is investing $270 million annually in its transmission and distribution systems, with $170 million going into public works and $100 million being spent on operations and maintenance.
"That's the economic reality of Prepa and its clients. If we had more money, we could do the work more quickly," Alicea Flores said. If electricity were brought from Florida at a low rate, Prepa would have more funds to redirect toward distribution and maintenance.
The size of the task is massive. Prepa's transmission system consists of 2,416 miles of lines and 175 transmission centers, while its distribution system has more than 30,000 miles of lines, 334 substations and 27 technical offices.
In Puerto Rico, which is in the path of hurricanes, many of these critical transmission and distribution lines need to be buried under ground to maintain and improve system reliability. After Hurricane Georges struck Puerto Rico in 1998, Prepa buried a large set of transmission and distribution lines in the San Juan area, but the vast majority of the system remains exposed to storm damage.
As part of his "Energy Relief" plan to bring down rates, Senate President Eduardo Bhatia will begin an investigation next month into the best way to separate Prepa's generation system from its distribution and transmission systems.
Utier officials have also accused Prepa of not investing enough in maintenance, something that not only causes service interruptions, but also leads to increased electricity losses, with the bill for the losses being passed on to Prepa clients, driving up electricity bills.
Utier officials blamed a lack of maintenance on the power outages Puerto Rico suffered during Tropical Storm Jeanne in 2004 and other more recent storms, as well as fires and other accidents at generating plants and other Prepa facilities. None of these tropical storms would have much effect on the island's electrical transmission if more lines were buried and trees were trimmed.
Utier President Ángel Figueroa Jaramillo has complained all year that the lack of personnel assigned to maintenance is also putting workers' lives at risk, saying the average industrial accident rate is 5%, but at Prepa, it is 19%. So getting Prepa out of the power-generation business would liberate more employees to undertake the important work of maintenance of the distribution and transmission system.
Utier's plan to reduce energy costs also relies on increasing administrative and operational efficiency, so there is also much work to do on this front as well.
Prepa also needs to begin providing maintenance to the reservoirs to secure the island's drinking-water supply and restore Puerto Rico's hydropower capacity, which would provide a new source of clean power.
Prepa owns a majority of the reservoirs, including Lago Dos Bocas, the source for the Superaqueduct, but has failed to provide appropriate dredging maintenance. That is endangering Puerto Rico's drinking supply and forfeiting its hydropower capacity.
A deal between the Puerto Rico Aqueduct & Sewer Authority (Prasa) and Prepa would have given Prasa control of the reservoirs owned by Prepa, and allow it to develop hydropower resources for its own energy needs, but it was called off by this administration, putting the ball back in Prepa's court.
"Someone needs to look after that infrastructure, if not Prasa, then Prepa, but someone, sooner rather than later, needs to invest in some dredging and getting that infrastructure up to speed and on par with what it should be," Prasa Executive Director Alberto Lázaro told CARIBBEAN BUSINESS earlier this year.
While Prepa officials have said dredging reservoirs would require a $2 billion investment, Lázaro said Prasa has undertaken studies and found that with a $200 million investment in partial dredging, hydropower production could be tripled to about 50 megawatts annually. Much of the future maintenance of the reservoirs could be handled by Prepa personnel, cutting down on the need to invest in huge dredging operations.
Alicea Flores also said he is looking to generate additional revenue through new lines of business, and the Florida power-cable plan would also provide a source of low-cost energy to Puerto Rico while allowing Prepa to concentrate on these initiatives.
A big bet Alicea Flores said he would make is to promote the use of electric cars in Puerto Rico to drive up demand for energy. He is getting ready to announce special rates for charging up electric vehicles and will be announcing additional electric- vehicle charging stations across the island.
Once its offshore natural-gas terminal comes online in 2015, Alicea Flores said Prepa would look to enter the business of distributing natural gas for vehicles, small plants at local businesses and Prepa's own vehicle fl eet.
The public corporation is also pursuing opportunities through its Prepa. net subsidiary, which uses Prepa's fiber-optic network and other assets for its wholesale telecommunications business. It is investing $20 million in new headquarters and a cable station in Carolina's Isla Verde sector that will enable it to launch a big expansion (CB April 4). Last year, Prepa.net paid a royalty of $2 million from its profits that went toward lowering energy rates.
In fact, the powerline from Florida would have a powerful fiber-optic cable on its back to help detect and rapidly fix any problems in the line, and would also be able to transfer high-speed data to support Prepa.net's worldwide expansion plans.