Dive Brief:
- Puerto Rico's proposal to switch a majore power plant from oil to natural gas have hit a snag, potentially throwing into turmoil the island's plans for cleaner and cheaper electricity, Bloomberg reports.
- Bloomberg Business reports that delays in switching the Aguirre power plant from oil to gas, enabled by the development of a liquefied natural gas (LNG) import terminal, could cause the Puerto Rico Electric Power Authority to incur fines of $37,500 each day.
- The LNG terminal is already two years behind schedule, but the U.S. National Marine Fisheries Service found its environmental plan to protect sea turtles, coral and manatees was not sufficient and could delay development even more.
Dive Insight:
Puerto Rico's plans to revamp its energy sector and revitalize its economy are moving at the proverbial snail's pace, but it's actually turtles that are holding things up.
The National Marine Fisheries Service determined an LNG import terminal development plan failed to protect the hawksbill sea turtles and elkhorn coral, threatening in turn an April 16 start date for the Aguirre facility to begin burning gas. Missing that date, according to the utility, could result in heavy fines.
“We’re here just waiting to see what happens,” Ivelisse Sanchez Soultaire, associate director of the power authority, told Bloomberg. “We could be facing the usual consequences, which are fines and possible orders to cease and desist.”
Those fines could reach $37,500 each day. Analysts noted to Bloomberg the delays underscore the difficulty that the power provider has encountered trying to execute its strategy.
“For them to turn things around in the long term will require them to convert to natural gas because until they do that, they can’t drive down their costs,” said Jeff Panger, a Standard & Poor’s analyst in New York. “And until they can drive down their costs, they can’t change their rate structure.”
The struggling utility did get a bit of good news, recently. PREPA scored an extra week to submit a petition to regulators for a securitization charge on ratepayers, part of an effort to restructure more than $8 billion in debt. Gov. Alejandro Garcia Padilla signed the PREPA Revitalization Act into law last month, mapping out how PREPA would repay its creditors.
Padilla, in a letter to FERC in January, told regulators that a shutdown of the island's largest plant would "threaten reliability of the entire power grid and cripple our economic recovery."