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Let There Be Light

February 7, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

One of the few subjects pertaining local government administration that garners consensus in Puerto Rico is the incredible improvement of the Puerto Rico Electric Power Authority (Prepa) starting in 1993.

The frequent and prolonged blackouts we had to endure in the late ‘80s and early ‘90s are almost forgotten today.

Former Executive Director Miguel Cordero (1993-2000), besides being a well-respected engineer, proved to be a clever, focused, evenhanded administrator who won unanimous praise for his leadership at the helm of the utility.

An ever-growing demand was closely approaching the utility’s maximum generation capacity and poor maintenance of a rapidly decaying infrastructure resulted in frequent and prolonged disruptions of service. Morale problems among the labor force and an antagonistic union made the job even tougher. Cordero inherited a truly chaotic situation and turned it around. During his tenure, new privately owned cogeneration plants increased generation capacity, and reliability of the system was improved considerably. The net effect was a sharp decline in consumer complaints.

But maybe not for long, unless the present administration gets "plugged in" and "switched on".

Prepa Executive Director Hector Rosario was a natural choice to lead the utility. He was part of the agency’s very top management during Cordero’s tenure and, thus, very much part of the solution to Prepa’s historic problems during the ‘90s.

Rosario seems to have an adequate handle on the day-to-day operations of the agency and appears to know how to build on Cordero’s successful formula of the past few years. If anything, his occasional, not-so-veiled criticisms of the past administration seem a little odd, given the key role he played in it.

But it is Rosario’s vision for the future that’s less clear.

A case in point is the critical issue of strategic planning for new generation facilities to meet future demand. When we talked to Rosario last May, he spoke with resolve about a new cogeneration plant to be located on the island’s west coast for which a Request for Proposal would be issued before the end of fiscal year 2002 (June). By 2007, he told us then, demand would exceed Prepa’s present generation capacity. Now he tells us that while the cogeneration plant for the west is "still under consideration" no additional generation will be required until 2009 anyway.

It may be that Prepa’s capital improvement program (increased from $100 million in fiscal year 2000-01 to almost $120 million this year, for which Rosario, in part, deserves credit) has improved the efficiency of existing plants so significantly as to have postponed the need for new generation facilities by two years. But we doubt it.

As explained in our front page story this week, private sector experts agree that Puerto Rico’s current energy demands are adequately served at present. But they also agree that additional new capacity will soon be needed and that a new cogeneration plant in the west is the way to go.

Given the number of years that it takes to develop a new plant from concept to reality, Prepa should start now. By again enlisting the private sector to build and operate the new power generation facility, as was successfully done in the cases of natural gas-fueled Ecoelectrica and coal-fueled AES, Prepa can continue to concentrate resources on improving transmission and distribution infrastructure while ensuring that the system’s overall generation capacity will grow to meet future demand.

This Caribbean Business article appears courtesy of Casiano Communications.
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