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Editorial & Column


The Energy Challenge


July 29, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

When it comes to energy, Puerto Rico is still playing catch up.

Reliability and cost are two of the most important elements by which to judge the quality of an electric power system.

Despite some undeniable progress in the last decade or so with respect to reliability, in Puerto Rico we still have to pay dearly for some of the most expensive electric power service in the nation.

Ask around. Most people, whether individual consumers or commercial customers, will tell you that although today they experience fewer and shorter blackouts than in the 1980s, for example, they still have to pay through their noses for electricity.

There’s no question that the tenure of Miguel Cordero as Puerto Rico Electric Power Authority executive director (1993-2000) marked a before and after in the history of the utility. The whole system was upgraded and strengthened and the efficiency and reliability of the service improved considerably.

Also during his tenure privately developed cogeneration power plants were designed and built: a 540-megawatt natural-gas-fired EcoElectrica plant and a 454-megawatt coal-fired AES plant. The addition of these cogeneration plants allowed Prepa to reduce its dependence on crude oil from 98% to the current 71%. The two privately owned and operated cogeneration plants now produce roughly 27% of our electric power. That’s good news.

Current Prepa chief Hector Rosario has stayed the course, but has not moved as fast as we would have hoped. He says plans are in place to further reduce the island’s dependence on oil to just one-third in the next eight years. To achieve this, Prepa plans to bring a 474-megawatt gas-fired power plant on line in 2009 and improvements to units 5 and 6 at Prepa’s San Juan plant will allow the generators there to be fueled with either natural gas or crude oil.

In the meantime, local consumers have been paying dearly for electricity in the last few years thanks to skyrocketing oil prices. The administration’s much-touted hedging program, whereby Prepa paid millions up-front in order to be protected from upswings in the price of crude oil in the international markets, have yielded no appreciable results to the average consumer whose electricity bill looks higher every month.

But where Puerto Rico is really behind is in the development of alternative renewable sources of energy. It’s good that we have added coal and natural gas to the menu of fuels we use for generating electricity. But those resources, like oil, are not renewable.

Thirteen mainland states have adopted renewable energy portfolio standards requiring that a fixed percentage of energy come from renewable fuel sources. Renewable fuel sources include, for example, wind, solar, and hydrogen. Nine western states have signed a plan to develop 15% of their current demand from renewable sources by 2015. And both the federal government and individual states are investing billions in the development of hydrogen-based energy alternatives.

Rosario points out, correctly, that today it is still cheaper to produce kilowatt of electricity with fossil fuels (oil, coal, gas) than with any renewable alternative such as wind or solar. "If someone comes to me saying they can produce electricity at 6 cents a kilowatt hour, I’d approve it tomorrow," he says.

He's right in the sense that, being a government-owned utility, Prepa has to deliver the most reliable electricity at the lowest cost possible. And today, still, the lowest possible cost possible comes from oil, coal, or gas. But that doesn’t solve the problem in the long term.

This matter requires vision much beyond how to produce the cheapest-possible kilowatt-hour today. Large-scale wind or solar energy production might not be cost-efficient today, but it may be tomorrow.

Puerto Rico should adopt as soon as possible a renewable energy policy, as so many mainland states have. Whether and when it will be time for Prepa to produce electricity based on those alternative renewable sources is another matter altogether.

But unless we act today, we will not be prepared for tomorrow.

This Caribbean Business article appears courtesy of Casiano Communications.
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