The Puerto Rico Energy Commission rejected the Puerto Rico Electric Power Authority's immediate plans for the Aguirre Offshore Gas Port, saying the utility must show the project is the best way to meet the island's energy needs.
The commission announced the rejection Friday and upheld its finding that the authority's First Integrated Resource Plan had been inconsistent with the commission's rules and Puerto Rico law.
The Energy Commission issued its own 5-year plan for PREPA in September. The plan authorized spending no more than $15 million on the port for the time being. PREPA, which estimated the project would cost $517 million, appealed.
The utility, in negotiating a restructuring of its business and debt with holders of $8.26 billion of bonds, presented the Aguirre port as its most important near-term capital project. The authority has said it would be a means for converting the Aguirre power plant from oil fired to natural gas fired.
PREPA has said the plant conversion would help stabilize Puerto Rico electricity prices. PREPA provides all the electrical power on the island. The island's electrical price formula includes an adjustment that depends on the price of fuel. PREPA's power plants overwhelmingly burn oil to produce electricity. Over the last 10 years oil prices have varied widely.
The commission ordered the authority to demonstrate that the gas port is the best option to meet its future energy needs. The commission also set up a separate procedure for the authority to conduct an economic analysis of the Aguirre conversion project including the port.
The analysis will enable the commission to make a final determination on the gas port project, it said.
Along with lowering energy costs, the authority has said the gas port and power plant conversion would allow it to diversify its fuel sources and help the authority comply with U.S. Environmental Protection Agency pollution standards.
The Aguirre plant is in the southeast part of Puerto Rico.
The authority has been working on a negotiated restructuring of its more than $8.4 billion in debt for 2.5 years.
In other news about the Aguirre plant, on Friday the authority announced it had brought back unit #2 into service. The unit had broken down in November 2015. The addition of the unit will make 450 megawatts available, making the system capacity 4670 megawatts, PREPA said.
Turning the unit back on will "ensure the stability and reliability of the electrical system," PREPA executive director Javier Quintana Méndez said. Puerto Rico had an island-wide blackout for several days in September.
