Puerto Rico power plant may be down for a year

Register now

A power plant with about 14% of Puerto Rico’s electrical power generating capacity will probably be down for about a year or more, the Puerto Rico Electric Power Authority executive director said.

José Ortiz made the prediction about the Costa Sur power plant on Wednesday.

Earthquakes on Monday and Tuesday damaged PREPA’s Costa Sur plant on the island’s southwest coast.

El Nuevo Día news website reported that the nearby power plant, EcoElectrica, was also damaged. An independent power company operates EcoElectrica and sells its power to PREPA.

On Thursday afternoon Moody’s Senior Credit Officer Rick Donner said: “PREPA has said power has been restored to about a third of its customer base. The damage to the Costa Sur plant in the south[west] corner of the island is material, and it will take time to bring it back on line.

“Meanwhile, managing the load will be a challenge, but there is some excess capacity at the Aguirre plant, which is further east and farther from the quake epicenter, that will be able to help with the load,” Donner said. “The company currently has adequate liquidity to meet its needs, but a lot will depend on how long the blackout is."

PREPA will also likely receive some federal aid given that the federal government has already declared an emergency, and possibly as well as from the Financial Oversight and Management Board (FOMB), which also announced the release of $260 million of contingency funds to help with recovery efforts, Donner said.

Evercore Director of Municipal Bond Research Howard Cure repeated his comment on the American Society of Civil Engineers’ November report on Puerto Rico infrastructure: “What is the most troubling is the F grade for energy. As the report noted, the energy grid is fragile, blackouts are frequent and prices have continued to increase. While all of the infrastructure categories are important, Puerto Rico really needs to contend with its energy needs if it hopes to attract business to the island and expand the economy."

Cure continued, “In addition, Puerto Rico hasn’t even received all of its federal funding for hurricane damage so I don’t know the prospects of receiving additional monies for this new earthquake damage. The important point is that Puerto Rico has to coordinate with the federal government and there doesn’t seem to be a lot of cooperation between the two.

The damage is another obstacle for economic recovery "with investors perhaps being asked to take greater haircuts to deal with this new situation,” Cure added.

The U.S. Department of Energy reports that Puerto Rico’s peak electrical demand is 3,685 megawatt. The PREPA fiscal plan approved in June said that there was 6,070-megawatt capacity in the system from both PREPA and independent power generators.

In an interview with CBS News National Correspondent David Begnaud, the Costa Sur Operations Manager Angel Perez said that it would take “no less than a month” to restore Costa Sur, and only if work was done 24 hours a day.

Begnaud said the Federal Emergency Management Agency could lend a mobile 500-megawatt power plant to the island if President Trump declared that a “major disaster” had occurred. Earlier this week the president declared that there was an “emergency.” FEMA didn’t immediately respond to an inquiry to confirm its stance.

According to El Nuevo Día, Ortiz was in talks Thursday with FEMA about installing temporary electrical generating capacity on the island.

On Thursday morning Puerto Rico Gov. Wanda Vázquez said she was planning to seek disaster status from the president.

The Costa Sur plant normally contributes to the electrical supply for the western and central parts of the island.

According to El Nuevo Día, Ortiz said that PREPA would restore electrical service to the islands’ residents by this weekend at the earliest.

In other PREPA-related news on Tuesday Puerto Rico bankruptcy judge Laura Taylor Swain extended the deadlines for the arguments concerning the authority’s Restructuring Support Agreement. For example, she extended the deadline for responses to timely motions in limine to March 12 from Jan. 17.

On Nov. 1 Swain set Jan. 14 as the start of a hearing on the Bankruptcy Rule 9019 hearing to consider the RSA. In mid-December she vacated that date and on Tuesday she set the new date as March 31.

For reprint and licensing requests for this article, click here.
PROMESA Puerto Rico Electric Power Authority Commonwealth of Puerto Rico Puerto Rico Sales Tax Financing Corp (COFINA) Puerto Rico
MORE FROM BOND BUYER