An entity controlled by the government of Puerto Rico, InterAmerican Energy Sources LLC, filed on Dec. 3 at the Federal Energy Regulatory Commission for what is basically a non-approval of a planned underwater transmission line between Puerto Rico and the U.S. Virgin Islands.
InterAmerican Energy Sources requested from FERC a declaration that it qualifies for exemption under the Federal Power Act as a wholly owned subsidiary of a state political subdivision; and after the transmission cable is constructed and placed in service, the reliability standards used by the Puerto Rico Electric Power Authority (PREPA) will apply, not those imposed by North American Electric Reliability Corp. (NERC).
PREPA generates, transmits and distributes electricity to approximately 1.5 million customers. Electric energy is produced by five main power plants owned by PREPA: Costa Sur, Aguirre, San Juan, Palo Seco and Cambalache. Approximately 68% of the total energy production is fuel oil-based; approximately 15% natural gas (LNG); approximately 15% coal; and approximately 2% hydro.
PREPA is directed by a Governing Board comprised of nine members. In 2009, PREPA created a nonprofit limited liability company subsidiary by the name of PREPA Holdings LLC PREPA Holdings, 100% directly-owned by PREPA, is also an authority of the Commonwealth of Puerto Rico. PREPA Holdings holds the sole membership and 100% interest in InterAmerican. As a wholly-owned subsidiary of a public authority, InterAmerican is also a public authority of the Commonwealth of Puerto Rico.
The Virgin Islands Water and Power Authority (VIWAPA) is a public authority created by the U.S. Virgin Islands Legislature in 1964. VIWAPA generates and distributes electricity to approximately 55,000 customers throughout its territory. VIWAPA operates seven generating units on St. Thomas and six generating units on St. Croix. All of its power is generated using fuel oil. As a governmental instrumentality of the U.S. Virgin Islands, VIWAPA is exempt from Part II of the FPA, the application noted.
InterAmerican has entered into a Letter of Intent with PREPA and the VIWAPA to potentially develop and own an underwater transmission cable interconnecting the PREPA and VIWAPA power grids. It is contemplated that InterAmerican may own, develop, permit, finance and construct the project. InterAmerican may provide transmission service to PREPA and/or VIWAPA. PREPA will likely sell power to VIWAPA. Specifically, as currently proposed, InterAmerican will own, develop, permit, finance and construct an undersea transmission cable that will interconnect the electrical power systems on the islands of Puerto Rico (PREPA), and St. Thomas, US Virgin Islands (VIWAPA).
This transmission cable will be approximately 50 miles (80 kilometers) long, between the Fajardo Substation in Puerto Rico and the Randolph Harley Power Plant (Krum Bay Substation) on St. Thomas. The transmission cable will most likely be a DC one, with an expected power transmission capacity of 100 or 200 MW. Transmission service will be provided by InterAmerican or by PREPA. Power will initially flow from Puerto Rico to St. Thomas in the U.S Virgin Islands.
InterAmerican said: "As islands, both the Commonwealth of Puerto Rico and the U.S. Virgin Island of St.Thomas have isolated electrical systems. With respect to Puerto Rico, PREPA operates the electric system to ensure reliable and stable operation, including maintaining load demand and power distribution balance across the island. The electric system in Puerto Rico is undergoing change. In part and as a result of compliance with new Environmental Protection Agency ('EPA') regulations under the Clean Air Act, including the Mercury and Air Toxics Standards ('MATS'), PREPA is going to convert some of its oil burning generation to natural gas/dual fuel generation. PREPA plans to retrofit the Aguirre Complex Units 1, 2 and combined cycle, San Juan Plants units 5, 6, 9 and 10, and Palo Seco Plant units 3 and 4. Natural gas fuel will be brought to the island as liquefied natural gas ('LNG'). Once the generating units are converted from oil to LNG, they will assist PREPA in maintaining MATS compliance. In addition, there will be an opportunity to sell excess energy to the U.S. Virgin Islands, both from PREPA's fossil fuel generation and from renewable resources. St. Thomas is in need of electricity. VIWAPA has some of the highest electricity rates among the U.S. and territories. InterAmerican, PREPA and VIWAPA estimate that prices for electricity in St. Thomas will be reduced and reliability improved due to the imports and power purchases from Puerto Rico."