Embattled PREPA announces new grid modernization plan amid privatization push

Dive Brief:

The governing board of the Puerto Rico Electric Power Authority (PREPA) has formally adopted a plan to transform the power company into what it calls a "reliable, sustainable, customer-focused" utility for the island, as it recovers from Hurricane Maria.
PREPA, the island's embattled electric utility, has also been moving towards privatization. In announcing the utility's new modernization plan, Ernesto Sgroi, the chair of the governing board, called privatization "the key step to [PREPA's] recovery in the short-and medium-term and indispensable to its transformation in the long-term.”
Another key is finding a new executive director to head the utility, who will be responsible for guiding the company through the transition. PREPA's board said they are at about the middle of their search, while Reuters reports several candidates are being vetted.

Dive Insight:

All around the country, states and utilities are reimagining how the business model operates and how customers can have more choice and control and reliable power. Now Puerto Rico is having that conversation, too — albeit with 30% of the island still in the dark.

To assist in developing the plan, PREPA has a Transformation Advisory Council (TAC), that includes utility industry executives and industry experts volunteering their time to provide guidance to PREPA’s board and management team. TAC Co-Chair Cris Eugster, who is also Chief Operating Officer of CPS Energy, said the group is working "towards establishing a more sustainable and customer focused utility system of the future.”

The vision plan includes five "pillars," including: a focus on the customer; creating a financially viable business; reliability and resilience; sustainability; and for PREPA to be an economic engine for Puerto Rico.

In the aftermath of Hurricane Maria, which devastated the island, there are fears many residents will flee and not return. The board said PREPA's vision had to include that possibility.

The business model will be "robust to changes such as outmigration and reduction in energy demand, and does not create disincentives for adoption of cheaper energy resources, either at the grid level or at the customer premises."

PREPA's governing board says it is working with the Gov. Ricardo Rosselló to propose and enact reforms in the industry structure and to transform PREPA. Those include a "legal and regulatory" framework for privatizing the utility and opening the door toward constructing microgrids.

"This reform needs to be part of a single, coordinated effort integrating multiple planning activities, while also leveraging studies being conducted by other groups," Sgroi said.

It has been more than four months since Hurricane Maria destroyed the island's grid; however, 20% of generation is offline and 30% of customers are still in the dark.