Puerto Rico is known for having issues with expensive electricity. However, tumbling oil prices are expected to bring welcome relief to the island’s power problem.
According to a recent article in Reuters, cheap oil may not be a long term answer to solving the Puerto Rico Electric Power Authority’s (PREPA), longstanding issues. Considering that the fall in the oil prices can benefit PREPA’s cost structure and give them more relief when it comes to prices and debts, they also may stall serious overhaul.
Puerto Rico, unlike islands like Guam, Virgin Islands and even Hawaii, has a natural gas plant that could help it diversify the island’s power grid and significantly lower energy costs.
However, PREPA needs a serious overhaul, because the high oil prices have put the company in a really bad shape; and it’s getting increasingly difficult to provide energy for the almost 3.5 million island’s residents. This is a really serious issue, but Puerto Rico’s authorities are looking forward to solving it. And they should, since the company charges around double the average price a customer would pay in mainland U.S. (The cheapest U.S. state charges around $12 kW/hour and Puerto Rico charges $28 kW/hour). This inequity, they say is unacceptable on an island with such strategic importance.
It’s true that the Island of Enchantment’s challenges are different than those in U.S. mainland, given its geographic position and lack of oil. This together is a recipe for high fuel and electricity costs. Nevertheless, prices were high the past years but they’re expected to go lower in 2015.
Gas prices are at its lowest point. In October 2014 gas prices fluctuated between one dollar and the historical low price of $0.76 per liter. Around $3 per gallon.
Even if oil prices continue to stay low throughout 2015, if changes aren’t made to PREPA’s basic structure, the island would still be at risk if oil prices go high again. A great part of the debate is trying to develop a solar power plant in the island.
The question we should ask is, could natural gas solve the Island’s energy problem, or is it just a way to stall for time? Whatever it is, we hope to find a way to offer affordable electricity to Puerto Rico’s residents as it will go a long way in solving the island’s economic woes.