How PREPA brought earthquake-damaged plant online ahead of Isaias

by Peter Maloney
APPA News
August 24, 2020

In January, it looked like one of Puerto Rico’s biggest power plants would be out of commission for a year. Instead, one unit of the damaged plant was able to start generating power just days before Tropical Storm Isaias hit the island.

The speedy restoration of the Costa Sur plant is “by far the biggest success PREPA (Puerto Rico Electricity Power Authority) has ever had,” Todd Filsinger, senior managing director at Filsinger Energy and chief financial advisor to PREPA, said.

The two-unit, 820-megawatt (MW) Costa Sur plant, PREPA’s largest, was knocked out of service on Jan. 7 by a 6.4 magnitude earthquake that cracked foundations, ruptured pipes, split water tanks, and damaged a turbine and the plant’s control room.

Costa Sur provides about one quarter of PREPA electrical supplies and is one of the public power utility’s most efficient plants. Without it, PREPA was forced to use its more expensive diesel peaking plants and to rely more heavily on purchased power from third party generators such as EcoElectrica and a coal-fired plant owned by AES Corp.

Before actual repair work on Costa Sur could begin, however, a lot of negotiations and financial arrangements had to be made, all of which were complicated by Puerto Rico’s financial troubles – the island, and then PREPA, entered into a bankruptcy like process in 2017 – and in that same year was devastated by two hurricanes, Irma and Maria.

Soon after the earthquake in January, there were discussions with the Federal Emergency Management Agency (FEMA) for temporary generators, but that solution was thwarted by technicalities.

Meanwhile, plans to repair Costa Sur had to be approved by regulators, including the Puerto Rico Energy Bureau and the Financial Oversight and Management Board.

As part of the bankruptcy process, PREPA created a project management office (PMO) that reports directly to the head of the utility. The discipline, experience and focus of the PMO were key to the rapid restoration of Costa Sur, Filsinger said.

As the groundwork for the restoration efforts for Costa Sur began, it became apparent there were opportunities to negotiate a better deal in the form of lower prices and tighter schedules, Fernando Padilla, director of PREPA’s project management office, said.

When negotiations were completed and financing was in place – over 80% of the $40.2 million total cost is being covered by PREPA’s insurance – the actual physical work of restoration began in May.

The work was undertaken by a team of about 360 contractors and PREPA employees, many of them union workers, who worked in 24-hour shifts. PREPA was able to begin ramping up the 410-MW Unit #5 at Costa Sur within 24 hours of Isaias hitting Puerto Rico. Unit #5 is now fully operational, and Unit #6 is expected to be online by late October.

Among the key lessons learned from the restoration efforts, Padilla says, is to stay in close contact with the workers. He walked the power plant’s floor four times a day. “If you are not close to the people,” it is difficult for them to understand the scope and progress of their efforts. “It is hard to translate that from a piece of paper.”

“It is about having first eyes and hands on the problems to seek immediate solutions,” Padilla said. “Being there allows you to understand problems, employee needs, project risks, and to address contractors’ and employees’ problems and even creates opportunities to make work more efficient and quicker,” Padilla said. A daily management presence “also provides employees with the comfort that our executive team is fully committed” to bringing the plant back online quickly and motivates employees and signals urgency to contractors, he added.

The other lesson is the benefit of using a mix of contractors and public power union employees. “PREPA’s union expertise was indispensable due to their knowledge of the asset and its operation,” and union labor was lower cost compared with contractors of the same level of expertise, said Padilla.

Looking to the future, Padilla and his PMO team are working on other projects that will enable PREPA to be prepared for other disasters that befall Puerto Rico. Among them, vegetation management projects on 600 miles of the island’s electrical wires and a future that includes more decentralized power resources.