The Commonwealth

of Puerto Rico
Electrical Utilities
Agenda

Overview of PREPA
Capital Investment Program
• Transmission and Distribution
• Power Generation
Fuel Diversification Initiatives
• Natural Gas Projects
• Environmentally Friendly Projects
Conclusion
Questions
Overview of PREPA
PREPA is One of the Largest Public Utilities in the
United States

• Total Assets: $7.5 billion Among Public Utilities in the

• Total Revenue: $3.7 billion
(operational)
• Credit Classification
– Standard & Poor BBB+
– Fitch A-
– Moody’s A3
United States *:
 No. 1 in served clients
 No. 1 in revenue
 No. 5 in sales of kWh
 No. 6 in generated kWh
*Obtained from the American Public Power
Association publication for 2007-2008

4
The System Includes Extensive Transmission & Distribution
and Significant Generation Capacity

Transmission Lines 2,379 miles Generation Capacity 5,365 MW

Distribution Lines 30,480 miles Peak Demand 3,685 MW
Substations 38 kV 278
115 kV 45
PREPA - Fuel Oil #6
PREPA Combined Cycle & Combustion Turbuines
-Light Oil
PREPA Hydroelectric
EcoEléctrica-Natural Gas
AES -Coal
454
100 507
(2%)
(9%) (8%)

2,992
(56%)
1,312
(24%)

MW
PREPA Maintains Excellent Business Relationship with
its Cogenerators

EcoEléctrica, L.P.
• Commercial operation: March 2000
• Contracted capacity of 507 MW
• Contracted guaranteed availability at 93%
– Actual availability was 93.4% for FY 2006
– Actual availability was 92.9% for FY 2007

AES
• Commercial operation: November 2002
• Contracted capacity of 454 MW
• Contracted guaranteed availability at 90%
– Actual availability was 93.5% for FY 2006
– Actual availability was 91.8% for FY 2007
Overview of Capital Projects
PREPA Has a $2.3 Billion Capital Investment Program

700 $617.7 $474.0 $431.4 $361.1 $401.0

600 63.2

500 80.8
67.9
400 139.5 81.5
77.6 41.1
47.7 82.9
300 79.4
117.6 77.8
200 114.5 117.3
334.2 94.4

100 210.9
155.9 141.2 159.7

0
2008 2009 2010 2011 2012
G e n e r a t i o n T r a n s m i s s i o nD i s t r i b u t i o n O t h e r s

During the 2nd Quarter of 2007, PREPA completed the largest financial
transaction in its history. We issued $2.4 billion in the US tax-exempt bond
market to secure:
• $643 million to finance the Capital Investment Program
• Savings of $106 million from refinancing bonds
Transmission System Investments Will Improve Energy
Transfer and Reliability

New 115 kV Reconstructed

Line 230 kV Lines
New 115 kV
Underground Line

New 115 kV
Line

Reconstructed 115
New 230 kV
kV Line
Line
Major Transmission and Distribution Projects
Accommodate Growth and Increase Reliability
230 kV lines ($mm)
Projects Cost Status
South Coast to Manatí $15.0 Study
South Coast – Cambalache $ 52.0 Study
South Coast – Aguas Buenas $ 65.0 Construction
Sabana Llana – Yabucoa $ 56.0 In Operation
Total $188.0
Gas insulated substation construction ($mm)
Projects Cost Status
Central Palo Seco $ 50.0 Construction
Luis Muñoz Marín Airport $3.9 Acceptance Test
Isla Grande Transmission Center $ 24.0 In Operation
Martin Peña Transmission Center $ 20.0 In Operation
Total $97.9
Underground systems construction ($mm)
Projects Cost Status
Fernandez Juncos – Phase II $8.0 Study
115 kV Circuit $175.0 Construction
Condado underground Project $3.2 Civil Construction
“Ponce en Marcha” – Phase II $17.0 Construction
“Ponce en Marcha” – Phase I $22.0 In Operation
Fernandez Juncos – Phase I $8.9 In Operation
Total $234.1
 San Juan Underground 115 kV Circuit Mitigates Against
Disaster Events
Fifth Stage
COVADONGA Completion Date: TBD
PALO SECO Status: Under evaluation.
STEAM PLANT Route and environmental
ISLA GRANDE analysis started
165 VIADUCTO

5
SAN JUAN 2
Third Stage STEAM PLANT MARTIN Second Stage
Completion Date: October 2007 PEÑA Completion Date: Feb. 2008
Status: Partial Acceptance Test 22 22 HRTC Status: Construction—Contract
Awarded in June 2003. Awarded in April 2003.
167 23
Percentage Complete: 99% Percentage Complete: 90%

17 18
BTC 2 First Stage
1 Completion Date: October 2007
Fourth Stage 21 Status: Acceptance Test
Completion Date: Nov 2007 Awarded in May 2003.
174
Status: Acceptance Test MTC Percentage Complete: 99%
52
Awarded in September 2004. 20
Percentage Complete: 98%

• First four stages cost $175 million, including the cost of studies and design
• FEMA to provide funding of $75 millions
• Incorporates cross-linked polethylene cables (lessens environmental exposure)
Significant Power Generation Investment To Accommodate
Growth and Reliability
SAN JUAN COMBINED CYCLES
• Two units of 232MW each
• Expected completion date: December 2007
• Conversion to natural gas: 2010

CAMBALACHE COMBINED CYCLE

CONVERSION
• Installation of the required equipment to convert
the existing units to combined cycles with a
capacity increase of 100W
• Cost: $140 million
• Expected completion date: 2010
• Conversion to natural gas: 2010
Significant Power Generation Investment To Accommodate
Growth and Reliability
COMBUSTION TURBINE
REPLACEMENT - MAYAGÜEZ
• Existing units will be replaced obtaining a
capacity increase of 120MW
• Cost: $120 million
1 2 • Expected completion dates:
3 4
– Units 1 & 2: November 2007
– Units 3 & 4: May 2008

WEST COAST PLANT

• 400 MW combined cycle burning natural gas
• Expected completion date: Fiscal Year 2013-14
Fuel Diversification Initiative
PREPA Has an Aggressive Fuel Diversification Plan

Historic and Projected Fossil Fuel Prices

16.00
• Targeted reduction in fuel oil
14.00 of 24% by 2010; replaced
12.00 with natural gas
10.00

8.00
• Long-term plan calls for
6.00
proportionate use of fuel oil,
4.00 natural gas and coal with
2.00 the incorporation of
0.00
renewable and alternate
Year energy sources
Fuel Oil No. 6 - PREPA Fuel Oil No. 2 - PREPA
Natural Gas - DOE Coal - DOE
Reference: EIA-Energy Review, PREPA

Fuel Oil
Fuel Oil Fuel Oil
73.1% 32.0%
49.7% Natural Gas
33.0%
Natural Gas
37.5%
Coal
Coal Natural Gas Renewables &
Coal 33.0%
13.6% 12.8% Renewables & Alternate
Renewables & Alternate 12.3%
Sources
Alternate Sources 2.0%
Sources 0.5%
0.5%

2007 2010 LONG TERM

The Fuel Diversification Plan Calls for the Use of Natural Gas
to Replace Light Oil

• Dual Fuel Conversion of the Aguirre Combined Cycle - natural gas

conversion and pipeline expected to be completed in 2008

• Dual Fuel Conversion of the San Juan Combined Cycle - natural

gas conversion and pipeline expected to be completed in 2010

• Dual Fuel Conversion of the Cambalache Plant - natural gas

conversion and pipeline expected to be completed in 2010

* Natural gas will substitute light oil which has a higher price.
In Addition to Natural Gas, PREPA is Also Considering Coal
and Renewable Energy Projects
• New 400 MW generating base plant located in Mayagüez – expected
start-up using natural gas in fiscal year 2013-14

• New 500 MW generating base plant– expected start-up using an

environmental friendly technology for coal burning in 2017

• Renewable Projects (wind, waste-to-energy and others)

New Natural Gas Pipelines Are Required to Complete the
Fuel Diversification Plan
• 1st Priority - Gas pipeline to Aguirre Combined Cycle (Gasoducto del
Sur) to replace light oil

• 2nd Priority - Gas pipeline to northern plants: Cambalache and San

Juan Combined Cycles to replace light oil

• 3rd Priority - Gas pipeline to western plants: Gas turbines and 400MW
new plant

• Natural gas distribution to the non-power market

– Industrial
– Commercial
Gasoducto del Sur Will Be Completed in 2008
Main Activities Status
• Natural gas will be transferred from
Project Licensing In Progress
EcoEléctrica to the Aguirre Combined Emissions Permit Modification In Progress
Cycle Contractor Selection Completed

• 42 miles, 20 inch diameter Construction Negotiation In Progress

Right of Way (ROW) Acquisition In Progress
• Selection of contractor based on Tolling Agreement (PREPA-Gas Contract Signed
specific experience, financial strength Natural S.A.)

and EPC capabilities LNG Supply Discussions with

potential suppliers
• ROW: 50 ft
• Cost: $70 million
• Expected Completion Date: 2008
PPP Opportunity - Gasoducto del Norte Has a Targeted
Construction Completion Date of 2010
• Pipeline System Feasibility Study was completed in 2005. A detailed Route
Selection Study will be completed on the first quarter of 2008
• Route selection shall meet delivery of natural gas in 2010
• Cost: $145- $190 million (according to selected route)
• Expected construction completion date: 2010 (San Juan Combined Cycle)
• The construction of a new LNG tank in EcoEléctrica is required to deliver the
capacity of natural gas to the northern and western plants. This is a critical path
for the project
Gasoducto del Norte – Alternative Route 1

Peñuelas→Arecibo

• Estimated distance of 80 miles

• Section between Ponce and Arecibo may
be able to run parallel to Road PR 10,
except in a section between Adjuntas and
Utuado
• North section of route may be able to use
the SuperAqueduct ROW
• Impacted Municipalities: 14
Gasoducto del Norte – Alternative Route 2

Peñuelas→Arecibo

• Estimated distance of 118 miles

• From EcoEléctrica to Mayagüez through
Lajas Valley
• In Mayagüez North section through road
PR22 and possible use of the
SuperAcqueduct ROW
• Impacted Municipalities: 24
Gasoducto del Norte – Alternative Route 1 and 2

Arecibo → San Juan

Gasoducto del Norte - Potential Private Sector Clients
Company Location

Merck Sharp & Dohme Arecibo

Guidant Puerto Rico B V Arecibo
Pfizer Pharmaceuticals LLC Barceloneta
Bristol Alpha Corporation Barceloneta
Merck Sharp & Dohme Chemical Barceloneta
Araxis Bioscience MFG LLC Barceloneta
Abbott Health Prod., Inc. Barceloneta
Shering Ind. Dev. Corp. of P.R. Manatí
Bristol Myers Squibb Holdings Pharma Manatí
Ortho Pharmaceutical, Inc. Manatí
Dupont Agrichemical Caribe Manatí
Shering Del Caribe Toa Baja
San Juan Cement Co. Inc. Dorado
Bacardí Corporation Cataño
• A second tank at EcoEléctrica would provide an additional 400MMSCF/ day of firm forwarding capacity
Construction, Maintenance and Operation Standards for Gas
Pipelines
Applicable Regulations
• 49 CFR 192 –Minimum Federal Safety Standards
• American Petroleum Institute (API) Standard 5L
• Welding - API 1104
Quality and Safety Assurance
• Hydrostatic Test
• Coating and Cathodic Protection 1-800-XXX-XXXX

• Qualified personnel
• Markers
• Inspection (PIG launcher and PIG receiver)
• Control Room, Metering stations
• ROW limited to minor agricultural products
PREPA Is Also Evaluating Renewable Energy Projects

WIND ENERGY
• PREPA completed negotiations with two wind
farm developers for 40 and 50 MW projects
• Expected completion date: 2010

BIOMASS
• A biodiesel study in selected PREPA turbines
is in progress
• PREPA is evaluating waste-to-energy projects

OCEAN THERMAL ENERGY

• PREPA is evaluating two proposals based on
this technology
Other Environmentally Friendly Projects - Water Re-Use

• Source: PRASA waste treatment plant discharges

• Supply process (demineralized and service) water to Palo Seco and

San Juan Stations

• Capacity: 2.7 million gallons per day

• Available at a competitive price

• Public - Private investment

• Similar projects might be considered for other PREPA stations

PREPA Has Implemented Revenue
Diversification Initiatives
Commercialization of Fiber Optic Capacity
• PREPA.Net began operation in January 2005
• Started offering Bandwidth services in July 2005
– MPLS (Multi Protocol Label Switching) services available island wide
– SONET services available in the San Juan Metropolitan area
• First carrier customer contract signed in November 2005 for
transport and access services
• Currently negotiating connections to international submarine cables
Conclusions
Conclusion

• Comprehensive capital investment plan to

respond to short and medium term projected
demand

• Strong strategic plan to reduce fuel oil

dependence

• Effective management of the system, including

redundancies for emergencies

• Reliable electric system that supports

investments on the island