The Bad Decision That Will Haunt Puerto Rico For Decades

The island's broken, mismanaged electricity monopoly has stubbornly resisted investing in solar power — and now, it's doubling down on old mistakes.

The bungled response to Hurricane Maria is an ongoing humanitarian crisis for the 75% of Puerto Ricans who still don’t have electricity, more than a month after the storm hit the island.

Power might not be fully restored for a year. And while we have every reason to be outraged by our government’s slow response to the crisis, there’s a deeper, less visible failure currently playing out that will haunt Puerto Ricans long after the lights flicker back on.

Puerto Rico has long been hobbled by its broken and outdated electricity system, which gouges residents and businesses with sky-high prices, and leaves them vulnerable to catastrophic outages. Right now, the island has the chance to fix that: to rebuild something that is cleaner, cheaper, and more resilient.

It’s a moment for change, and the change isn’t happening. Instead, a tiny, obscure company from Montana has somehow picked up a $300 million contract to rebuild things as they were — and federal authorities are all but requiring that emergency relief dollars be spent propping up the old, failing system.

This is particularly infuriating, because Puerto Rico is an ideal place to roll out widespread, decentralized solar energy. Solar is cheaper than burning imported oil and diesel fuel — imports made even more expensive by US shipping laws. And small-scale, decentralized solar systems would make it easier to replace the island’s antiquated transmission and distribution systems, while creating much needed jobs and lowering its notoriously high electricity prices.

People on all ends of the political spectrum should support an energy strategy that saves money, is good for the environment, and is less vulnerable to periodic crisis. So why isn’t it happening?

Two words: PREPA and FEMA.

PREPA, the Puerto Rico Electric Power Authority, runs an antiquated grid with a handful of big, dirty, oil-fired power plants. Most of the power plants are in the southern part of the island, while the majority of the residents live in the north. To get electricity from A to B, transmission lines run through virtually inaccessible mountainous areas in the middle.

That is the problem-plagued power grid that PREPA is now beginning to rebuild — at great expense, with contracts that will line the pockets of two obscure American contractors.

PREPA, a self-regulated monopoly, has been been crippled by mismanagement and inefficiency for decades. Its leaders stubbornly refused to invest in energy efficiency and renewable energy sources. In the last couple of decades they took on debt, which was used to fund day-to-day operations and maintenance, rather than invest in the future. A lax municipal bond market, irresponsible lending from commercial and public banks and little oversight from regulators all helped it become both deeply indebted and in desperate need of investment.

PREPA needs to change and it needs to change fast.

But change is not what’s being pushed by the federal or territorial government. That’s where FEMA comes in: The agency insists that its emergency relief dollars must be used to rebuild the preexisting fossil fuel energy systems that were in place before the hurricanes hit.

That can change — when Congress passes its supplemental hurricane relief bill, which is expected to happen in early December, it could direct agencies to focus federal funds on energy efficiency and clean renewable sources, rather than for patching up the rickety old electrical grid that will just come down again after the next hurricane.

Congress also must scrutinize the contracts recently awarded by PREPA to small companies 3,000 miles away in Montana and Oklahoma. The decision to bring these private corporations was done without transparency and without consideration of other options. It deserves close examination.

These approaches should appeal to fiscal conservatives and environmental conservationists alike. For that we need leadership in Congress and right now we see no one in Washington providing this vital leadership. The people of Puerto Rico deserve so much better.

The federal board overseeing Puerto Rican finances is now reportedly seeking an outside manager to supervise PREPA. In other circumstances, that kind of oversight would be welcome news, but what Puerto Ricans need today is transparency around the decisions shaping their future. Instead, scrutiny will come from an unelected board concerned primarily with the interests of bondholders, not the public.

It’s hard for people to trust PREPA, but the same can be said of a federal body whose main task is making sure Puerto Rico’s lenders get paid. Those bondholders will prefer to see PREPA be privatized and sold to the highest bidder — who, again, will be more interested in return on investment than building a better electrical grid. There is no doubt that some level of private capital would be needed in the reconstruction, but full privatization wouldn’t be a better deal for Puerto Ricans.

Instead, if PREPA is going to survive it must embrace good governance, transparency, and improved service. Right now, it’s failing on all three.

Ramon Cruz is a member of the Sierra Club's national board of directors and the former vice chair of the Puerto Rico Environmental Quality Board.

Judith Enck is the former EPA regional administrator for Region 2, which includes Puerto Rico and US Virgin Islands.

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