Puerto Rico gov. signs bill to privatize PREPA utility assets
Puerto Rico's governor signed a bill Wednesday to privatize the U.S. territory's troubled power company
SAN JUAN, Puerto Rico (AP) — Puerto Rico's governor signed a bill Wednesday to privatize the U.S. territory's troubled power company in a move hoped to minimize power outages that have followed Hurricane Maria and stabilize the production and distribution of energy amid an 11-year-old recession.
The Puerto Rico Electric Power Authority is one of the largest U.S. public utilities, and the bill allows for the sale of its power generation plants as the company faces more than $9 billion in public debt and relies on infrastructure nearly three times older than the industry average.
It also allows the government to create public-private partnerships for the transmission and distribution of power as well as for services including billing and meter-reading.
"We're here to make transformational changes for Puerto Rico," Gov. Ricardo Rossello said, adding that he believes the law will help attract more investment. "It's no secret that Puerto Rico's economic development has remained stagnant in recent decades."
Rossello said initial market studies have revealed "a lot" of interest in taking over the generation and distribution of power in Puerto Rico. But contracts will not be awarded anytime soon. Legislators now have 180 days to approve another measure to establish a public energy policy and regulatory framework that Puerto Rico's Energy Commission will use as a guide to award contracts.
The new law protects the jobs of the more than 6,000 people that currently work at the power company. If workers decide not to remain, they will be relocated to other government agencies, Rossello said.
The Electric Power Authority became Puerto Rico's first public corporation when it was created under a different name in 1941. The island's power system now has a generating capacity of some 5,000 megawatts and includes six fossil fuel and seven hydroelectric generation sites and nearly 31,500 miles of distribution lines and nearly 2,500 miles of transmission lines.
Imported oil accounts for 45 percent of power generation in Puerto Rico, compared with a national U.S. average of 4 percent. Renewable energy represents 4 percent of generation on the island, compared with the U.S. national average of 15 percent.
Rep. Victor Pares, a member of the island's House of Representatives, said privatizing certain assets will help boost Puerto Rico's economy and create a more resilient power grid.
"This is possibly the most important project in decades," said Pares, who heads the House Commission for Economic Development, Planning, Telecommunications, Public-Private Partnerships and Energy.
Those who oppose privatizing the power company's assets say it doesn't guarantee a more widespread use of renewable energy or cheaper power bills on an island where electricity costs nearly twice the average of the U.S. mainland.
"This measure does not contain any guarantee of lower rates as promised by the government," Freddyson Martinez, vice president of a union that represents power company workers, said in a phone interview.
Rep. Denis Marquez, a member of Puerto Rico's Independence Party, voted against the measure and told The Associated Press that the company should be overhauled but remain in government hands.
"Energy is a human right," he said, adding that he believes Puerto Ricans will be hit with higher power bills.
The Electric Power Authority serves 1.47 million customers, with more than 4,300 of them still without power nine months after Hurricane Maria destroyed up to 75 percent of Puerto Rico's distribution lines, causing the longest blackout in U.S. history.
Crews are still repairing lines and installing new power poles as the U.S. Energy Department's Office of Electricity works with Puerto Rico's power company to start strengthening the grid even as the new Atlantic hurricane season has started.
Rossello stressed that the grid has to be modernized.
"If we leave it like it is, it will fall apart with the slightest wind," he said.