Puerto Rico Power Crisis

Puerto Rico Electric Power Authority workers repair distribution lines damaged by Hurricane Maria in the Cantera community of San Juan in October 2017. The government is moving to privatize the utility that is faced with crushing debt and known for its poor service.

“The Puerto Rico Electric Power Authority has become a heavy burden on our people, who are now hostage to its poor service and high cost,” Puerto Rico’s Gov. Ricardo Rossello said in a statement in January 2018. “What we know today as the Puerto Rico Electric Power Authority does not work and cannot continue to operate like this.”

On June 20, 2018, Gov. Rossello signed a historic bill to privatize the Puerto Rico Electric Power Authority (PREPA).

It 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. Rossello said, adding that he believes the law will help attract more investment.

PREPA held more than $9 billion in public debt as of the signing of the new privatization law.

On Jan. 20, the government announced the selection of four bidders seeking to take over PREPA’s electrical transmission and distribution system.

“Under a public-private partnership, we will be developing a system that responds to the real needs of our people, providing stability, reliability and efficiency to our island’s energy system,” the Wall Street Journal quoted Omar Marrero, executive director of the Puerto Rico Public-Private Partnership Authority.

The article went on to say that in the third quarter, the government will select a winner of the bid selection process. It also states that PREPA is under bankruptcy protection as it negotiates with its bond holders to reduce the debt load in excess of $9 billion that the utility company holds.

The move to privatization is not without controversy. Some argue that it will lead to higher rates, with private companies not having any incentive to reduce prices, and that without some sort of regulatory oversight or consumer protection, residents will be at the mercy of unscrupulous investors out for maximum profit.

Proponents of the new law argue that private companies can do it better, more efficiently and more affordably. Clearly the governor of Puerto Rico agrees and has thrown his political support behind privatization.

Why does what happens on a neighboring island matter?

WAPA also is at a crossroads, holding long-term debt of more than $200 million. The government, depending on which report you believe, owes $50 million for its electric bill and is not paying.

Our utility is plagued with many of the same issues faced by our neighbor.

WAPA is now seeking a rate increase to stay financially solvent. If this rate increase goes into effect, the damage to Virgin Islanders and businesses will be incalculable and we will be paying one of the highest electric rates in the country.

The executive and legislative branches of our government are now faced with a serious crisis that requires leadership and the willingness to chart a path for the Virgin Islands’ utility company that ultimately seeks the best interest and welfare of all Virgin Islanders. This could be a sale, privatization, public-private partnership or some form thereof.

We also need to continue to explore sustainable and renewable energy opportunities using wind and solar to help reduce electrical costs.

We are the stakeholders in WAPA. Affordable and reliable power distribution will be crucial to our continued economic recovery and is central to our quality of life.

— Filippo Cassinelli lives on St. Thomas.