The geopolitical instability in the Middle East should serve to prioritize the country’s energy transformation. While the Title III process of the Puerto Rico Electric Power Authority (PREPA) does not move forward, doubts are growing here about the government’s actions in matters critical to the stability of the electric service.
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It is clear that consumers will receive an increase in their electricity bills that could have been avoided if they worked as a team and with diligence.
As we enter the hurricane season, PREPA has not informed us when the country will have the promised emergency generators to address the lack of capacity and production, and we question the lack of transparency, which only contributes to the loss of credibility. PREPA has no assurance of fuel supply after the expiration of the supply contract with New Fortress Energy (NFE). The expressions about this contract are also untrue, since NFE is the only operator that submitted a request for proposal (RFP) for the sale of gas, different from the public explanation about hands tied due to the fault of past administrations.
While we play with public opinion, the electricity system operators, LUMA and Genera PR, are waiting for substantial payments to finance the operation of the system, according to the current contractual provisions.
Although the trajectory of LUMA and Genera PR should be audited, it is worth questioning how they can claim good performance if they do not receive the monetary resources for the administration and maintenance of the electrical infrastructure contractually agreed through a Public Private Partnership (APP). Unlike other contracts, in which the operator invests capital for improvements or to manage the asset, in the agreements negotiated with LUMA and Genera PR, the government agreed to pay the operator compensation for its work, but the money to manage the electrical infrastructure - from tree trimming to fuel purchases - must be paid monthly by PREPA, with resources that include FEMA funds. As of last April, it owed some $726 million to LUMA for deficiencies in operating accounts and at least another $337 million to Genera PR. This delay in disbursements also adversely affects hundreds of Puerto Rican companies that provide services to LUMA and Genera PR, which have not been paid either. It is easier to blame others than to admit that the problem begins at home. Time will tell if we were able to do the right thing, leave egos aside and start working as a team. Seven years after Hurricane Maria we are still basically in the same situation. This is nobody’s fault but our own.
This delay requires a considered analysis. It is urgent to analyze whether the current events prove that, from the beginning, as described in our pages, the APP contracts to transform the electric system were destined to fail or whether the current stumbling blocks are due to the fact that the present administration does not have a genuine commitment to this management model.
Faced with such a complex scenario, it is unsustainable to paralyze the relevant steps to advance in the energy transformation. Inconceivable power struggles are surfacing even in the executive leadership, where at this point there seem to persist conflicting visions on the necessary paths for this crucial renewal. The clashes can be perceived in the attitudes and actions of figures such as the Energy Czar, Josué Colón. This Thursday, the governor categorically expressed her opposition to the construction of gas pipelines on the island, an initiative that takes years and is subject to complex procedures of indispensable environmental permits, among others. The expressions were contrary to those of Colón days before. It seems that the calls to execute the public policy of the Executive respond differently to the commitment agreed in the platform of the current government, which highlighted the support to APPs to meet the energy challenge. The recent discourse of certain officials suggests that there is an intention to return to the past so that PREPA controls generation and distribution, despite the fact that this corporation induced the bankruptcy that exacerbates the precariousness of the situation. It should not be forgotten that millions of dollars in federal funds are conditioned to a private entity producing and distributing energy.
Meanwhile, the urgency to transform the existing units seems to be relegated and the Bureau of Energy, for example, has not approved the procedures to gasify the units. In addition to being part of the federal Department of Energy’s policy, it would save hundreds of millions of dollars for the people of Puerto Rico.
There is an urgent need to elucidate visions on essential expenditures and to demonstrate on the fly the willingness for transparent execution with clear accountability. It is necessary to overcome pitfalls related to the matching of funds and a rigorous management of accounts that will allow us to meet the payments to Genera PR and Luma. Related to this issue, it is necessary to improve the efficiency of COR3, whose performance was criticized during the governor’s primary campaign, but at present no significant changes have been perceived, particularly in efforts to help expedite disbursements to key contractors.
It is time for a vital consensus centered on honest commitments to the public-private partnership model and with changes that cannot be postponed, which have been categorically recognized since past quadrenniums, following the collapse of PREPA.
The officials in charge of ensuring that the available funds are disbursed and that the APPs operate successfully must demonstrate a true commitment to transform Puerto Rico’s energy system. The sad fact is that we are where we are, not for lack of money. The resources exist, they are just waiting to be used. There is no excuse whatsoever. The island cannot continue to be paralyzed. It is time for iron will and action. It is imperative to work as a team to leave in the past the models that led us to bankruptcy in order to promote stability in households, in the public and private sectors, as well as the return to investment markets, which implies resuming with strength the progress and sustainable development of the country.
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This content was translated from Spanish to English using artificial intelligence and was reviewed by an editor before being published.
