The agreement to restructure the debt of Puerto Rico´s power utility places the government before its unavoidable responsibility to identify and implement mechanisms that reduce the cost of energy generation and distribution.
It is the state´s obligation to ensure the quality of life of our families, avoiding electricity increases that raise the costs of their essential goods and services. The public mission of providing affordable energy to the different economic sectors that drive the island´s development is not less important.
The list of priorities leading to the transformation of the Electric Power Authority must include the diversification of energy sources, to replace fossil fuel generation, which is financially and environmentally costly. Solar energy and natural gas are viable alternatives on the road to a power grid that entirely relies on cleaner sources. This step is essential to achieve a sustainable and competitive economic production that attracts capital investment to the island.
PREPA´s restructuring agreement, reached under PROMESA, presents itself as an opportunity to renew an unstable system that has partly hindered revitalization after the 2017 hurricanes. Power blackouts and other failures of a deteriorated and largely obsolete distribution network force energy renewal.
The agreement, supported by 47 percent of the public corporation´s bondholders, is considered essential to address the Puerto Rican government adjustment plan and to make the island´s return to capital markets viable.
We welcome Governor Rosselló´s commitment to neutralize the projected rate increases in light of the agreement by purchasing cheaper fuel and starting natural gas generation through planned changes in metropolitan plants and in other regions. The Governor argues that the change would eventually reverse the current rate of 22 cents per kilowatt-hour. Meanwhile, the agreement to pay bondholders recommends a 5 percent initial rate adjustment, as of July.
This complex scenario raises the need for effective communication between the executive and legislative branches to work on the law adjustments that the agreement would require, once approved by Judge Laura Taylor Swain. Both sides must engage in constructive discussions over concerns regarding the cost that customers who produce or contemplate producing energy on their own, with solar or wind systems, both domestic or commercial, would face.
We trust that processes to grant exemptions and agreements with the private sector for energy transformation will also be seriously and openly addressed.
PREPA´s debt reaches $ 11,4 billion. In a decade-long recession scenario, Puerto Rico needs to modernize its power grid, a crucial part of global economic competitiveness.
The desired transformation includes administrative efficiency, with processes based on transparency and accountability. Supporting the work of the Energy Bureau, as an oversight body that protects residential and business customers, and contracting processes for the transformation of the system will be crucial in this line.
If approved, the agreement that would restructure PREPA´s debt would join other restructuring processes resulting from negotiations with bondholders, including the debt of the Sales Tax Financing Corporation (COFINA). However, reaching a financial agreement that mitigates the situation of the energy utility and facilitates the use of private concessions must go hand in hand with the task to implement a capital improvement plan based on the most efficient and sustainable electricity generation practices and technologies.
The pursuit of balance that ensures the wellbeing of the people of Puerto Rico poses the imperative need to reach a reasonable energy rate.