The Puerto Rican government has the responsibility to ensure that the result of the privatization of the power grid boosts economic development and protects public interest.
It is crucial to do so with transparency in order to guarantee the confidence of the federal government, investors and Judge Laura Taylor Swain, who is in charge of the debt of the Electric Power Authority, which payment is demanded by creditors.
Puerto Rico already has an independent regulatory body that requires strength to serve the purpose of transparency. What the Energy Commission needs is for its authority to be validated and provided with the tools that allow it to ensure affordable energy rates.
The PPOMESA law states that purpose in its Title V, section 503 on critical projects. The paragraph dictates criteria that the Revitalization Coordinator may require proponents. One of the criteria is how the project will support the Commission in its goal of reducing energy costs and guaranteeing affordable rates for consumers and businesses. Such line recognizes the mandate of the organization.
The Commission was created in 2014 through Law 57, as an independent and specialized entity. It arose from the demand of several sectors, including the private sector, to put a stop to the excesses of the Authority. That debauchery, fueled by monopoly and partisan politics, led to its collapse.
The statute provides that the Commission must regulate, oversee and enforce the state energy public policy. Its mission is to ensure that Puerto Rico has a reliable, efficient and transparent energy system, and provides the service at reasonable prices. Its financing comes from PREPA and other regulated entities. Its commissioners are appointed for staggered terms to ensure their independence. This provides continuity to works.
These characteristics become more important in the process of placing the generation, transmission and distribution of an essential service in private hands.
Now, when energy transformation becomes an urgent task, bondholders, industrialists and non-profit entities raise flags about what they perceive as a purpose of weakening the Commission. And they warn of the risks.
Since last April, it is chaired on interim basis by one of the commissioners. Governor Ricardo Rosselló has not appointed a substitute after Agustín Carbó´s resignation.
In his recent project to give PREPA liquidity, Rosselló empowers the corporation to sign agreements and use the money without the Commission giving its consent. This action contradicts an order of the body issued in November for PREPA to report that its contracts need to be authorized by the Commission.
In the government's reorganization plan, the Commission would be subject to a regulatory body for public services, despite the proposal to privatize energy. Precisely, the new process of privatization raises questions that the government should answer. And it will generate more. It is essential that, from its foundations, the transformation of the system shows transparently. Its legitimacy will depend on it.
The future of the debt, which is about $ 10 billion and caused the bankruptcy of the corporation under the Title III of PROMESA, is tied to that transparency.
A strengthened Commission will help restore external and local confidence in Puerto Rico. For their duties, the entity needs resources in order to be able to ensure purity in transactions and contracts. That ensures fair prices for industries and families.
The transformation of the energy system has to come from an open process. And it should consider the wide range of expert recommendations to produce a durable and adaptable system, promoting economic development. A key recommendation is the permanence and independence of the Energy Commission.