July 30, 2018 Read More →

PREPA’s history taints its drive to privatize

The Intercept:

If you happen to take tens or hundreds of thousands of dollars from the oil and gas industry, the economics of phasing out fossil fuels in Puerto Rico look fairly straightforward. There aren’t any fossil fuel reserves on the island to be mined, meaning that all traditional fuels need to be shipped there. Currently, Puerto Rico gets about 90 percent of its fuel from costly imported oil, having spent $27.7 billion on it between 2002 and 2017 — in some years, as much as 61 percent of its yearly operating budget. Renewable energy can be produced locally, and the island is particularly well-equipped to produce high-quality wind and solar power. One report estimates that Puerto Rico could get 40 percent of its energy from renewable sources by 2028.

PREPA’s acquisition of fossil fuels has also been wrought with corruption. A recent study from the Institute for Energy Economics and Financial Analysis finds that PREPA’s Fuel Office arranged through a series of doctored lab tests to pay premium prices for low-quality fuel for as long as the last three decades. The report’s authors argue, as well, that this kind of chronic mismanagement when it comes to contracting is unaddressed in the bill authorizing PREPA’s privatization, passed through the island’s legislature and signed by the governor in June.

The proposed privatization would, in fact, see PREPA strike more deals with private contractors, not less, as they bid to take over different pieces of the island’s energy grid. Bishop, who oversaw yesterday’s hearing, this spring suggested turning Puerto Rico into an “energy hub” for the Caribbean, a base from which U.S.-based fossil fuel companies could ship imported natural gas out to the region. He said as well that he had been in conversations with oil and gas companies about the idea.

“They want to keep Puerto Rico energy dependent as an energy market for fuels, instead of promoting energy self-sufficiency for the island. I think that’s the main struggle,” Arturo Massol told me of Congress’s designs for the island. “It’s not so much if it’s public or private. It’s a matter of being energy self-sufficient or fossil fuel-dependent.”

Massol is the director of an organization called Casa Pueblo, based out of its titular pink house in Adjuntas, Puerto Rico. They were an early adopter of solar power on the island, first installing panels onto their headquarters in the late 1990s. After Maria, those same panels meant that Casa Pueblo was one of the only places in the area with power — an “energy oasis,” as Massol calls it.

“The conversation has completely shifted” on solar after the storm, he said. In an effort to spread decentralized renewables around the island, Casa Pueblo is trying to proliferate energy oases and has hosted several workshops on how to install your own solar arrays. Massol said they “fill up in 24 hours every time we do it. … People see solar power now as a way to modernize and move forward. They know the quality of life can improve through it.”

The group has installed solar systems at two hardware stores, one barber shop and several corner stores that activists hope will serve as a power oasis where people can charge their phones and store medications during a storm if needed.

Seeing that excitement and the transformed conservation around energy in Puerto Rico has made him still more leery of how decisions about its future are being made. “The country has to define the role of PREPA. PREPA shouldn’t be deciding what Puerto Rico’s energy landscape is going to look like,” he added, explaining the importance of making it easier to generate power at the point of production, rather than running it through costly transmission lines that are vulnerable to heavy weather. “The idea is not to disappear all the power plants that are already built. But we need to invest in what is missing, and what is missing is clean energy power generation in Puerto Rico.”

Energy sourcing is just one of many challenges facing PREPA, the island’s monopoly public power provider. The utility has suffered from years of disinvestment that became apparent after Hurricane Maria battered the island and its electricity infrastructure, which still hasn’t been fully repaired. PREPA currently sits in about $9 billion in debt, part of the at least $74 billion that the island is now saddled with and that the Washington-appointed fiscal control board is tasked with reigning in. The utility has shuffled through three separate directors in the last several weeks, with five out of six board members resigning at one point after Gov. Ricardo Rosselló urged them to rein in short-lived director Rafael Diaz-Granados’s $750,000 salary following public outcry.

In keeping with other privatization efforts in sectors like education and transportation, federal authorities and politicians on the island have, since before Maria hit, been keen to privatize PREPA, ostensibly to correct for persistent mismanagement and the slow pace of recovery. Yet while there’s a virtual consensus on the island that PREPA is in need of serious reforms, many doubt that selling it off — especially to fossil fuel interests — will improve matters.

It’s not as if PREPA is completely public as is. About 30 percent of its power generation capacity comes from two privately owned plants, and PREPA management have awarded generous contracts out to private contractors post-Maria — most infamously a $300 million deal with the novice Montana-based firm Whitefish Energy.

“PREPA’s past history of contracting scandals kind of taints the credibility of what they say they’re trying to do with this privatization,” report co-author and IEEFA Energy Analyst Cathy Kunkel told me. “A very large amount of money has been extracted through these contracts, stolen really.  If you are going to do a privatization that is basically just a series of more contracts — and do that without reforming in a serious way the contracting processes and the failures that have already happened — why is that going to result in anything that’s any better for the consumers?”

More: House Republicans Deeply Confused About Why Puerto Rico Might Benefit From Win and Solar Power

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