January 23, 2018 Read More →

Puerto Rico to Seek Buyers for Battered Electricity Utility

Reuters:

Puerto Rico’s governor said on Monday he intends to sell off the U.S. territory’s troubled power utility to the private sector, saying the process could take roughly 18 months to complete. 

A worker of Puerto Rico’s Electric Power Authority (PREPA) repairs part of the electrical grid after Hurricane Maria hit the area in September, in Manati, Puerto Rico October 30, 2017.

The Puerto Rico Electric Power Authority (PREPA) has yet to recover fully from the devastation wrought by Hurricane Maria, which in late September knocked out power to the entire island, leaving all 3.4 million residents in the dark and killing dozens of people. 

“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,” Governor Ricardo Rossello said in a statement. “What we know today as the Puerto Rico Electric Power Authority does not work and cannot continue to operate like this.” 

Less than 64 percent of homes and businesses are receiving power, according to the latest data from the U.S. Department of Energy. PREPA had promised that most of the island would have power by the end of December. The new plan calls for 30 percent of power generation to be from renewable sources. 

Rossello described how the process for breaking up the company would occur in three phases, calling it a move toward a “consumer-centered model.” 

Phase one consists of defining the legal framework via legislation. Phase two will be evaluating bids, and phase three will be “the terms of awarding and hiring the selected companies that meet the requirements for the transformation and modernization of our energy system will be negotiated.” 

Given PREPA is currently trying to work its way through bankruptcy and all of the island’s financial dealings must go through the federally appointed Financial Oversight and Management Board for Puerto Rico, selling off PREPA’s assets could be a long process. 

One analyst was skeptical of Rossello’s plan. 

“He’s got no energy plan, no financial analysis, if he thinks he’s going to sell it off and the private sector is going to come in and invest, that is a recipe for Puerto Rico being raked over the coals by private interests,” said Tom Sanzillo, director of finance for the Cleveland, Ohio-based Institute for Energy Economics and Financial Analysis. 

“This will produce a maximum amount of corruption and a minimal amount of electricity,” said Sanzillo, whose as provided expert witnesses to PREC proceedings.

More: Puerto Rico to sell off crippled power utility PREPA

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