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IEEFA Op-Ed: Now Is Not the Time to Roll Back Oversight of Puerto Rico’s Power Company

March 21, 2018
Cathy Kunkel

Members of Congress have rightly expressed concern over Puerto Rico Gov. Ricardo Rosselló’s incessant campaign to steamroll the Puerto Rico Energy Commission, the progressive regulatory body that is seeking responsible modernization of the island’s backward electricity system.

Permitting the governor free rein could invite the very kind of sweetheart deals that put PREPA in its current operational and financial crisis in the first place.

Just last week, the Puerto Rico Senate approved a bill that contains the governor’s most recent plan to dismantle the commission. The measure, now before the full Puerto Rico Assembly, is essentially a retread of a February initiative by Rosselló that failed. It would consolidate the commission with four other regulatory agencies under a single Public Service Regulatory Board governed by three commissioners appointed by the governor. The new board would have three departments, one of which would deal with energy regulation. The decisions of that department could be revised or reversed by the board.

At issue is the how the bankrupt and mismanaged Puerto Rico Electric Power Authority, or PREPA, proceeds with rebuilding a power grid all but destroyed by Hurricane Maria last year.

Rosselló’s bill attempts to justify the consolidation with the argument that it will streamline administrative functions. But the result — an extraneous layer of review to the commission’s decisions — seems likely to only complicate the process. And while Rossello touts the administrative savings of his proposal — without providing any real basis for his numbers —the purported savings pale in comparison to the costs.

THE ENERGY COMMISION, CREATED BY THE PUERTO RICO LEGISLATURE IN 2014, brought much-needed transparency and accountability to the epic mess that PREPA was in the run-up to Hurricane Maria and the shambles that it is now. PREPA’s long history of mismanagement cannot be corrected overnight, but the commission has systematically taken steps in the right direction.

Specifically, the commission — to list just some of its accomplishments — has rejected PREPA’s long-term energy plan for failing to follow industry standard practices; called for greater reliance on energy efficiency, demand response and renewable energy; ordered the renegotiation of imprudent contracts; exposed numerous areas of poor fiscal management; and drafted regulations to facilitate microgrid development. It is the only entity on the island with the technical expertise to competently oversee Puerto Rico’s electricity recovery.

The commission is the counterweight to decades of political interference behind PREPA’s many levels of dysfunction. The utility, over the course of time, has become a political tool with priorities changing with each new political administration, making sound energy planning and prudent long-term investments all but impossible.

If the governor were allowed to create a new agency controlled by his appointees, it would only invite further disarray. He would also be advancing his misguided plan to privatize PREPA — an idea he has promoted with no underlying rationale of how it would lead to a more resilient, sustainable power system (nor would it address PREPA’s crippling indebtedness).

Permitting the governor to proceed unbridled could invite the very kind of sweetheart deals that put PREPA in its current operational and financial crisis in the first place.

Questionable contracts, mismanagement of funds, and high electricity rates will continue to be the norm so long as the commission is prevented from playing the regulatory role it was meant to fill.

Cathy Kunkel is an IEEFA energy finance analyst. This column appeared yesterday in The Hill.


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Cathy Kunkel

Former Energy Finance Analyst Cathy Kunkel has written reports and given expert testimony on the finances of Appalachian natural gas pipelines and drilling; electric utility mergers, rates and resource planning; energy efficiency; and Puerto Rico’s electrical system. She has degrees in physics from Princeton and Cambridge.

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