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IEEFA Update: Accountability for Puerto Rico’s Energy Must Be Baked Into FEMA Legislation

October 13, 2017
Tom Sanzillo

As Congress contemplates how to craft emergency FEMA spending legislation for the U.S. commonwealth of Puerto Rico, it must do so with an appreciation for the rare opportunity the moment presents.

Puerto Rico’s electricity system, still in tatters 22 days after Hurricane Maria and with no set date for recovery, can be brought into the 21stcentury with firm fiscal oversight aimed at reforms that will prevent managers of the Puerto Rico Electric Power Authority (PREPA) and their cronies from saddling the island with a regressive grid rebuild that will only cripple the economy in the long term.

If federal resources go into Puerto Rico under business-as-usual conditions, they will be misspent. If left to its own devices, PREPA, at the expense of Puerto Rican households, businesses and industry, will rebuild a system that will be reliant on high-priced imported fossil fuels and that will ignore the vast potential in decentralized solar-power.

Key safeguards should be included in FEMA legislation for Puerto Rico:

  • An assurance that the Puerto Rico Energy Commission will have the final say on how PREPA is run and how the island’s electricity system will be reconstructed.
  • Clear language that requires a rebuild that meets hurricane-resistant standards and that requires a substantial renewable energy component
  • Provisions that require serious large-scale development of solar energy and major progress on energy efficiency, backup generation and microgrid build-out

Some specific language to start with, should tackle restoration and recovery in three phases.


FEMA, PREPA and the PROMESA Oversight Board should coordinate with the Puerto Rico Energy Commission to ensure restoration efforts are consistent with the Commission’s orders and resolutions.

If federal resources go into Puerto Rico under business-as-usual conditions, they will be misspent.

Additionally, the Puerto Rico Energy Commission, not PREPA, should be directed to prepare a report and file such report to Congress detailing the conditions of PREPA’s electric system prior to the onset of Hurricanes Irma and María, the emergency preparations and contingency plans developed by PREPA and in place at such time. and PREPA’s response to the damages to its infrastructure. Such report shall include detailed findings and recommendations for future events.


Any efforts at rebuild, replacement or upgrade of the electrical system in response to Hurricanes Irma and María, regardless of whether those efforts are financed through federal emergency funds, should be consistent with lawfully approved Commission orders and resolutions.

The Puerto Rico Energy Commission should be responsible for reviewing, modifying and approving the commonwealth’s short-, medium- and long-term energy resource planning and shall ensure electricity rates are consistent with such policy goals.

Market structure evolution and energy as a service

As part of developing a resilient and modern energy system, the Puerto Rico Energy Commission should adopt a market structure that promotes resource diversification, energy efficiency, customer empowerment and system sustainability.

The product and services offered should include but not be limited to:

  • Integrated grid (central generation and distributed generation)
  • Energy-efficiency programs
  • Demand-respond programs
  • Green-power options
  • Energy-storage services
  • Back-up generation
  • Financing
  • EV-charging stations

No funds should be disbursed in the authorizing legislation without certification by the Puerto Rico Energy Commission.

Specificity like the above is crucial in federal FEMA aid to Puerto Rico given the governor’s, PREPA’s and PROMESA’s formal opposition to low-cost renewable energy.

Members of Congress — in the House and Senate alike — are being lobbied now by status-quo interests that would keep Puerto Rico from modernizing its energy policy. Now is the time to write legislation that demands accountability, transparency and results.

Tom Sanzillo is IEEFA’s director of finance. This column appeared this week in The Hill.

Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. He also examines such areas as community and shareholder activism, institutional investment, public subsidies and Puerto Rico’s energy economics.

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