Puerto Rico to Privatize Power Generation Amid Outages

Puerto Rico to Privatize Power Generation Amid Outages

With this decision, Puerto Rico’s Electric Power Authority, a massive organization long accused of corruption, poor management, and inefficiency, begins its demise.

A first for a U.S. territory, Puerto Rico declared on Sunday that it intends to privatize electricity production. territory facing chronic power outages as it struggles to rebuild a crumbling electric grid. The decision signals the beginning of the end for Puerto Rico’s Electric Power Authority, a monstrous organization long accused of corruption, poor management, and inefficiency that is saddled with a $9 billion public debt, the highest of any government agency.

Given that serious complaints about the length of outages, high power bills, and other issues arose after the island’s government privatized the transmission and distribution of power in June 2021, many Puerto Ricans who were already irritated and weary of power outages were wary of the announcement.

According to Fermin Fontana, executive director of Puerto Rico’s Public-Private Partnerships Authority, the board of directors, including the members who represent the public’s interest, unanimously approved the privatization of generation.

It was unclear right away which company they chose to take over power generation. According to local laws, the contract has not yet been made public, according to a spokeswoman for the authority.

Fontana said the contract would be sent to the power company’s board of directors before being signed by the governor of the territory. Despite opposition to the privatization, the contract is anticipated to be approved.

The main opposition Popular Democratic Party’s vice president, Carmen Maldonado, declared that she and others would oppose the proposal.

José Luis Dalmau, a senator from Puerto Rico and a member of the party, said that lawmakers would examine the procedure carefully and demand, among other things, that the grid be stabilized, the number of outages be decreased, and workers at the state power company be protected.

He noted that Puerto Ricans are dismayed with the current situation and demand a more reliable and economic electrical system: “Our system needs to change, and that is a top priority.”

It wasn’t immediately clear what impact, if any, the privatization would have on the unsuccessful efforts made thus far to restructure the power company’s debt, with the government and some creditors turning to the legal system after numerous rounds of unsuccessful mediation talks.

The movement to privatize generation coincides with a dispute over a contract extension recently given to Luma, a group made up of Calgary, Alberta-based Atco and Quanta Services Inc. of Power is distributed across the island by Houston, who manages the transmission system.

The presidents filed a lawsuit last week against the governor of Puerto Rico, who is in favor of the contract extension, and are asking the judge to revoke it in light of complaints made against Luma.

Hurricane Maria, a Category 4 storm that struck Puerto Rico in September 2017, completely destroyed the island’s power grid, but it was already fragile due to decades of neglect in equipment maintenance and investment. Its generation units are twice as old as those in the US, with an average age of 45. mainland.

Only emergency repairs were made in the years after Maria, and efforts to rebuild the grid only recently started.

Reference: https://english.elpais.com/international/2023-01-16/puerto-rico-to-privatize-power-generation-amid-outages.html

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