Thursday, July 19, 2018

After resignations, new members sought for Puerto Rico power company board

By on July 12, 2018

SAN JUAN – Five members of the Puerto Rico Electric Power Authority’s (Prepa) governing board, including newly chosen utility Chief Executive Officer Rafael Díaz Granados, abruptly resigned Thursday, citing political forces that want to control the public utility.

Besides Díaz Granados, Chairman Ernesto Sgroi, Vice Chairman Edwin Irizarry, and independent members Errol Davis and Nisha Desai resigned as well, leaving only Gerardo PortelaChristian Sobrino and María Palou on the public corporation’s board.

Prepa Governing Board Chairman Ernesto Sgroi, April 2018 (Courtesy)

The move comes after Gov. Ricardo Rosselló demanded that the $750,000 salary set for Díaz Granados be lowered. That salary is much higher than what was paid to his predecessor, Walter Higgins, who resigned after his $400,000 a year salary was cut.

Candidates for Prepa’s board are being evaluated to help it reach a quorum, as well as to replace Prepa’s resigning CEO, Walter Higgins III, by Sunday, when he steps down, the governor said.

Elí Díaz, the executive director of the Puerto Rico Aqueduct and Sewer Authority, could be a candidate for a seat at the board. “Elí [Díaz] is going to be appointed and when the independent appointment is made…there will be a quorum to appoint and executive director,” board member Sobrino told the media Thursday.

Before resigning from the board, newly chosen CEO Díaz Granados said in a WKAQ radio interview earlier Thursday that the panel had convinced the governor to name Higgins as a member, but another source said the governor is no longer considering him for the seat. 

In a statement Thursday, Rosselló had threatened to take action if the amount was not lowered.

“The salary granted by the Governing Board of the Electric Power Authority (Prepa) to the new executive director is not proportional to the financial condition of PREPA, the fiscal situation of the Government, or to the feeling of a People who are making sacrifices to lift Puerto Rico up.

“The Governing Board of PREPA must temper the salary to what I am proposing or, alternatively, the members who are not willing to do so must resign their positions, so that these are assumed by people who work arduously on the search for a good executive director willing to work for a salary that fits the reality of PREPA,” the governor wrote.

Senate President Thomas Rivera Schatz also called for board members to resign in protest, while minority Popular Democratic Party Sen. Eduardo Bhatia said the administration has been “swinging blindly for a year and a half on the matter of energy and Prepa. The incompetence and inexperience of the governor and his advisers have already cost lives and has further complicated the economic crisis.”

The members who stepped down said that while they have made tough decisions to run Prepa, they believe they can no longer do so if they do not have the support to drive change within Prepa.

“The political forces in Puerto Rico have provided a definitive statement that they want to continue control of Prepa. When the petty political interests of politicians are put ahead of the needs of the people, the process of transforming the Puerto Rican electricity sector is put at risk,” they wrote.

The governor has enacted a law that would privatize the utility in 18 months, but a Prepa source said the resignation will delay privatization because the governing board was in charge of handling operations.

The governor’s office, La Fortaleza, said it will be making an announcement shortly, presumably about new appointments to the board.

There have been five executive directors and now a sixth has to be named; three different governing boards at Prepa, the changes made to the State Energy Office, the attempt to repeal the Energy Commission and the privatization of Prepa without any clear direction, he said.

The island’s Financial Oversight and Management Board, which represents Prepa as a debtor in its bankruptcy process, declined to comment.


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