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Gov’s rep to Puerto Rico fiscal board: Utility privatization bill won’t be withdrawn

By on April 16, 2018

By Génesis Ibarra and Eva Llorens

SAN JUAN – The representative of the governor to the fiscal oversight board, Christian Sobrino, denied Monday that the privatization bill of the Puerto Rico Electric Power Authority (Prepa) that is currently being considered by the Legislative Assembly will be withdrawn.

“Withdrawing the privatization bill of the Electric Power Authority has not been agreed to. Today we held a meeting with the legislative leadership to discuss the bill and technical and procedural questions regarding it. Any change that is necessary to clarify the bill will be worked on in the current legislative process,” Sobrino said in a statement.

GDB President Christian Sobrino, the governor’s representative to the fiscal oversight board for Puerto Rico (CB/Juan J. Rodríguez)

The official comment was issued after Senate President Thomas Rivera Schatz recently said the privatization bill will be worked on in conjunction with another that would establish the regulatory framework, a bill the administration of Gov. Ricardo Rosselló has yet to send to the Legislature.

On Monday, Senate Vice President Larry Seilhamer revealed that Senate Bill 860 will be amended to eliminate language that refers to privatization and keep only that on a public-private partnership (PPP) to transfer Prepa’s energy transmission and distribution (T&D) to a private company.

Economist: Puerto Rico utility’s privatization will raise electric bill

Although only one private company would control the public utility’s T&D–similar to the PPP with Aerostar Airport Holdings to operate Luis Muñoz Marín International Airport–Seilhamer said it would not be a monopoly because “the sale of [Prepa] assets is not included.”

The senator, who is also the chairman of the Special Committee on Energy Affairs also announced that the U.S. Department of Energy contracted the Southern States Energy Board–which is composed of governors and state legislators from 16 states, Puerto Rico and the U.S. Virgin Islands, as well as a presidential appointee–to draft along with the Rosselló administration the second bill that will contain the regulatory framework, the legal framework and the public energy policy.

The second bill “could be left for the next session, and I emphasize the time schedule given by the federal Department of Energy, which at the end of the day wants a reliable and resilient Puerto Rico electrical system,” Seilhamer said.

The Southern States Energy Board will have nine months to prepare the regulatory framework.

As currently written, the Prepa privatization bill has numerous critics who believe it could result in high energy costs.

Prof. José Alameda Lozada, an economist, conducted a study, commissioned by the Puerto Rico Electric Power Authority’s Irrigation & Electrical Workers Union (Utier by its Spanish acronym), in which he concluded, among other things, that contrary to what the government alleges, the public utility’s privatization would result in higher residential bills.

“On average, citizens would be paying on average $986 per year. Commercial customers would pay $13,600 more and industrial customers would spend $827,000 more per year,” Alameda said during a hearing last week held by the Joint Committee on Economic Development, Planning, Telecommunications, Public-Private Partnerships, Energy and Government of the House of Representatives.

Alameda also mentioned that the decrease in energy demand, whether due to newer electrical equipment using less power or the island’s population decline, does not help reduce the cost of generating electricity in Puerto Rico.

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