Friday, June 23, 2017

Upper middle class reaps most benefits from green energy incentives

By on March 7, 2017

SAN JUAN – Since its formal inception in 2013, the Green Energy Fund has provided nearly $60.3 million in economic incentives to Puerto Rico Electric Power Authority (Prepa) commercial and residential customers for the installation of solar panels, benefitting nearly 1,900 families.

However, most beneficiaries are from the “upper middle class” because “the costs to acquire renewable energy are high,” Francisco Rullán, the interim director of the State Office of Energy Public Policy (Oeppe by its Spanish acronym), explained during the first public hearing for Senate Resolution 25, which investigates the impact of government incentive laws on the Puerto Rican economy.

Oeppe interim director Francisco Rullán (right), justified the Green Energy Fund's incentives, deeming it necessary to transform energy production to a renewable alternative. (Cindy Burgos/CB)

Oeppe interim Director Francisco Rullán, right, justified the Green Energy Fund’s incentives as necessary to transform energy production. (Cindy Burgos/CB)

Rullán, who has spent 33 years in Oeppe, explained that the agency grants incentives to install solar panels for up to 30% of the total cost for residential customers and up to 40% in the case of commercial clients. He emphasized that about a decade ago this system cost approximately $55,000 for a house of four, whereas now it cost is less than $20,000.

Apart from systems’ costs, the Oeppe official listed the number of requirements for incentives as limiting factors—among them, owning the property and not owing the government—as well as the lack of a media campaign to inform citizens on how to acquire them. He also noted that the regulations lack a specification so part of the incentives are granted to people with limited resources or senior citizens, which he argued can be amended in the future.

“As public policy, our intention is to provide accessibility to people with scarce resources, perhaps with this fund or additional funds… We still have to grow the office. We need more incentives. We need to expand our representation on the island,” declared the Oeppe official, whose agency receives a budget of nearly $765,000 for a dozen employees, and projects $20 million in incentives for the upcoming fiscal year.

Sen. Migdalia Padilla, vice president of the Social and Economic Revitalization Committee, which is evaluating the senate resolution—requested the deponent to present justification to continue granting incentives in light of, not only the new fiscal year that begins in July, but the Incentives Code currently under development.

Padilla added that the incentives can’t be seen simply based on the economic impact they represent, but also their social impact and if they help the most vulnerable, and insisted that amid the economic crisis it is necessary to evaluate all the money the government invests.

Rullán justified the incentives by stressing the need to shift local energy production to an alternative that is less dependent on fossil fuel and more focused on renewable energy. Only 2% of Puerto Rico’s produced energy falls under the latter, he said.

In the past, the Green Energy Fund’s incentives were prone to criticism after it was revealed that sometimes the same person benefitted from more than one incentive, whether by owning several homes or businesses. During the transition process it was also disclosed that among these beneficiaries are Secretary of State Luis Rivera Marín and Supreme Judge Erick Kolthoff, both of whom received more than $6,000 for renewable energy projects in their homes.

Incentives Website Under Development 

Meanwhile, Puerto Rico Statistics Institute Executive Director Mario Marazzi said in the hearing that his agency is developing an Interagency Validation Portal for the Concession of Economic Development Incentives —established under Act 187 of 2015— which is expected to be filled with data by summertime.

The website will include incentives that will be granted in 37 state laws, which range from tax extensions to Fine Arts institutions, hospitals, and flower production, to the most recent incentives for doctors. Marazzi expects that agencies will present the corresponding information to include it in the website, which will have “statistics on economic activity incentivized by various laws.”

Moreover, in representation of the Treasury Department, Carmen Guillén stated there aren’t objections to the bill, because she deems it beneficial to evaluate the incentives’ impact.

Although the Office of Management & Budget (OMB) was cited, the agency didn’t send a statement. The Economic Development & Commerce Department was also cited, but was allowed 25 additional days to prepare.

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