Draft Legislation to Privatize Puerto Rico Electric Utility Gains Traction on the Hill
Editor’s note: The following article originally appeared in the May 10-18, 2018, issue of Caribbean Business.
BY PHILIPE SCHOENE ROURA and EVA LLORÉNS VÉLEZ
U.S. House Natural Resources Committee Chairman Rob Bishop (R-Utah) continues to focus on the transformation of the Puerto Rico Electric Power Authority (Prepa), as he confirmed his intent to help steer Sen. Don Young (R-Alaska) in the development of draft legislation that would put the utility’s privatization under the purview of the U.S. Treasury Department.
“Sen. Young hasn’t dropped [the bill] yet, but we are talking to him about the best way of doing it,” Bishop told Caribbean Business during an exclusive interview that took place days before a hearing on Prepa’s recovery was held by the U.S. Senate Committee on Energy & Natural Resources.
“When you are talking about Prepa—energy costs have got to come down, whatever we do. If you are going to be a vibrant economy, you must have abundant and affordable energy; it just costs more here than it does on the mainland. So, a government monopoly has problems; a private monopoly would have the same kind of concerns. And whether you want to have the federal government in charge of that, we have to have a discussion about whether that is where we want to end up. In some respects, perhaps a combination so there can be checks and balances; so there can be competition, the regulations required by the government. But the delivery doesn’t necessarily have to be in the traditional way of doing that,” Bishop added.
The draft legislation includes provisions for Treasury to oversee and partially fund the privatization of Prepa with language that also brings the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Energy into the fold.
The Puerto Rico Electricity Modernization & Reform Act of 2018, as the legislation is denominated in the draft document obtained by Caribbean Business two weeks ago, empowers the secretary of the Treasury, “in consultation with the governor and the oversight board to initiate a program to modernize and privatize the electricity system in Puerto Rico.”
Although the Prepa measure is yet to drop, the draft bill is one more sign that Congress does not believe it resolved the Prepa problem, which has shifted since the enactment of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) from a focus mostly on restructuring the bankrupt utility’s massive debt to a more pressing concern over resiliency.