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Energy public policy by law sought in Puerto Rico utility’s transformation

By on April 17, 2018

SAN JUAN – Public hearings to evaluate the proposed privatization of the Puerto Rico Electric Power Authority (Prepa) ended Tuesday with a categorical request from witnesses that the current administration introduce and gives the force of law to a long-term energy policy plan.

The executive director of the State Office of Energy Public Policy (OEPPE by its Spanish initials), Francisco Rullán, said that since 2001, each change in administration has promoted a different public policy, which has hindered the electric utility’s transformation.

“For us, it would be absolutely desirable to be able to prepare a long-term plan and that it not be changed it in a few years because the administration changed. It’s a serious problem we are having,” Rullán said. “If we want to transcend beyond that, we have to do it by law.”

Rep. Víctor Parés (Courtesy)

Both Rullán and the president of the Engineers & Land Surveyors Association, Pablo Vázquez, and the other witnesses at the hearing were in favor of transforming the electrical system, but emphasized that it would not be achieved without first transparently forming a regulatory and legal framework.

The chairman of the Committee on Economic Development, Planning, Energy, Telecommunications and Public-Private Partnerships, Víctor Parés, made reference to an executive order signed by former Gov. Pedro Rosselló in 1993, in which a plan of up to 20 years was proposed to modernize the electric grid.

Although the order proposed generating power from alternative and renewable sources–specifically, solar on the islands of Caja de Muertos and Mona–Rullán said only 3% of electricity on the island is generated with renewable sources.

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“The governor [Ricardo Rosselló] instructed us about the concept of energy democratization in the long term and that the consumer chooses [their supplier], and that we can prepare a work plan and a defined plan on that particular, that transcends the elections,” he added.

Parés stressed that Act 57 of 2014 (Act for the Transformation and Energy Relief of Puerto Rico) could be the initial mechanism that allows the public energy policy of the island to be pushed. The law tasked the OEPPE with the development and oversight of compliance with Prepa public policy.

To reduce dependence on imported oil, the executive director of the OEPPE proposed to take renewable energy generation to 50% in 20 years. This long-term objective requires the implementation of a consistent public energy policy that requires compliance with these parameters.

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On Monday, Senate Vice President Larry Seilhamer announced that the privatization of the public corporation will be completed with the approval of two bills; one that includes the concession of Prepa’s transmission and distribution system via a public-private partnership and another that will include the regulatory and legal framework as well as public policy.
Vázquez favored this position, which the leaders of the House and the Senate together with several lawmakers suggested in a meeting to representatives of Gov. Ricardo Rosselló, who must approve the proposal before allowing its execution.

“As we have expressed before, we were seriously concerned about the absence of a clearly established policy and the absence of a regulatory framework that would lead to clarity from the participants in the process, before even a request for proposals was made,” Vázquez said.

A futile attempt?
In the same hearing, Popular Democratic Party minority Rep. Luis Vega Ramos said the evaluation process of Senate Bill 860 and its counterpart in the House (1481) has been futile, since the future of Prepa will depend on the fiscal plan that the island’s financial oversight board will certify this week.

Vega Ramos argued that the calls for a transparent process, a regulatory framework and public policy will be subject to the fiscal board’s decision and warned that the panel could seek to have a say over Prepa’s privatization process.

“What I want to posit with this is that this exercise we are carrying out today is a nice but useless exercise, because the public policy, the absence of transparency and the regulatory framework will be, in one way or another, defined in the next 48 hours by the fiscal plan, which will govern the fate of Prepa for the next five to seven years,” he stressed.

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