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Energy think tank, nonprofit back fiscal board takeover of Puerto Rico utility

By on November 14, 2017

SAN JUAN – Despite Monday’s court ruling, the Institute for Energy Economics & Financial Analysis (IEEFA) and the Institute for Competitiveness & Sustainable Economics for Puerto Rico (ICSE-PR) on Tuesday called for the Puerto Rico Energy Commission and the island’s Fiscal Oversight and Management Board to take over the Puerto Rico Power Authority (Prepa), citing a pattern of waste and mismanagement at the utility.

“The ongoing governance crisis at Prepa, and now the denial by a judge of the appointment of a Prepa chief transformation officer, meant that the energy commission and the fiscal board must immediately combine efforts to restore electricity to the island,” the institutes said in a joint statement noting that more than half of the residents of the storm-stricken island remain without electricity almost two months after Hurricane María.

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The statement from the two institutes follows Monday’s refusal by a federal judge to grant a motion by the fiscal board to appoint an outside “chief transformation officer” to oversee Prepa. The board, created by the Promesa federal law, had proposed appointing Revitalization Coordinator Noel Zamot. Judge Laura Taylor Swain blocked the appointment, saying the board did not have the authority to put Zamot in charge.

“The well-known scandal around Prepa’s contract with Whitefish Energy is only the most recent example of the agency’s poor contracting policies and procedures,” said IEEFA Director Tom Sanzillo, who credits the Energy Commission for exposing many of Prepa’s common problems.

“In its various orders and findings, the commission has revealed waste and mismanagement at Prepa on the order of hundreds of millions of dollars,” Sanzillo said. “This waste has included money spent for consulting fees on a failed debt deal, overly expensive and mismanaged renewable energy contracts, and poor selection of energy and engineering consultants.”

Tomás Torres, executive director of ICSE-PR, said the fiscal board “cannot afford to see the commission’s powers reduced, especially now after ruling by Judge Swain.”

“The pain we Puerto Ricans have suffered, along with the ravages to our economy, require leadership in all its forms to step forward, break down barriers and rebuild Puerto Rico now.

Puerto Rico needs a coherent recovery plan and a strong show of unity as it presses for supportive legislation and federal financial assistance,” Torres said. “The formula for success exists already in federal and commonwealth law, and a can-do spirit of accountability and cooperation will help Puerto Rico rebuild under strong policy guidelines.”

Sanzillo and Torres recalled that Prepa submitted a motion to the U.S. District court in Puerto Rico in September to reduce the commission’s powers. The utility argued that the commission had usurped the authority of both Prepa and the fiscal board. On Nov. 3, the commission submitted a motion to the court proposing a resolution of any potential jurisdictional overlap between it and the fiscal board.

“The areas where coordinated action is most urgent include contract review and finance. The FOMB board and the commission need to also work together on a strong oversight to PREPA including budget reviews and approval, rate-setting and resource planning. The Puerto Rico Energy Commission brings a level of technical expertise in these areas that the FOMB does not have,” Torres said.

“More than ever, lack of coordination between the two institutions will delay the restoration of power and the re-design of the Puerto Rico electrical system,” they added


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