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Power, projects and salaries discussed at congressional hearing over Puerto Rico recovery

By on November 8, 2017

SAN JUAN – The Financial Oversight and Management Board’s revitalization coordinator, Noel Zamot, told the U.S. House Natural Resources Committee on Tuesday that he would like the language of the Promesa law to include that he may also incentivize projects that are not necessarily critical for Puerto Rico.

Under Title V of the federal law the role is designed choose so-called critical projects, in areas such as water and energy, to be put under an expedited permitting process. Those projects are ones likely to solve important infrastructure problems, provide economic benefits such as jobs and that have private funding.

Zamot told committee Chairman Rob Bishop (R-Utah) that he wanted some clarity included in the law regarding his powers as revitalization coordinator to enhance his ability to ensure permitting processes are executed properly, that Title V projects are compatible with fiscal plans and “to be able to incentivize projects that are not critical” as well.

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The engineer made his remarks during a congressional hearing to learn of the efforts carried out and needed to enable Puerto Rico to recover from the disaster wrought by Hurricane María.

During the hearing, representatives and witnesses remarked on how Puerto Rico is affected by the Jones Act and whether it should be exempt, on the assistance provided by the Federal Emergency Management Agency and if it was adequate, on the transformation of the Puerto Rico Electric Power Authority (Prepa) and on what the island needs to begin its path toward economic prosperity.

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The fiscal board’s executive director, Natalie Jaresko, stressed several times that Puerto Rico needs federal aid to pull itself out of the devastating state María left it in. She said the island sustained $100 billion in damages and that about 100,000 people have left the island since the hurricane hit.

On a question on whether the island’s debt should be reduced, Jaresko said it was difficult to see the future but that the island needed both long- and short-term liquidity. “It will be difficult for creditors,” she said.

A lot of the discussion at the hearing centered around the collapse of Prepa’s grid and the board’s attempts to appoint Zamot as the public utility’s chief transformation officer. Jaresko said the board had rejected the appointment of a receiver to the power corporation in the past but now wants to appoint a CTO because the circumstances surrounding Prepa changed after the major hurricane, requiring additional resources and focus. “Prepa for decades has not served the people well,” she stressed.

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Regarding FEMA, Guaynabo Mayor Ángel Pérez said that while in the beginning the mayors were unable to get help because of the islandwide collapse of communications, the agency assigned people to each municipality, a move that helped mayors get water and food to residents. He said the problem is now how to help individuals living with relatives or neighbors because they lost their homes. “If we are going to rebuild. It cannot be the same because then, we will have the same problem,” he said.

However, one of the lawmakers, Rep. Rubén Gallego (D-Arizona), noted that the disaster response was inadequate. He said there are 9,000 troops in Puerto Rico compared with 20,000 sent to Haiti after its devastating earthquake in 2010. Rep. Raúl Labrador (R-Idaho) suggested that the idea that FEMA’s response was inadequate is a Democratic ploy.

Some of the lawmakers questioned Zamot’s decision to move forward with a controversial waste-to-energy plant in Arecibo, which has been criticized for potentially drying up protected wetlands. Zamot said the project is more of a waste-management initiative needed amid a management crisis affecting the island.

Rep. Tom McClintock (R-Calif.) questioned Zamot on his insistence of replacing the current power grid with renewables, which are more costly and the least productive source of energy. Another lawmaker urged him to pursue the use of liquefied natural gas.

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Rep. Nydia Velázquez (D-New York), meanwhile, told Zamot she was not sure “selling Prepa to the highest bidder” would help solve the island’s energy problems. The fiscal board has said Prepa should be transformed into a private utility.

Zamot remarked the Board was looking into different options to transform the electric utility, including privatization, opening the energy sector up to competition and carrying out energy projects with private investors.

Several members of the committee expressed support for exempting Puerto Rico from the Jones Act, which regulates maritime commerce in U.S. waters. Jaresko said the move would help the island economically because the statute increases the price of goods shipped to the island.

But Rep. Garret Graves (R-Louisiana) noted that goods in Miami were more expensive than on the island, and thus the Jones Act is not the reason for their price on the island.

Rep. Luis Gutiérrez (D-Illinois)repeatedly  questioned Zamot and Jaresko about their salaries. Zamot, which at first hesitated, finally said his salary was $350,000 while Jaresko said it was $625,000. Pérez said he makes $96,000.


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