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Preventing collapse of Puerto Rico private sector in power utility’s hands

By on October 26, 2017

SAN JUAN – The secretary of Puerto Rico’s Economic Development & Commerce Department (DDEC by its Spanish acronym), Manuel Laboy, said he was confident the target date to have 95% of the island’s electric power restored in December could be met and thus avoid a total collapse of the economy, especially for the private sector.

When Caribbean Business asked the secretary whether he trusted the word of Ricardo Ramos, the executive director of the Puerto Rico Electric Power Authority (Prepa), Laboy simply replied he “trusted the governor’s word.”

However, the DDEC secretary noted Ramos is aware of the need to restore electric power to reduce the impact on the private sector. More than 30 days after Hurricane Maria struck Puerto Rico, much of the local retail and industrial trade has failed to restore operations due to lack of electric energy. Everyday, hundreds of people leave the island—after becoming unemployed because their employer lacks power or water—to support their families.

Puerto Rico Economic Development Secretary Manuel Laboy (Juan J. Rodríguez/CB)

The Retail Trade Association (ACDEI by its Spanish initials) has already warned there could be losses of $8 billion if electricity is not restored within six months, and about $3 billion within three months.

The manufacturing sector has also been affected, with many factories having to reduce operations to limit the use of generators and extra expenses to function. U.S. Food & Drug Administration (FDA) Commissioner Scott Gottlieb has already expressed concern that there is a shortage of medications and medical devices as a result of the hurricane. Gottlieb has said several industries have moved their production out of Puerto Rico.

Since the first day after the hurricane passed, Laboy has held meetings with different sectors and attended assistance activities for businesses and members of the private sector affected by the hurricane.

The head of DDEC also recalled that Hurricane Maria was unprecedented, affecting all sectors, including agriculture and tourism.

Without Power Restored, P.R. Retail Sector Could Lose $8.9B in 6 Months

Given the fact that only 26.2% of electric power generation has been re-established, the Puerto Rico Manufacturers Association (PRMA) submitted its demands and lauded the chairman of the fiscal control board, José Carrión, for board’s intention to appoint Revitalization Coordinator Noel Zamot as Prepa’s “chief transformation officer.”

PRMA President Rodrigo Masses said the leaders of the supply chain and employment production centers are asking—in this “lights out” economy framed by a bankruptcy-like process under the Promesa law and the existence of a fiscal plan for the public power utility—whether it would be possible to reach and maintain the required sustainable competitiveness for the electric system to support businesses and employees in the future.

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Masses asked that Prepa’s action plan respond to the emergency by including the following:

–A conservative estimate of Prepa’s loss of demand, which will occur because it is impossible to maintain a stable electrical system, while also promoting distributed generation, or energy from various sources or locations.

–That Prepa’s base rate for electricity is reduced so it does not exceed 20 cents per kilowatt-hour (kWh) and not more than 15 cents per kWh for the industrial and commercial sectors.

–That a budget is immediately established for the Puerto Rico Energy Commission, and that a “public collaboration” process be started whereby industry can effectively intervene to ensure all distributed generation technologies and private-sector financial capacities are considered for competitive investment in line with rates.

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