A plan to restructure Puerto Rico’s Electric Power Authority’s (PREPA) debt risks increasing energy prices and forcing Puerto Ricans to leave the notoriously unreliable power grid, dozens of organisations and individuals warned in an open letter.
Residential electric bills in Puerto Rico could skyrocket following plans to restructure the staggering debt held by the country’s public electric utility, forcing customers to leave the grid or the territory altogether, dozens of organisations have warned in a letter.
The utility debt restructuring plan would address Puerto Rico’s Electric Power Authority’s (PREPA) more than US$10 billion in debt obligations. In a statement, the Financial Oversight and Management Board for Puerto Rico (FOMB), a government entity created by Congress in 2016 to assist in restructuring the country’s debt, said the plan would “cut PREPA’s unsustainable debt by almost 50%” and “should provide the financial stability necessary to invest in modern, resilient, and reliable energy system for Puerto Rico.”
In order to do so, FOMB proposed double-digit rate increases for at least the next 35 years, which would allow extracting more than $13 billion to pay the utility’s legacy creditors.
The plan to save PREPA was met with harsh criticism. In an open letter published last week, 50 Puerto Rican organisations and dozens of community advocates, economists, conservationists, and energy experts said these charges, combined with ongoing high fuel costs and defection from the grid, would dramatically increase the already high energy prices to unaffordable levels, forcing many to leave the grid or the island altogether.
“The proposed debt plan will only weaken an already failing system, in addition to provoking more business closures, layoffs, and outmigration, further imperiling the island’s economic recovery,” the letter reads.
FOMB’s proposal comes at a critical moment in the country’s history. Decades of poor investments and maintenance of Puerto Rico’s notoriously unreliable, outdated grid have led to daily, hours- or even weeks-long power outages across the island. The racist federal response to the 2017 Hurricane Maria further worsened the situation. The winds of the Category 4 hurricane that killed thousands of Puerto Ricans decimated the island’s already crippled electric system, leaving the island without power and clean water for months.
Despite the huge renewable energy potential, the island’s power grid is still heavily reliant on imported fossil fuels for approximately 95% of its generation. In a bit to protect themselves from the frequent power outages in the aftermath of Hurricane Maria, many residents of the Caribbean island have begun installing their own solar panels.
Lawmakers set a 100% renewable energy goal with interim targets of 40% by 2025 and 60% by 2040, and a phaseout of coal-fired power generation by 2028. Despite the approval of some 18 renewable power plants, which are expected to generate about 884 megawatts of energy by 2024, more than 80% of Puerto Rico’s electricity will still come from fossil fuels.
Featured image: Wikimedia Commons.
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