Between the pandemic, Hurricane Maria, and the recent earthquakes, the last four years have been an immense struggle for Puerto Rico. But as the island rebuilds, it must be careful to do so in a manner that corrects past mistakes and lays a stronger foundation for the future. This is especially true for Puerto Rico’s electrical infrastructure.
Systemic problems with Puerto Rico’s electricity were obvious even before the recent natural disasters. Just two months before Hurricane Maria made landfall in 2017, the Puerto Rico Electric Power Authority (PREPA) declared bankruptcy on $9 billion in bond debt.
In the hurricane’s aftermath, Puerto Rico’s electrical infrastructure was in physical and financial ruins. It took nearly a year before power was restored to all parts of the island. Unfortunately, this led to a focus on getting things rebuilt quickly rather than on getting things rebuilt well.
After billions of dollars in taxpayer funds were spent to rebuild the island’s energy infrastructure, Puerto Rico’s situation was scarcely improved. Then-PREPA Executive Director Jose Ortiz even confessed that the grid would have to be completely remade again. When the earthquakes began in 2019, Puerto Rico’s power plants and grids were again damaged and significant portions of the island were again plunged into darkness.
Recently, the Biden administration announced that it was dedicating $1.3 billion in aid for Puerto Rico to help protect itself from future climate disasters. In typical left-wing fashion, this maneuver is simply throwing more good taxpayer money after bad.
To provide meaningful protections from natural disasters, Puerto Rico should embrace free-market reforms that will bring together the best expertise and experience of the public and private sectors. Last summer, PREPA announced a new public-private partnership with LUMA Energy that would do just that.
Under the agreement, PREPA would continue its ownership of the system with LUMA operating, improving and maintaining the electrical grid. This partnership would help Puerto Rico develop modern electricity infrastructure capable of withstanding future natural disasters. This is critical for the island’s economic growth.
As Jose Carrion, chair of Puerto Rico’s Financial Oversight and Management Board, said, “Puerto Rico deserves manufacturing and the service industry jobs created by investors who don’t turn away because its electric power system is unreliable and antiquated.”
Rebuilding Puerto Rico means more than providing Puerto Ricans with access to electricity. It means providing Puerto Ricans with access to jobs. If the island wants to attract businesses and create these jobs, then it must demonstrate to these companies that it can deliver reliable, affordable electricity. A partnership with LUMA could be an important step in achieving that necessary goal.
Unfortunately, some are calling for cancelling this partnership, saying it doesn’t provide enough benefits for Puerto Ricans. Translation: some leftists don’t want anything they can’t control or won’t directly line their pockets.
LUMA has made commitments that will greatly benefit Puerto Rico ratepayers and workers. The company has committed to not increasing electricity rates for at least the first three years of the partnership. LUMA has also promised to prioritize the hiring of local workers and PREPA employees. By March, LUMA already received nearly 15,000 job applications from island residents and soon began construction of a $10 million facility to help train new workers. Should Puerto Rico miss out on this chance simply because do-nothing leftists want an unwarranted piece of the action?
Reliable electricity is the foundation of the modern economy and Puerto Ricans deserve a 21st century electrical system. The LUMA partnership will help shore up a problem that has plagued the island for many years. Big government has already failed Puerto Rico. Puerto Ricans should give the private sector a chance.
Chris Salcedo is Executive Director of the Conservative Hispanic Society.
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