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Puerto Rico Senate Minority Leader Calls for New Energy Market

July 25, 2018, 4:13 PM

Puerto Rico needs an open energy market with microgrids and rural electric cooperatives to decrease dependence on its large utility, Eduardo Bhatia, the island’s Senate minority leader, told Bloomberg Environment.

Bhatia is testifying July 25 at the House Natural Resources Committee’s oversight hearing, where the island’s electric utility will be front and center.

The bankrupt Puerto Rico Electric Power Authority, the largest public electric utility in the U.S., has faced corruption and mismanagement allegations and has had five new chief executive officers in the last 18 months.

Puerto Rico’s utility needs to exist in an open market involving other players, including consumers producing their own electricity from solar panels, which he refers to as “prosumers,” he said in an exclusive interview with Bloomberg Environment ahead of the hearing.

Bhatia said he thinks the island needs to allow PREPA to exist but also encourage citizens to participate in the market by producing their own energy.

“If you want to stick with PREPA, fine, but there are many other alternatives,” he said.

PREPA’s new CEO Jose Ortiz was appointed July 18 after the previous CEO Walter Higgins announced he was leaving July 11 and his replacement, Rafael Diaz-Granados, left a day later.

Puerto Rico Governor Ricardo Rossello was invited to the hearing, but wasn’t going to attend. He said in a July 25 letter to the committee that his “attendance would legitimize a political exercise that was organized for the sole purpose of promoting flawed legislation that would severely hamper our reconstruction.”

“This is about the future of Puerto Rico and the people who are suffering,” Bhatia said. “This is a critical moment to be playing political games. The governor should have been here.”

Pushing Back on Federal Takeover

Bhatia addressed rumors about lawmakers proposing a federal takeover of PREPA, possibly putting it under jurisdiction of the Energy Department. That, he said, isn’t a good solution.

He said that the Energy Department and the Federal Energy Regulatory Commission should work with Puerto Rico and create a specialized task force, but not take over.

“That’s not federalizing, that’s working together, but it’s short of federalizing,” he said.

The problem with FERC’s role in the island is that there is no interstate sale of electricity—it doesn’t have jurisdiction over Puerto Rico. He suggested connecting Puerto Rico’s electricity to the U.S. Virgin Islands to enable this.

Increased funding also is needed for the Puerto Rico Energy Commission, an independent regulator formed in 2014 to oversee PREPA. In a recent budget from the bankruptcy oversight board, the commission’s budget was proposed to be cut more than 70 percent—from $7 million in fiscal 2017 to $1.8 million in fiscal 2018.

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bloombergenvironment.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bloombergenvironment.com

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