Fiscal board slams bills that would give PREPA oversight of P3 contracts
By The Star Staff
The Financial Oversight and Management Board said Tuesday it was gravely concerned about Puerto Rico House Bills 775 and 776 because, the board said, they will impair the transformation of Puerto Rico’s energy sector.
“Contrary to the requirements of the Certified Fiscal Plans for the Commonwealth and the Puerto Rico Electric Power Authority (PREPA), the bills effectively put PREPA back in control of Puerto Rico’s energy sector,” the oversight board said. “PREPA is a source of concern for most people in Puerto Rico. For decades, PREPA has systematically ignored maintenance and focused on reacting to problems rather than proactively preventing them. This mismanagement has led to consistently poor performance and regular power outages.”
The bills were filed by a group of lawmakers headed by Popular Democratic Party Rep. Luis Raúl Torres Cruz. House Bill 775 will make sure PREPA has oversight over the management contract for PREPA’s transmission and distribution (T&D) system amid complaints that the Puerto Rico Public-Private Partnership Authority (P3A) is not monitoring the contract adequately as it does not have the expertise. House Bill 776 will make sure that companies participating in public-private partnerships invest from their own resources in a project so that the government does not pay for all expenditures as is occurring with LUMA Energy, the private operator of PREPA’s T&D system.
The oversight board said the fiscal plans provide a detailed approach for transforming Puerto Rico’s energy sector to provide energy that is more reliable, more affordable, and cleaner.
“A key component is avoiding political interference, which has plagued PREPA for decades,” the board said. “The bills effectively reintroduce the potential for political interference, hindering the transformation of the energy sector.”
HB 775 would diminish the involvement of the P3A and Puerto Rico’s independent energy regulator, the Puerto Rico Energy Bureau. Under the bill, PREPA would have supervisory authority over any partnership contracts – not the P3A, as defined in Act 29-2009. Further, the bill would effectively shield officials who decline to cooperate with P3As from the serious consequences in the current law, the board said.
HB 776 seeks to leave the PREPA board of directors in charge of overseeing private operators and impairs the transformation of PREPA – which is directly contrary to the fiscal plans for the commonwealth and PREPA, the oversight board pointed out. PREPA has failed for many years to operate the electrical grid and generation facilities effectively and competently, the board said, and empowering the PREPA board to oversee and essentially control the private operator would at a minimum impede the energy system transformation that is critical to improving the quality of life and business climate in Puerto Rico.