Fiscal board to become active in accelerating grid reconstruction

Financial Oversight and Management Board Executive Director Robert Mujica, third from right, said that while he believes the private operators of Puerto Rico’s electric power system, LUMA Energy and Genera PR, are underperforming, he also thinks the root cause of the problem is the slowness in fixing the grid as just $1.3 billion of the $17 billion allocated for energy infrastructure has been spent.

By The Star Staff

After seven years overseeing Puerto Rico, Financial Oversight and Management Board Executive Director Robert Mujica said Wednesday that the oversight board will become more active in moving along the reconstruction of the island’s electrical grid to stabilize the system, and warned that the government must have a viable alternative if it wants to get rid of the private firms currently operating the assets of the Puerto Rico Electric Power Authority (PREPA).

Mujica said that while he believes the private operators, LUMA Energy and Genera PR, are underperforming, he also thinks the root cause of the problem is the slowness in fixing the grid as just $1.3 billion of the $17 billion allocated for energy infrastructure has been spent.

“If you want to get rid of the operator, you need to have an alternative, and you better have one immediately because any transition will take time … and there will be more delays,” Mujica said. “We will have to approve the contract.”

New Progressive Party gubernatorial candidate Jennifer González Colón, Popular Democratic Party gubernatorial candidate Jesús Manuel Ortiz González, Dignity Project gubernatorial candidate Javier Jiménez and Juan Dalmau Ramírez, the gubernatorial candidate for the Alliance, have all said they will cancel the contracts of the private operators because they are not performing as they should.

“You are in the middle of the election cycle; people say a lot of things,” Mujica said. “We have to make sure the system is working and any more delays do not work for the people of Puerto Rico.”

He rejected the idea of having public officials running PREPA again.

“Those who don’t remember the mistakes of the past are doomed to repeat them,” Mujica said. “Let’s remember how we got to the place where we are now. The old operator did not invest in the system. Politics intervened. Those elements are recurring. The further you get into a crisis, the more you forget.”

Mujica attributed the power outages to a lack of sufficient generation to meet demand and the failure to fix and renew the energy infrastructure.

“We want to focus on solutions. The role of the board is reconvening all of the parties on a regular basis, and identifying problems to find solutions,” he said. “No one is talking about the fact that we have only invested $1.2 billion out of $17 billion.”

Mujica said the oversight board did not intervene before because it does not control or manage federal funds and the island government has taken the position that federal funding is its purview.

He said that at this point, the board wants to accelerate the process to fix the grid and for that it needs to find money for PREPA. The utility has about $1.5 billion in its account but most of that is restricted or in reserve accounts.

“As the pace of the investment in the system increases, you run up against a reimbursement issue,” Mujica said. “We need to accelerate the process and for that we need more cash.”

The plan, he said, is to examine the bank account balances and evaluate options such as reimbursements from the Federal Emergency Management Agency to fix a failing grid.

Mujica also said the oversight board is preparing an economic plan for Puerto Rico, whose economy is currently being supported by federal funds that will soon taper off.

“There is $10 billion in federal funding running through the economy” he said. “It makes the economy look better [than it would look] in the absence of federal money. It will fall off.”