Governor to fiscal board: Reconsider subsidizing PREPA from emergency fund
By John McPhaul
In a letter sent Thursday to Financial Oversight and Management Board Chairman David Skeel, Gov. Pedro Pierluisi Urrutia urged the board to reconsider its position on the government’s proposal to authorize the disbursement of no less than $200 million from the State Emergency Reserve to subsidize the cost of producing electricity in Puerto Rico as a result of the war between Russia and Ukraine.
“The Government will evaluate options to continue optimizing the use of federal funds and existing programs, but we recognize that these actions are insufficient to adequately address this global energy crisis,” the governor warned, reiterating that the request is due to the war and not to operational insufficiencies of the Puerto Rico Electric Power Authority. “As you indicate in your letter, it seems that we agree that the Electric Power Authority (PREPA) needs an injection of money to avoid future increases in electricity rates; however, we differ on the amount and sources of financing.”
“I request that the Board reconsider its position,” the governor insisted, adding that “the impact on Puerto Rico cannot be overestimated because the unexpected increase in oil prices that we need for power generation would require sudden and significant rate increases at PREPA to attend to this emergency. If there is anything that constitutes an emergency, it is this. The current emergency may not have been caused by nature, but its economic ramifications in Puerto Rico are the same.”
“Without an injection of additional funds,” Pierluisi added, “PREPA’s energy costs, already among the highest in the entire United States, will have to rise, forcing many citizens to choose between keeping the lights on in their residences or feeding their families – a decision no one should have to make.”
In passing, the governor emphasized that the government is not requesting an unconditional use of the State Emergency Reserve and clarified that the oversight board would maintain the authority and the final decision to approve the use of any disbursement from the reserve. Likewise, he said that if necessary, the government will submit amendments to the Certified Fiscal Plan to the oversight board.
“Not approving access to the Emergency Reserve Fund now would expose Puerto Rico to negative economic effects that can be avoided,” Pierluisi said. “Time is of the essence and acting now will help us address this emergency more effectively.”