Amid natural disasters, Puerto Rico places hope on privatization to save electrical system

by Sep 2, 2020Puerto Rico1 comment

A series of natural disasters have devastated Puerto Rico’s electrical system, leaving the territory with unreliable and fragile power. Hurricane Maria in September 2017 had incredibly damaging effects on the people and infrastructure of Puerto Rico. Among this infrastructure was the energy grid and other sources of transmission or distribution. This combination of destroyed infrastructure made it rather difficult to regain power. The blackout from Hurricane Maria was the second largest blackout in history, with about 3.4 billion hours of lost electricity. Consequently, the majority of the territory was without power for months, it took over a year before the power was fully restored, and even then it was fragile. 

The earthquakes in January 2020 caused another outbreak of power outages, causing the Puerto Rico Electric Power Authority (PREPA) to further develop a stronger electrical system. The effects of these natural disasters have exacerbated the weak power system in place, contributing to the billions spent on disaster relief. However, these events have revealed the flaws in the current electrical system and provoked investigation into a more efficient and resilient power grid. In response to this, the past governor Ricardo Rossello (D, NPP)  began the process of privatizing the power grid in order to accomplish wide-spread change that the government run PREPA failed to do. 

Luma Energy recently signed a 15 year contract with PREPA to operate and maintain the Puerto Rico transmission and distribution system. Luma Energy is a new venture between US and Canadian companies Quanta Services and Canadian Utilities Limited. They are incorporating a plan to introduce renewable energy such as wind, solar, and natural gas as a solution to the expenses of obtaining oil. They also hope the contract will help eliminate the $13 billion in debt to bondholders. 

However, there has been a varied response to the privatization of the power grid. Some are opposed to the privatization, such as the electric workers union, who filed a lawsuit against the process. In which, they claimed the deal lacked transparency and may have included aspects of corruption. Additionally, they raise a question on the fairness of the fact that the decision of privatization did not include public stakeholders. Alternatively, some people like Lionel Orama, who is a professor of electrical engineering at the University of Puerto Rico, argue that the immediate concern that requires more focus is ensuring the territory is prepared for the upcoming hurricane season.