Special report: Culebra’s energy lifeline threatened
By Istra Pacheco
Center for Investigative Journalism
In an abandoned structure within walking distance of the City Hall of Culebra, the small island of the Puerto Rican archipelago with one of the best beaches in the world, the fate of a project that would ensure the provision of electricity during emergencies in the face of the vulnerability of the system of the Puerto Rico Electric Power Authority (PREPA) remains in suspense.
The initiative has been paused for four years, even though less than 10 percent of the work remains to be completed, while the public corporation has paid $2.3 million for a rented generator that it cannot depend on because it continuously breaks down.
Almost a week after Hurricane Maria, Culebra and its 1,800 inhabitants had the luxury of having electricity for periods of approximately 12 hours while the rest of Puerto Rico was in a total blackout due to a mix of factors.
First, brigades with more than 20 PREPA workers had repaired the damage that Hurricane Irma caused the transmission system a week earlier. Then, PREPA’s permanent repairs team worked extended hours to repair Maria’s new damages, which were of lesser scope.
But energy from the big island did not arrive to be distributed. When it was finally possible to connect the temporary generator that PREPA has rented from a private company there, it was possible to supply energy intermittently.
In El Batey, a business that overlooks Culebra’s Bahía Ensenada, a group of young people met every evening at six o’clock to do a countdown, at the top of their lungs, when they saw the person in charge of starting up the plant that would give them 12 hours of power, said Luz Rivera-Castwell, president of the Culebra Foundation. She heard them from her home.
It was a daily party, said the psychologist and speech pathologist. However, she said it was like a spell: everything ended at six in the morning when the company employee disconnected the generator to give it a break and save diesel.
With the light of day, the “Culebrenses” went back to dealing with the heat, the mosquitoes, and the health crisis due to the overflow of dirty water, since the island’s only pumping station for that purpose is completely dependent on electricity to run.
“The bedridden elderly people and the children were the ones who suffered that period. They were very distressing weeks and more so with the transportation problems we had after, when diesel didn’t arrive to turn on the plant, so we didn’t even have those 12 hours of power … and we did not even know when we would recover,” Rivera-Castwell recalled.
The project located next to the mayor’s office and whose construction has been stopped for four years is a three-turbine plant with the capacity to produce six megawatts (6MW), which are more than enough to light the entire island municipality, 24 hours a day if necessary. In fact, its generation is so powerful that it could also supply energy to the neighboring island, Vieques.
While the project remains incomplete, PREPA has been paying uninterruptedly since 2011 for an alternate generator, rented from equipment provider Rimco for $27,000 a month, about the same amount a public school teacher earns annually.
The original agreement was to pay for that $270,000 rent in the 10 months it would take to complete the turbine project. But as it still remains unfinished, in more than seven years, PREPA has disbursed $2.3 million.
Engineers who have worked in the public corporation and were consulted by the Center for Investigative Journalism (CPI by its Spanish acronym) believe that given the progress of the original project, its turbines can be connected to a transformer owned by PREPA and that would eliminate the rental expense with the private company.
The reason the original project was stopped four years ago is a legal battle between the parties responsible for giving it life: Masterlink, the company in charge of the construction, Mapfre, the insurer that had to respond in case something should fail with the contractor, and PREPA, whose obligation is to ensure the supply of energy to the population.
Citing irreconcilable differences, in 2014 Masterlink filed legal action against PREPA at the San Juan Superior Court (TPI for its initials in Spanish.) When the public corporation accepted Title III of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA,) it asked the TPI to paralyze the case while the U.S. Bankruptcy Court decides whether to declare Masterlink as a creditor and include it in its debt restructuring plan. Superior Court Judge Aida Oquendo granted PREPA its petition to stop the lawsuit. The controversy is now before the federal court, while debts continue to mount.
PREPA refused to provide detailed information on the stagnation of the work and its consequences. Instead, the agency submitted a brief written statement, stating that there was a meeting on Jan. 11, 2018, the same day the CPI made a first request for information on the matter.
Allegedly, that day “public corporation officials met with several PREPA divisions and discussed the steps to begin a procurement process aimed at finalizing the project in the summer of 2018. Final agreements are pending with the insurance company.”
In its brief statement to the CPI, PREPA did not mention the lawsuit filed against Masterlink. The corporation also did not want to provide a copy of the lawsuit it faces, nor any other public document the CPI requested related to the project and the rented generator.
But, according to documents the CPI obtained through the court, PREPA alleges that Masterlink’s lawsuit is a “frivolous” and “prescribed” legal action. It adds that the damages claimed by the contractor did not occur due to PREPA’s “negligent action or omission,” do not proceed in law and dismissed them as “excessive, speculative, unreasonable and fictitious,” because the contractor, it said, “did not act diligently.”
The solution to Culebra’s power supply is complicated because the federal bankruptcy court does not have a deadline to determine what will happen to the money that Masterlink claims to finish the 10 percent left of the project.
On the other hand, it was announced that PREPA’s assets will be sold, so Culebra residents said they fear their problem will remain in limbo.
Meanwhile, two generators the U.S. Army Corps of Engineers (USACE, for its initials in English) installed on Dec. 18 cover the lack of electricity on the island municipality. The equipment is supplied with fuel the USACE “manages.” If it were not for those generators, Culebra would continue — with any luck — having energy only 12 hours a day.
Although the CPI asked FEMA officials directly about how long the USACE would maintain the provisional generators in Culebra, the response was evasive.
“Culebra receives power through a microgrid that delivers electricity to the majority of customers that may receive it … A long-term solution for Culebra is in the planning process to achieve permanent working solutions,” said FEMA via e-mail.
In February, the then Acting Executive Director of PREPA, Justo González, said it would take two years to restore the municipality’s electrical system, since the lines in Naguabo must be repaired and energized, then the submarine cable that leaves from there to Vieques must be repaired, the energy system on the Isla Nena must be restored, and in turn, the other submarine cable that supplies Culebra from there must be repaired. About that last stretch between Vieques and Culebra, PREPA said “it was totally destroyed due to Hurricane María.”
However, the update is that there will be not two, but four years to restore the energy transmission network to Culebra, according to a request for proposals published by PREPA on April 13.
While that happens, the corporation decided to ask private companies to propose a new temporary system that provides electricity, stabilizes power generation and does not take more than six months to complete.
What would happen to the project, which only needs a 10 percent construction? It is uncertain. At the closing of this edition, PREPA did not respond to a request for comments on this point.
Culebra neighbors agree there has been a waste of money, very little attention and supervision by the government and PREPA of what happens in that island municipality, and the state of defenselessness of the residents there is increasingly visible.
And with every hurricane warning, the people of Culebra lose all contact with the rest of the world: Boats and flights are suspended one or two days before the passage of atmospheric phenomena and it is not until weather conditions improve and the damage is repaired that they can resume services and receive aid, which magnifies their vulnerable position in the face of the effects of climate change.
Also, because of their geographical position to the east of the large island, Culebra and Vieques often receive the first impacts of a hurricane, which mostly fluctuate from east to west.
For many “Culebrenses,” the problem with generators and the lack of electricity is a core issue that must be resolved immediately, especially because a new hurricane season kicks off in two months.
Private company benefits from rebound
Prior to the start of the project in 2011 so that Culebra would have a backup plant with three turbines, PREPA was obliged to rent a 2MW generator. So, in the event of any breakdown or failure in the system in that period, the island would not be left adrift without power.
Rimco was the benefited company. However, the contracting process was done with a purchase order (#00059743) and not through a contract. Therefore, the related documents are not available through the Comptroller’s Office, which can only make declarations after completing specific audits of PREPA’s purchase orders, that is, after the expenditure of public funds has been incurred.
From 2011 to April 2018, PREPA has paid slightly more than $2.3 million to Rimco for the rent of the provisional electric generator, which is the same as the cost of the full and permanent construction of the project with three turbines, according to the calculations made by the CPI based on the purchase order.
Because of the constant use, the generator had ongoing mechanical damage, with the aggravating circumstance that it was not possible to ensure the supply of diesel for its operation due to problems with maritime transportation, since they depended on a Rimco employee to arrive in Culebra to fix any flaw.
An expert source on the subject of energy who spoke on condition of anonymity for fear of reprisals, said that if FEMA takes out the two provisional generators that USACE took to Culebra and that are currently generating electricity, and PREPA is seen in the obligation to return to the use of the generator rented from Rimco, which it continues to pay even if it is not used, it is likely that it will not last more than two months in operation.
“Those generators (like the one rented from Rimco) are not made for, say, ‘long distance’: nor for many days, nor for intense use. We don’t known if it works one, two weeks, or a month, but more than that … having it on all the time, until it explodes, because they are mechanical parts that will get damaged and if that happens, Culebra would be back to zero energy,” the source said.
Another PREPA source said the last extension to the agreement with Rimco expired in October 2017 and the company asked for an additional period, even though the generator falls short. As of this date, the contract has not been extended.
There is even a proposal on the table for PREPA to buy the generator from Rimco for which it has already paid about $2.3 million in rent, the CPI learned. PREPA did not answer questions about that offer.
At the time of this publication, no Rimco executive answered the CPI’s calls.
A long chain of mistakes
In January 2011, Carlos Morales, owner of Masterlink, signed a contract (2011-P0067) with PREPA for the construction of the three-turbine plant with capacity to produce 6 MW.
The project consisted of the rehabilitation of the station located next to City Hall, including the installation of three, 2MW diesel generators, a new control system and switchgear, a 25,000-gallon diesel storage tank, three 3,000-kilowatt (kVA) transformers and new facilities to house the equipment, as detailed by PREPA.
According to the lawsuit, when Masterlink started construction, instead of rehabilitating the existing structure, it decided to demolish the building. After that phase was completed, about five months later, Masterlink found that the exposed land was contaminated with hydrocarbons.
The company offered to remove all the material in 15 days for an additional amount of $285,000, because they would have one of the Maritime Transportation Authority’s ferries for exclusive use. PREPA did not agree with the figure and decided to hire another company.
Masterlink then turned to the Environmental Quality Board. That entity investigated and decided that the contaminated land could not be deposited in the Culebra landfill but that it should be moved to the large island. In addition, it disavowed the plan that PREPA designed to get rid of the material, as it went against environmental protection laws and regulations, according to several letters.
Finally, Indutech Corp. took two-and-a-half years to complete the cleanup of the contaminated land, instead of the 15 days proposed by Masterlink, as the CPI learned, since PREPA also refused to provide this information.
During all that time, Masterlink was unable to continue working and demanded that PREPA pay compensation because the equipment it brought to Culebra could not be used in any other construction, due to the high transportation costs. It also requested a payment for arrears in the original plan that were not the contractor’s fault.
According to the lawsuit, PREPA asked Masterlink to proceed with the construction and once the work was completed, they would then agree to certain amounts that had not been specified. Later, with 95 percent of the construction completed, Masterlink decided it was not fair that they were owed and paralyzed the project, the lawsuit says.
Faced with the impasse, PREPA decided to enforce another contract — which is also not filed at the Comptroller’s Office — so insurer Mapfre would take over what was yet to be completed. But the insurer did not act either.
No Mapfre executive was available to talk about the controversy.
According to Masterlink’s lawsuit, all these problems, delays and changes in orders have left them with damages and debts for which PREPA would have to pay more than $5.4 million, according to calculations through February 2017. The company alleges that after that date there are amounts with interest that continue to accumulate.
Meanwhile, PREPA alleges that up to now it has invested $4.7 million in the detained project, a figure that does not include expenses such as renting the generator from Rimco for seven years and payment for the decontamination of the land.
If Masterlink prevails in court, and the payment claimed is authorized, the unfinished project in Culebra will have cost the government more than four times what was originally agreed upon, when adding up the additional disbursements previously described.
Neighbors demand action
When community leader Mayra Félix-Rivera has to explain Culebra’s power scenario, her eyes and voice reflect indignation. Then those feelings are transformed into anger because she cannot understand how, since 2011, PREPA disburses $27,000 a month to Rimco for a provisional generator, while the main three-turbine project is still stopped.
Félix-Rivera said “Culebrenses” learned that the project has been halted at a town meeting with Mayor Iván Solís after Hurricane María.
Since then, she has collected signatures to ask Gov. Ricardo Rosselló to help them resolve the situation. The governor personally received the signatures and pledged during a visit on October 8, 2017 to inquire about the matter.
More than six months later, the “Culebrenses” have not received a reply from Rosselló.
“That can’t go to waste. We’re the window to the hurricanes and this (the lack of electricity) will continue happening every year,” Félix-Rivera said. “What we, community leaders, the community, everyone, want is that at some point this three-turbine generator is completed, because it is not like you can take that three-turbine generator to another town, because that is fixed there.”
Jessica Soto, coordinator of the Educational Association in Culebra, also expressed her outrage at the problem. “I cannot understand all the money the government has spent, because if that (rented) plant is not currently being used … if they are using FEMA’s … why then? I worry about not having electricity, I am concerned about many points: the children’s education is affected, our elderly are affected, our disabled who are bedridden are affected, along with tourism, our island collapses.”
Héctor Manuel Díaz, owner of Colmado Milka, has made the calculations and is also upset because he believes the money used to pay the rental of the generator could have paid for one that belonged to the town.
“When we were hit with these two tragedies with the hurricanes, we realized that we have a generator rented from a company … and it is not enough for the island because we cannot run (the entire) island with two megawatts. And without energy, tourism is also affected, which is the source of income and the engine of the island’s economy,” he lamented.
Díaz believes the situation psychologically affects the people, who don’t know when FEMA will remove the two provisional generators.
“People become anxious. Many bedridden people ask me what we’re going to do. We’re in a very delicate situation and I believe they are not going to withdraw the power generator because we have no other source than that. I believe that will not happen, but … we need the certainty and security of what will happen. There are people here who need dialysis machines, food and those things … children …,” said Díaz.
Wilfredo Cintrón, owner of the Tiki Grill in the La Romana neighborhood, said the emergency caught people so unprepared that many businesses had to close when faced with the problem of lack of electricity.
“They chose not to experience the headache of seeing how inventory was lost. Many businesses won’t get up again. It is the reality … we’re not told anything …, ” he assured.
Mayor’s hands are tied
Culebra Mayor Iván Solís said he has no official information on the status of the negotiations between contractor Masterlink, insurer Mapfre and PREPA. He confirmed that PREPA is interested in buying the generator that it has rented for eight years from Rimco.
“The municipality’s concern is the following: … everyone has forgotten that in (two) months we will have hurricanes again. The concern is that PREPA continues doing the work, finishes it as soon as possible … (But) we cannot remain there … we want to be prepared for the emergency,” he said in an interview with the CPI on the strict condition that he not be asked about the investigation against him by the Office of the Special Independent Prosecutor for alleged misuse of public funds.
Solís said in his five years in office, he has written some letters asking for details and the current Deputy Director of PREPA, Justo González, was his contact when he was director of the power generation division. However, González allegedly never answered him. He said that beyond that, as mayor, there is practically nothing he can do to move the halted project forward.
Broken promises on renewable energy
For decades, some sectors among entrepreneurs and groups concerned about the environment have seen in Culebra the perfect scenario to start renewable, self-sustainable energy projects. Some governments even agreed on the need to develop alternate plans for energy on the island municipality, but that did not translate into action.
During the Sila M. Calderón administration, a document entitled “Master Plan for the Sustainable Development of Vieques and Culebra” was produced, but the energy issue was not included.
Former Gov. Luis Fortuño approved a windmill farm project on one of the mountains that overlook the world famous Flamenco Beach. Island residents opposed it, believing that in the way in which it was proposed, it had a substantial impact on the main tourist attraction that they have and, that as a result of the construction, it would affect the quality of the water, flora and fauna. In the face of opposition, the initiative was canceled.
During the Alejandro García-Padilla administration, Law 26-2014 was signed to establish a 10-year plan called “Culebra, Environmental Pioneer,” which sought to convert the island into the first municipality with energetic self-sufficiency “using renewable sources, and mechanisms that encourage conservation and efficiency.” Those plans, which were released with a ribbon-cutting in front of the media, did not materialize.
In early December, Gov. Rosselló announced an agreement with Tesla for the installation of a combined system of solar panels and batteries to avoid the problem with the pumps that led to the discharge of wastewater. The initiative is part of a one-year pilot plan after which the company and the government could reach a long-term agreement.
Meanwhile, Solís said the municipality does not have the money needed to invest in renewable energy options, and in any case, he said that is PREPA’s responsibility, which leads him to believe that no project of this kind is possible at this time. However, he said he could “consider” private-sector initiatives.
“They have all come here and told me they have the best interest (in mind,) but they have to go through the central government’s bureaucracy,” he said, pointing to that as the second major obstacle, aside from the funding needed.
Díaz said renewable energy is a step in the right direction for that part of the island whose communications are cut off once maritime transportation ferries leave.
“Right now it is evident that the whole island’s energization system is very weak. They must realize that this is a good source to develop,” he said, referring to renewable energy.
One of the sources associated with PREPA consulted by the CPI said there have been countless studies on different renewable energy alternatives done at the public corporation. In their opinion, the only real solution for Culebra is that solar panels or some other individual system are installed at the residential and retail levels, although he recognizes there would be many people who would not be able to afford them.
“For a normal house, a solar panel system would cost between $20,000 and $30,000. You have to work on incentives and financing so that it could happen on a small scale. You have to consider that Culebra is sold as a paradise and there are people behind this to exploit it and make it an area like El Condado in San Juan. What they do not see is that all the Virgin Islands live on eco-friendly tourism and Culebra is part of that circuit, and you can develop it that way. I am convinced of that,” the source said.
Félix-Rivera also believes it is possible to develop energy projects that are self-sustaining. “We want renewable energy, but not in exchange for our natural resources or our heritage,” she said.