Op-Ed: Puerto Rico’s energy ‘revolution’ marks birthday
A year ago, as Puerto Rico welcomed the signing of the Energy Transformation and Relief Act of Puerto Rico (Act 57-2014), I shared my sentiment of great enthusiasm with friends, by quoting the extraordinary anthem of the Beatles 1968 “Revolution.” I was then — as I am today — convinced that we were at the threshold and cutting edge of a revolution: The transformation of our energy paradigm as a result of Act 57-2014.
Today, as we recall and revisit the genesis of Act 57-2014, we must recognize it has been an arduous process, but in the end, the dedication of many who played a role throughout this uncharacteristically lengthy debate has paid off: Puerto Rico finally will implement its long-awaited energy reform.
At this juncture, it would be unfair not to recognize and salute the valiant and, at times, defiant roles the main figures in the debate and controversy played, and presently continue to play in shaping the discourse (and eventually the outcome) of this historical debate with far reaching consequences for Puerto Rico.
As witness of this deliberation, I extend my sincere acknowledgment and indebtedness to all the men and women from both sides of the aisle, which stood their ground and fought the good fight. Now, a year after its passage, Puerto Rico should finally start reaping the harvest which begun to sow when this historic energy reform was signed into law.
Now that its implementation is upon us, many obstacles will be faced, but for those of us convinced this energy reform is one front in our evolution as a society, we must welcome said challenges — we simply cannot afford to fail .
Signing the energy reform bill into law on May 27, 2014, was but the first step in what we all expected would become a dynamic and challenging process, aimed at transforming the island’s energy sector. After all, this new legal framework constitutes the most comprehensive change in the energy industry in more than seven decades.
Need for independent entity
At the core of the reform proliferates a public policy emphasizing the need to adopt a legal and regulatory framework by establishing an independent, robust regulatory entity, the Puerto Rico Energy Commission, or PREC, which ensures a transformation of our electric system. The energy reform contains a clear mandate for Puerto Rico to distance itself from its crippling reliance on fossil oil (particularly petroleum) and attain independence from this expensive and toxic material.
This main objective should be accomplished by embracing cleaner and safer energy resources readily available to Puerto Rico, such as sun and wind, and the promotion of renewable energy projects, all with the firm conviction of producing cleaner energy and reducing our excessive energy cost.
To accomplish this mandate, Puerto Rico has accepted the inescapable and urgent need to embark in the broad reform of our electric sector, which ultimately will transform into an efficient system based on reasonable and fair cost lowering Puerto Rico’s historically high cost for electricity.
To meet this goal changes have focus primarily on how the Puerto Rico Electric Power Authority conducts its day-to-day affairs. Specifically, the reform brings PREPA within the purview of the newly created independent PREC.
Both the PREC, as the main component of this reform, in conjunction with the newly created Commonwealth Energy Public Policy Office, or CEPPO, will play a major role in accomplishing Act 57’s public policy. Both of these administrative entities have now been, at last, adequately structured and the Senate has confirmed the designated president and commissioners at PREC, and the executive director at CEPPO.
These entities are entrusted with the enormous challenge of reducing the Island’s dependence on fossil oil in order to reduce energy cost through efficient and environmentally sound practices which are safe for Puerto Rico’s present and future generations.
To that effect, the PREC is presently evaluating information submitted by PREPA, and by June 2015, the agency will determine if PREPA can generate electricity in an efficient manner and at reasonable cost, and if not, the PREC should open the generation of electricity to private competition.
This upcoming report and recommendation by PREC is another milestone in the implementation of this historic energy reform and an essential affirmative step towards overcoming our excessive dependence on petroleum, as well as assuring transparency in PREPA’s day-to-day operations.
Within this new spirit of transparency at PREPA, CEPPO, as recently as February 2015 has already accumulated and published important and relevant information by means of its 2014 Annual Report on the State of the Energy Sector in Puerto Rico. This report gives us an X-ray on the present status of energy generation, conservation, efficiency, and transport of electric power in Puerto Rico.
CEPPO has by its report, mandated by law, documented and offered significant information, on the use of petroleum, natural gas, renewable sources, waste disposal, and other appropriate technology that may be used as energy source, including sun and wind in Puerto Rico for its generation of energy. The CEPPO 2014 annual report has clearly demonstrated the lack of change at PREPA in its use of fossil oil, in particular petroleum during this last year.
To no one’s surprise petroleum was burned by PREPA in 2014 for 46.76 percent of its generation of electricity and 46.06 percent in 2015 for an insignificant and minuscule reduction in PREPA’S dependency on petroleum as its principal source for energy generation from 2014 to 2015.
Though there appears to be consensus, even amongst PREPA’s most vocal critics, that the intent of the energy reform and its goal is neither to obliterate nor undermine the entity responsible for building up the electric power grid on the Island for over seven decades, we should all be reminded that for now PREPA will remain the main administrator of Puerto Rico’s electric power grid.
PREPA should progress with the times
But it is no secret that much has changed since PREPA’s organic law was enacted in 1941, and this energy reform should ensure that PREPA as well as Puerto Rico progresses along with the times. Within this scenario, the PREC and CEPPO should not be looked down or dismissed as hurdles or obstacles to PREPA’s day-to-day operation, but as entities capable of leveling the playing field at PREPA both for future competitors and Puerto Rico as a whole.
We can all understand that change in and of itself, especially one as unprecedented as this particular reform in the energy sector, will pose concerns along with challenges for all involved. So referring to this energy reform as anything other than “revolutionary” I humbly believe would certainly be a misnomer.
Today, as we celebrate this first anniversary of Act 57 and this important milestone, we are also anxiously awaiting Alix Partner and its chief restructuring officer, Lisa Donahue’s report to bond holders on PREPA’s proposed future business turn around and restructuring plan. As previously mentioned, we are also presently awaiting the soon to be released PREC report and its conclusion and recommendation on PREPA’s capacity to generate energy in an efficient manner at reasonable costs.
Both of these reports and recommendations that are at hand will most certainly have an enormous impact on PREPA as well as on the private sector that’s eager to take part constructively in the rebuilding of the energy sector in Puerto Rico.
Looking forward for these two reports and recommendations to be made public shortly, I am reminded of a quote by the British politician and author, Benjamin Disraeli. A quote that served me well during my younger years as a litigator as I prepared then to confront my adversaries in Court: “to be conscious that you are ignorant of the facts is a great step towards knowledge.” I believe we are at that moment when ignorance may turn into knowledge.
For now, after having had the benefit of CPPO’s 2014 Report on the State of Energy in Puerto Rico, and soon the awaited Alix Partner’s and Donahue’s business plan on PREPA, and PREC’s expected report and recommendation on PREPA’s capability — or lack of capability — to generate electricity effectively and at reasonable cost, Puerto Rico will no longer be able to pretend ignorance of the facts regarding the reality of PREPA’s and its generation of energy for Puerto Rico.
Puerto Rico will finally have the necessary knowledge, and with this newly acquired knowledge will most certainly be able to finally confirm and accept the inevitable premise that the private sector must participate actively and aggressively in the future generation and production of energy in Puerto Rico. This is the imperative for Puerto Rico and its energy production.
So, welcome to Puerto Rico’s energy revolution.