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Opinion: Puerto Rico will not go quietly into the dark

This month a massive outage left over 350,000 customers in San Juan, P.R., without power, including my 96-year-old grandmother and 75-year-old mom. Amid a record-breaking heat wave, my mom struggled to keep my grandmother cool with a battery-operated fan. The frustration and fear in my mother’s voice as we spoke on the phone was palpable, and when the call ended, I found myself blinking back tears of rage.

In 2020 the Puerto Rican government transferred management of the electric grid to a newly minted Canadian American private company, Luma Energy. It promised to bring clean, reliable energy to Puerto Rico after the state-owned Puerto Rico Electric Power Authority filed for bankruptcy and Hurricane Maria knocked out the island’s ailing electric grid.

So why is it that four years later, my mom is still cursing in the dark?

Puerto Rico’s power crisis illustrates the consequences of putting essential services in the hands of a private entity. Reliable electricity is not just a convenience; it is essential for economic stability and public health. Yet residents are paying exorbitant rates for a service that repeatedly fails them. Enough is enough. Puerto Ricans deserve a power grid that works for them, not against them.

After Puerto Rico declared bankruptcy in 2017, the fiscal control board, charged with managing the island’s debt restructuring and finances, began pushing to sell off its assets, but since PREPA couldn’t be sold while undergoing debt restructuring, the government opted for a public-private partnership model in which it retained ownership of the assets — and the debt — while outsourcing operations.

In such arrangements, the partners have a vested interest in the project’s success through shared risks, rewards and performance incentives. The upside in this structure is that unlike with full privatization, the public sector retains responsibility and accountability for ensuring that services are delivered properly. But in Puerto Rico, that has not been the case.

The contract awarded to Luma is outrageously generous. It receives a fixed management fee regardless of whether it keeps the lights on, is guaranteed federal funds for repairs and can charge PREPA for any unexpected operational costs. Luma has even threatened to charge residents more if they seek compensation for appliances damaged by outages and surges. Additionally, until PREPA’s debt restructuring is resolved, Luma is operating under an interim contract that nearly doubles its fee, to $115 million from $70 million.

Puerto Rico’s power authority is now a three-headed monster: Luma handles customer service, transmission, maintenance and repair; another company, Genera PR, takes care of energy generation; and PREPA remains responsible for compliance and the ongoing bankruptcy process.

To date, Luma has spent only a small fraction of the hundreds of millions of dollars allocated for improvements. At this rate, it will take over a century to rebuild the grid — assuming no further disasters. Plus, under a new federal administration those allocated funds could easily disappear. The labyrinth of federal bureaucracy contributes to delays, but it’s only part of the story.

When Luma took over the electric grid, PREPA’s skilled line workers were forced into contracts with reduced benefits. Some were left with little choice but to transfer to jobs mopping floors or cutting grass for other public agencies. Luma replaced them with an inexperienced team led by executives who command extravagant salaries. They blame the constant outages on the island’s weather, vegetation, cats and iguanas.

Since the federal government doesn’t publicly track Puerto Rico’s power outage data, the only performance metric comes from Luma. Public-private partnerships are meant to ensure accountability, but in Puerto Rico the legislature had to issue an arrest warrant for the company’s chief executive just to get basic reports.

In theory, Luma should be accountable to the independent Puerto Rico Energy Bureau, which has criticized it for poor performance, overspending and a lack of transparency. But the bureau is toothless against the Financial Oversight and Management Board, which manages the island’s finances. The board has blocked initiatives like compensating solar owners for energy sold back to the grid, claiming it conflicts with Puerto Rico’s austerity budget.

Hating on Luma has become part of local culture, fueling catchy songs, viral memes, comedy sketches and parody videos. Even Bad Bunny has sung about its epic apagones and has called for the company’s removal. Yet Luma is but a symptom of a broader problem of failed outsourcing and semi privatization.

No doubt, Puerto Rico’s public agencies need reform, but instead private public partnerships are maintaining the status quo. The result is a landscape of semi privatized dysfunction — sparking power lines, roads ridden with potholes, collapsing hospitals, glitchy voting machines, a toll collection system susceptible to cyberattacks. All while costs for these services soar.

Even the fiscal control board acknowledges that Luma’s contract was excessive. It boasts that the new contract for Genera PR, which oversees Puerto Rico’s electricity generation, includes performance metrics, accountability mechanisms and penalties for poor performance — everything Luma’s contract lacks.

In 2022, as Luma’s interim contract was coming to an end, Puerto Rico’s legislature voted against renewing it. However, Gov. Pedro Pierluisi vetoed the measure, opting instead to extend the contract without any changes, citing the need for stability through the bankruptcy hearings.

The legislature is now making another push for cancellation. Some believe the contract can be terminated without penalty, given Luma’s glaring failures, while others warn of the steep cancellation costs stipulated in the contract. In any case, it seems better to pursue cancellation than to keep throwing good money after bad. Of course, it is the Fiscal Control Board, not Puerto Rico’s people or its elected officials, that has the final call.

But swapping one private provider for another won’t solve the deeper problems. Puerto Rico needs a comprehensive reassessment of its energy strategy. Groups favoring clean energy, like the Queremos Sol coalition, advocate a decentralized grid with distributed renewable projects, like rooftop solar systems and community microgrids, to avoid the failures of centralized power lines that can be brought down by an unpruned tree or rogue iguana.

Puerto Ricans have already ousted one governor, amid large-scale protests. As the fifth anniversary of those approaches, the warm summer nights in Old San Juan reverberate again with the clatter of pots and pans as demonstrators return to the governor’s mansion, La Fortaleza, demanding change.

This article originally appeared in The New York Times.  

Author Dr. Yarimar Bonilla is a contributing Opinion writer and a professor at Princeton University’s Effron Center for the Study of America. She is the author and editor of “Non-Sovereign Futures: French Caribbean Politics in the Wake of Disenchantment” and “Aftershocks of Disaster: Puerto Rico Before and After the Storm.”


1 Comment

  1. Richard Tryon June 25, 2024

    Dear Dr. Yarimar Bonilla,

    My father also a Richard R Tryon was an AP writer in New York City in the late 1930s. He tried to take all of our family to Puerto Rico in 1940 but German submarines sank several passenger liners and the trip instead was from New Jersey to Washington DC where he assumed deleting role in the “Navy E Award system to recognize industrial performance that helped win the World War II. As a result, my wife and I came late to Puerto Rico in the 1970s, and night it so much we built homes and stayed in the Palmer Delmar area for about 40 winters.

    By coincidence, much of my working history and studies have given me a special opportunity to provide you with some salient points that may add to your fine article that unfortunately has no room for proposing a solution, only an excellent definition of the problem has the son of one of the founders of the Puerto Rico electrical development history told me, the start of what became PREPA and now Luma involved connecting several independent regional systems into an island wide program that required construction of major generating capacity, close to a convenient port to bring oil from the neighboring region to the south coast of PR. That generating station is still the largest but most obsolete and for many reasons can never be a part in the future that solves the problem of getting energy where it is mostly needed on the north coast not the south.

    Considering the myriad difficulties of the entrenched thief within the pieces of Loma, the only answer is to let it die on the vine, and pray that new technology will arrive fast enough to supplement the generation without requiring the enormity of the obsolete technology. There is a possibility, that small scale nuclear energy, could solve the problem in PR however, it will have to have a different name as the word nuclear is as dangerous in the minds of the most vocal voters in Puerto Rico. History shows that the best example of this groups power came from the women in the southwest coast of the island a decade or so ago. They were convinced that a Navy blimp tethered in the area was admitting radiation that was, sterilizing their men! Needless to say, the US military has always been important in Puerto Rico, but it has also been a source of irritation to the native population. Put her Ricans with names like yours, understand fully this concern.

    Because I still own an operate with the tenant a 400 acre farm in Santa Isabel on the south coast, I am fully aware of the major need for back up power to deal with frequent power interruptions. Keep in mind that power interruptions are far more difficult in terms of effort to restart, then most of us can imagine. Given the need to transmit most of the energy over the mountains to where the larger population needs it for homes, as well as business and industry, it is clear that the best solution is almost like a throwback to the age before the grid was put in place.
    Small atomic reactor technology is much less costly per kilowatt and faster to produce than what was trying long ago in PR and I believe totally shut down for lack of qualified control and maintenance. But there is no escaping that in NPR. The word atomic is frightening and causes a reaction without a counterbalancing argument or a decisive stability that has to label the party that makes the change as now in to accepting defeat at the next election.

    About the only solution that is not met with strong political resistance is the one now in place. Yes, when the backup system becomes the primary system for all of the island, the grid gets reduced to serve only as needed to move excess energy if it is profitable to do so. Given regional control, supply and demand and reasonable pricing sometime resulting a result that requires less bureaucratic and costly action.

    The coming Advent of small scale will involve use of hydrogen as the fuel that can be made on the island because it has the power to make it using. What is plentiful – the sun! Sun, hydrogen company may not be the winner, but others may share in the way to make hydrogen locally very cheaply and use it to make electricity in ways that do not require importing of costly oil or coal.

    If you would like to know more, try on technology is that icloud.com and we learn more from each other.


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