U.S. DOE shifts Puerto Rico power system funding

The U.S. Department of Energy said it will redirect $365 million approved for promoting solar energy in Puerto Rico to improving the existing energy system.

The island has suffered frequent power outages in recent years and the redirection of funds is an effort to address these.

The redirection of the Puerto Rico Energy Resiliency Fund money will help, "but whether it is significant will depend on the government's ability to access it," said John Mudd, a Puerto Rico-based attorney and commentator.

"This strategic shift allows us to address the root causes of the [electric] grid's instability, strengthening the grid's fragile infrastructure and delivering lasting relief for Puerto Rico," U.S. Energy Secretary Chris Wright said.

The island is in an energy emergency that requires rapid action, said Puerto Rico Gov. Jenniffer González Colón. "Rather than impacting a few customers, deploying these funds for urgent projects that improve the resiliency and reliability of our grid will have widespread, lasting benefits for all 3.2 million Americans in Puerto Rico."

Not everyone agreed with the redirection of funds. U.S. Rep. Nydia Velazquez, D-N.Y., said on X, "This is shameful. Congress has assigned billions to address Puerto Rico's broad energy needs, but the PR-ERF was designed to serve the most vulnerable communities."

The $365 million was part of the $1 billion fund approved by Congress in December 2022 aimed at aiding low income and/or disabled people in Puerto Rico. Applications are being accepted for grants from the $450 million tranche that would provide solar power for single-family homes. The $365 million was intended to provide solar power for public housing, community health centers and nursing homes.

Cathy Kunkel, energy consultant at Institute for Energy Economics and Financial Analysis, said her organization also opposes the DOE's action.

"While it is true that urgent work is needed on grid repair and vegetation management, there were already Federal Emergency Management Agency funds allocated to those activities (for example, approximately $1 billion in FEMA funds allocated to vegetation management in 2023), and we don't see how this decision will make those existing funds be deployed any faster," she said in an email.

"Critical healthcare facilities in Puerto Rico that would have gained energy security with rooftop solar and storage will now continue to be exposed to Puerto Rico's frequent power outages and the risks of future hurricanes," Kunkel said.

The department said it would use the money to "support technologies that improve system flexibility and response, power flow and control, component strength, supply security, and safety."

The El Nuevo Día news web site quoted U.S. Sen. Catherine Cortez Masto, D-Nev., as saying in a Senate hearing May 8 after the department floated the idea of redirecting the funds, that to do so would be illegal since Congress had allocated the funds for specific purposes. The senator didn't immediately respond to a request for a comment.

The electrical outages have been central in the arguments between the Puerto Rico Oversight Board and PREPA's non-consenting bondholders in the PREPA bankruptcy.

The Puerto Rico Oversight Board didn't immediately respond to a request for a comment.

González Colón has talked for months of replacing LUMA Energy as the entity in charge the island's electric transmission and distribution system.

Whether LUMA remains as the operator "will depend on the government having a new operator that the [oversight] board will approve," Mudd said.