Puerto Rico Senate passes PREPA privatization bill
The Puerto Rico Senate passed a bill to guide the privatization of the Puerto Rico Electric Power Authority. The bill would require that new owners respect existing labor contracts and pensions and commit to a goal of getting 100% of the island’s electricity from renewable sources by 2050.
The bill is subject to approvals from the Puerto Rico House of Representatives and Gov. Ricardo Rosselló. The Puerto Rico Oversight Board might also weigh in on parts of the bill.
The bill follows on the governor’s approval of the privatization in June. The law that the governor signed indicated that the utility’s power generation units would be sold and the government would make a concession of the transmission and generation system. The concession may involve a leasing agreement, as was done for the island’s main airport.
Among other things, the bill the Senate approved Tuesday for privatizing the island’s electrical system encourages electrical consumers to become energy suppliers, for example, by selling extra solar electricity; facilitates the interconnection of renewable energy and micro-energy grids based on solar, wind, or water power without taxes; and bars the use of coal for energy production starting in 2027.
In the new system, no one electrical supplier would be allowed to provide more than 50% of generation assets.
The bill also aims to provide the island’s energy regulator, the Energy Commission, with greater budgetary, fiscal, and operational autonomy.
The bill passed the Puerto Rico Senate Monday with a vote of 22 in favor, four against, and one abstaining. The senators who voted against it are two Popular Democratic Party members, a Puerto Rico Independence Party member, and an unaffiliated member. The abstaining member is a member of the New Progressive Party.
In other PREPA developments, in late October the governor announced that he was issuing a request for qualifications for potential operators of the transmission and distribution system. This would be done through the island’s public-private partnership process.
The government posted the request for qualifications on the website of Puerto Rico’s Authority for Public–Private Partnerships.
In July the Oversight Board announced a preliminary deal for PREPA’s debt restructuring. As of May 3, 2017 the authority had $9.25 billion of outstanding debt.
Lawyers for the Oversight Board and Puerto Rico’s Fiscal Agency and Financial Advisory Authority are now working on ushering the debt deal through the bankruptcy court process found in Title III of the Puerto Rico Oversight, Management, and Economic Stability Act.