The Island of Puerto Rico is a territory acquired by the United States from Spain on Dec. 10, 1898, because of its privileged geographic position as the easternmost of the Greater Antilles in the Caribbean. It served as a military bastion of the U.S. for the most of the 20th century. From there, the U.S. protected the Panama Canal, fought and won World War I, World War II and the Cold War. In Puerto Rico, the U.S. created a tax haven where U.S. manufacturers launched the globalization movement. These manufacturers demanded reliable and redundant power to operate three shifts for their production lines. The Puerto Rico Electric Power Authority (PREPA) designed and built the power grid to serve these industrial clients.
As these clients left Puerto Rico for cheaper tax havens in Ireland and Singapore, PREPA lost more than one-third of its rate income and has been unable to maintain the grid for the last two decades. PREPAs creditors are owed about $9 billion.
They forced PREPA into a private receivership by naming a “restructuring officer” that instituted draconian cuts to the ailing public utility. Then came Hurricanes Irma and Maria and found PREPA with 3,000 fewer employees and little inventory of materials needed to bring back the power grid after Category 5 storm. Thirty-some days after the hurricane, less than 20 percent of PREPA’s clients have electricity.
FEMA and the US Army Corp of Engineers are now pouring billions of dollars to restore the power grid to its pre-Maria state because the congressional mandate does not allow them to improve the power grid to make it more resilient to natural disasters. It would be a monumental mistake to spend tens of billions of dollars knowing a priori that the next tropical cyclone will destroy it.
As a former chairman of PREPA, I have advocated for years that the Congress must design and implement an island-centric energy policy for the U.S. Territories of Puerto Rico and the U.S. Virgin Islands in the Caribbean, and American Samoa, Guam and the Northern Mariana Islands in the Pacific Ocean. The central tenet of such energy policy should be the recognition that these islands are not interconnected to other power grids, unlike the 48 contiguous states. That ends up being a significant disadvantage (and possibly discriminatory treatment) to these island territories.
If Puerto Rico’s grid were interconnected with Florida, that interconnection would be supplying the power needed in the San Juan metro area without having to wait to replace the damaged high voltage transmission lines damaged by the hurricane during its path through the mountains. However, the costs and the engineering challenges of interconnecting Puerto Rico and the U.S. Virgin Islands to the U.S. mainland would be prohibitively expensive.
A better route would be to phase away from the early 20th-century centralized power model and redesign the power grid to make it more resilient by maximizing the use of solar and offshore wind energy resources and by supplementing the centralized power system with dynamic distribution systems that deal with the intermittency of renewable energy sources. Congress could tap into the resources of the Department of Energy and the National Renewable Energy Laboratory and quickly design the rules to make this island-centric energy policy a reality.
Congress would do well in providing incentives to U.S. energy firms to expand their R&D efforts into improving the design of resilient power grids. By 2050, half of the world’s population will live in the tropics while the tropical coasts will be increasingly prone to ever stronger natural disasters. The future of U.S. energy firms is to build energy infrastructure for the tropics. By implementing a sound island-centric energy policy for its territories, the United States will spearhead the efforts to provide clean, sustainable and resilient power to our tropical populations.
Luis A. Avilés is former chairman of Puerto Rico Electric Energy Power Authority. He is Professor of Law at University of Puerto Rico.