After the island went without power in some areas for over a year, we learned to treasure getting home after a hard day’s work to take a warm bath, have a cold drink with a hot meal and sleep pleasantly under the comfort of cool room. The catastrophic hurricane taught us; we survived the unimaginable, yet, our concerns over a basic need, have not ended.
Maybe they are just beginning.
High-energy costs are a dark cloud over homes and businesses. Opening the electric bill has become a monthly dread and many debate between paying their electric bill and buying medications! We are living on an island were uncertainty shadows all plans for the future. The negotiations behind the Puerto Rico Energy Policy to pay the Puerto Rico Electric Power Authority (Prepa) astronomical debt walk along with new proposals of investing millions to add natural gas plants and other improvements.
Who will pay the price of a fiscal and social entanglement that will bring an avalanche of increases in the next five years? If we analyze the magnitude of what awaits us, it is unprecedented.
Almost six months have passed since the approval of Act 17-2019, the Puerto Rico Energy Policy. During this time, the government, represented by the Fiscal Agency and Financial Advisory Authority (AAFAF), Prepa and the Financial Oversight and Management Board (FOMB), has presented in federal court, as part of Promesa Title III proceedings, an agreement with Prepa bondholders.
This agreement states that, in conjunction with additional charges included on the Prepa Fiscal Plan, will increase energy costs in the next five years to 10 cents per kilowatt-hour. Furthermore, an independent study by renowned Puerto Rican economist Ramón Cao Ph.D assessed the effect of those rate increases, including the loss of over 100,000 jobs and a decrease of the Gross National Product (GNP) in 22 percent.
Furthermore, Prepa alleges that the cost to use natural gas will compensate the increase due to the payment of the debt. Nonetheless, the investment in infrastructure required to make possible the necessary improvements, is over $20 billion. Lack of federal funding to pay this amount will result in passing the check to everyone connected to the grid, to absorb these excess costs. Responsibly we must ask ourselves, if we are looking into the future of the possibility of affordable and cleaner energy, why are we betting on natural gas, another fossil fuel? We should be thinking of a diversified plan with short, medium and long-term goals. These efforts and goals are not achievable without the participation of the private sector to open up to a more competitive environment.
Based on the projected increases in electricity rates included on the Prepa Fiscal Plan, in five years, Puerto Rico will be one of the jurisdictions with the highest average electricity rates of the world, with one of the highest industrial rates (29.8 cents per kilowatt-hour). Our system is patched and unreliable and fringes these depicted policies to assure sustainability and resiliency. The future is bleak and many questions remain unanswered. What awaits us in the future? What will happen to our employees and our manufacturing plants and businesses? High energy cost will not make economic development sustainable, how will we pay bondholders and make investments to assure affordable clean energy? How will the poor be able to survive this new storm?
Puerto Rico let‘s wake up, our future is at stake. Energy is a basic need not a luxury.