Months after Hurricane Maria, the island nation of Puerto Rico still has widespread issues with power outages. Indeed, as of this writing, nearly a third of all people in the country are without power, and the governor of Puerto Rico has a shockingly capitalist answer to the problem: He wants to see the country’s public power company privatized.
Liberals may decry the move, especially those in Puerto Rico who see that they have something to lose if the government has less control over the nation and its citizens (such as politicians). However, after the government electric company’s atrocious mishandling of the hurricane and the recovery from the hurricane, the idea of privatization is one that many citizens in Puerto Rico are ready to give a chance, hoping that it will provide some protection against further government corruption.
Puerto Rican Governor Ricardo Rossello said he is going to be working with legislators to draft a bill that would allow the nation to sell its electric power company, the Puerto Rico Electric Power Authority (PREPA), to a buyer. Governor Rossello said that he hopes the process will be completed within a year and a half, at most, allowing the citizens of Puerto Rico to get out from under the oppressive control of the Puerto Rico Electric Power Authority.
It’s true, PREPA is horribly mismanaged and does little to nothing to improve on its infrastructure; the island of Puerto Rico has, on average, an electric power infrastructure that is 45 years old, as compared to the United States, which averages an 18-year-old infrastructure. The United States’ infrastructure is mostly driven by private investments from private businesses, while Puerto Rico’s PREPA would have to pay for any such improvements with the use of government funds.
Further, the government control of PREPA has led to corruption. The board of directors for the organization are appointed by the governor, and the company is overseen by a government board which is also appointed entirely by the governor (the Puerto Rico Energy Commission). The company has also been granted a total monopoly on power generation in the island nation of Puerto Rico, meaning there is little to no reason for them to improve their services, as their customers have no other choices for where to get their power from.
Because of mismanagement, PREPA was having issues even before Hurricane Maria wiped out a good portion of their power infrastructure. Since it was established, PREPA has had several outages that have caused the entire island to lose power, including an outage that occurred about a year before Hurricane Maria, which was caused by a fire at a PREPA plant.
Corruption has not just kept PREPA from making necessary improvements or providing electricity to Puerto Rico’s citizens at a reasonable price, however; it has also been responsible for the slow recovery from Hurricane Maria. Earlier in January, the Army Corps of Engineers found out that PREPA was hoarding supplies meant for rewiring the country. PREPA refused to admit to this activity, or to release the supplies, forcing the Army Corps of Engineers, FEMA, and their armed security to take the supplies from PREPA at gunpoint.
The supplies were found in PREPA’s ‘warehouse 5,’ located in Palo Seco and lacking in any transparency from PREPA authorities concerning what equipment was held there. According to people involved in the search of the warehouse, there were “2,875 pieces of critical material to contractors” held in the facility, which PREPA had been hoarding.
Why the supplies were hidden in the warehouse, PREPA and its spokespersons could not (or would not) say. However, it is likely that had the U.S. Army Corps of Engineers and FEMA not taken armed security to the facility and forced PREPA representatives to tour and take stock of the supplies in the building, they would likely never have revealed the needed supplies.
Privatization of PREPA will allow Puerto Rican citizens to finally have some choice in where they get their power from. It will also give private businesses the impetus to improve the island’s poorly-managed electric infrastructure. Best of all, however, it will add an element of accountability to the electric utilities in the nation.
A government agency, especially one granted a monopoly, is difficult to hold accountable. It gets even worse when one political party gets to appoint not just the board that will oversee the operation of the utility, but also the board of the agency that will provide oversight of the operation of the utility.
Hopefully, the island can find someone interested in buying their infrastructure, though this may be a hard sell. Currently, PREPA is around $9 billion in debt, and it is not likely to dig itself out of debt in the next 18 months. However, moving toward privatization is at least a good step in the right direction for the nation, and it may modernize their power infrastructure while lowering costs for Puerto Rican citizens.