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Two satellite photos taken at night of the island of Puerto Rico—one before and one after Hurricane Maria, showing the extent of the damage to the grid.

Power for Puerto Ricans, not Private Investors

Johanna Bozuwa

Johanna Bozuwa

Co-Manager, Climate and Energy Program, The Democracy Collaborative more

Environment & Energy

“The whole of Puerto Rico is like this. I don’t think we are the only ones like this… We will survive,” Jose Torres, a resident of Puerto Rico, told an NPR reporter in late September. As a diabetic without access to medicine, he’s been working hard to keep up his blood sugar levels. Not an easy task when his fridge and stove don’t have power.

It has been almost a month since Maria devastated Puerto Rico. Since then, most of the island’s 3.4 million residents have been without electricity or running water. The power grid was effectively destroyed, with only 7 percent back online to date. This means that the entire system, from generation to distribution, will need to be rebuilt. The question now is: how?

While the unfolding human catastrophe on the island takes precedence, in the longer-term Puerto Rico has the opportunity to revolutionize their electricity system. Powered by renewables, a resilient and sustainable system can be built that genuinely puts the Puerto Rican people in charge of their energy. But, instead, the government is threatening to privatize electricity and bring in mainland investor-owned utilities to do the job. Elon Musk’s proposal for Tesla to power the island with renewables could be just the accelerant privatization needs.

Maria hits a Puerto Rico already in Crisis

Lackluster relief efforts in the wake of Maria are indicative of the United States’ treatment of the commonwealth as a second-class citizen. In direct contrast with aid packages to Texas and Florida that got equally pummelled by recent storms, Puerto Rico’s aid has been slow and relatively ineffectual so far. President Trump even blamed Puerto Rico for its inability to rebuild and threatened to cut off aid.

For one hundred years Puerto Ricans have had an uneasy relationship with the United States—while citizens, they lack any voting power in Congress and the US has effectively pushed the island into a state of economic depression through unfair trading rules, limited self-governance, and lack of access to the same benefits as other Americans. For decades, Puerto Rico mostly survived off tax breaks that brought American corporations onto the island to avoid federal corporate taxes. In the ‘90s, President Clinton got rid of those tax breaks. With it came the mass exodus of mainland corporations. This has contributed to a situation where the commonwealth is $70 billion dollars in debt and 45 percent of its residents live in poverty.

Powered by renewables, a resilient and sustainable system can be built that genuinely puts the Puerto Rican people in charge of their energy.

Trade rules effectively limit the island from buying goods not from the US mainland. During the New Deal, that meant  79 cents out of each dollar paid in wages was spent importing food, clothing, fuel, and other goods, effectively sending all the injected cash right back to the mainland corporations. During Maria, it meant other countries were stopped from shipping aid that the country so desperately needed for days. This included one of the major things they needed: fuel.

Puerto Rico relies almost totally on imported oil, which is one of the most polluting, least efficient fuel types. Only 2 percent of all electricity is generated from renewables. Electricity is also prohibitively expensive, costing 21.4 cents/kWh in comparison to 11 cents/kWh on the mainland. Much of this difference is because so much energy needs to be imported. It also means that when the island is cut off from shipments, it doesn’t have access to its fuel source.

The Threat of Privatizing PREPA

Puerto Rico Electric Power Authority (PREPA) is the publicly-owned utility that runs the electricity system on the island. It serves the highest number of customers of any publicly-owned utility in the United States, but is hamstrung by under-the-table dealings, ineffective leadership, little to no transparency, and an old, fossil-fuel driven business model. Even before the grid was wiped out by the storm, power outages in 2016 were 4-5 times higher than those of other US customers because of the dilapidated grid. Making things worse, Puerto Ricans are leaving the country en masse in the wake of economic disrepair, which means that the utility has been bleeding employees. 30 percent of PREPA employees have left in the past five years.

In June of this year, PREPA filed for bankruptcy with $9 billion in debt. Prior to May, Puerto Rico had no way to file for bankruptcy and restructure its debt (like private corporations and even President Trump do regularly) because it doesn’t have the same rights as states under US law. Recently, a federal oversight board, PROMESA, was created to handle the debt negotiations in the commonwealth. 

There is currently a massive attempt to privatize PREPA in the wake of the island’s debt crisis. Members of the Financial Oversight and Management Board, created under PROMESA, recently wrote an article for the Wall Street Journal titled Privatize Puerto Rico’s Power. “We believe that only privatization will enable PREPA to attract the investments it needs to lower costs and provide more reliable power throughout the island,” they maintained. “By shifting from a government entity to a well-regulated private utility, PREPA can modernize its power supply, depoliticize its management, reform pensions, and renegotiate labor and other contracts to operate more efficiently.”

Enter Elon Musk.

In a tweet, Musk proposed to rebuild Puerto Rico’s grid from the ground up to be 100 percent renewable using a combination of solar and batteries. He has been overwhelmingly applauded for his vision.

Rebuilding the grid to optimize renewables is exactly what we should do.The island could build integrated microgrids powered by renewables—cheaper, cleaner, and more resilient than the antiquated model destroyed by Maria.

The problem here is privatization. Musk’s entrance could trigger a larger corporate takeover. PROMESA officials are already chomping at the bit. UTIER, the labor union representing PREPA workers, denounced the utility’s leadership for not sending its employees out to restore the grid after the storm in order to incentivize privatization. Officials also perplexingly declined to work with the national network of public utilities, the American Public Power Association (APPA), on restoration efforts. Instead they contracted with a new, unproven private corporation called Whitefish. Unless appropriate safeguards are in place for community ownership and control, Musk’s investments could open a door for private companies to come and take advantage of a devastated and vulnerable island.

Bringing in private companies like Tesla, Whitefish, and others means that the fate of the Puerto Rican people is put in the hands of wealthy individuals and corporate shareholders nowhere near the island. Resources and wealth will be extracted from the island and deposited into Wall Street’s pockets, continuing the long-standing dependent relationship between the Island and mainland business interests. Large for-profit companies have just one ultimate goal, their bottom line; so if Puerto Rico isn’t making money for them they can and will ultimately leave.

Musk’s companies, SolarCity and Tesla, are no different. They proved as much in Arizona, where a battle between a privately owned utility and SolarCity ended in SolarCity leaving the area—eliminating 550 Arizonan jobs. It was a battle over which corporation would benefit from renewables: Musk advocated for a competitive market that he could dominate, while the privately owned utility wanted to hold onto its monopoly and focus on utility-scale renewables.

Worker’s rights and livelihoods are also at stake. It is likely privatization would lead to the end of UTIER, one of the strongest and most robust unions in Puerto Rico. Musk’s labor practices have repeatedly come under fire and he is a well-known opponent of labor unions. A California based organization, Worksafe, recently conducted a study on Tesla and found that the rate of serious injuries at plants was two times that of the rest of the industry in 2015.

Even if Elon Musk helps to build a renewable grid, Puerto Ricans would in all likelihood still find themselves exploited by an extractive economy where outside corporations can maximize their profits on the back of high consumer costs, poor workplace conditions, and underinvestment in infrastructure and then leave.

A Vision of the Future

Instead, an energy system could be created that puts decisions in the hands of all Puerto Ricans; one that invests in the community, creates local jobs, and builds resiliency. In short, Puerto Rico could become an island fueled by energy democracy.

Using renewables would lower dependence on imported fuel, stabilizing or lowering electricity bills for residents. By using Puerto Rican generated energy, it will be able to stop 4-6 percent of its GDP from “leaking” off the island. Eliminating fossil fuels from the mix also increases health and safety, potentially lowering healthcare costs (to say nothing of reducing the tremendous financial and human costs associated with climate change). Island residents could create democratically controlled community solar initiatives and renewable coops. Small scale ownership could flourish and increase local job opportunities. The Center for Social Inclusion’s Energy Investment Districts (EID) provides one cogent policy model for such a renewable transformation. An EID is a geographic area that is eligible for financing and allows residents to plan their own energy projects at the community level.

It is likely privatization would lead to the end of UTIER, one of the strongest and most robust unions in Puerto Rico.

Microgrids could also help to localize ownership and provide more resiliency. Microgrids are defined electrical boundaries that have the ability to both stand alone or interconnect with other grids. They allow energy to be utilized close to its source, increasing efficiency drastically. Microgrids could be particularly helpful in a landscape like Puerto Rico, and would limit the amount of the grid that goes offline during failures. The tropical habitat means that forests grow fast and get in the way of power lines and the salty air quickly erodes equipment. In the wake of a similar storm to Maria, a fate likely to increase with climate change, they can help fend off full grid outages like the one right now. Using microgrids also facilitates communities’ ability to aggregate their renewable energy production and coordinate their energy savings.

PREPA is broken publicly owned utility. But it could be fixed to fit this new future. Public utilities are supposed to be to the benefit of their customer-owners. By instituting new processes and policies that bring democracy back into the public utility, PREPA could be transformed to genuinely serve its community. For instance, board member quotas for workers (perhaps through their union as is common in Germany and other countries), community members, such as EID representatives, and other stakeholders could be instated. In contrast to their reception in the wake of Maria, the Instituto Nacional de Energía y Sostenibilidad Isleña (INESI) should be included in rebuilding discussions, drawing on a local knowledge base of the electricity system. New requirements for decision-making and financial transparency could be implemented. The utility could work alongside renewable coops and EIDs, facilitating long-standing relationships through collaborative planning processes and transformative power purchasing agreements. With effective engagement of workers and the community, PREPA could be democratized and reinvented, and the pitfalls of privatization prevented.

One of the major barriers is financing. Puerto Rico is strapped by debt and the US doesn’t have a good track record with providing the commonwealth with the aid or powers it needs. The Political Economy Research Institute (PERI) calculates that it will take about $2.2 billion dollars in annual investments for the next thirty years to reach an equitable, decentralized energy grid in Puerto Rico. This is a significant investment, but having an unsound grid actually was expensive. Wiping out or radically restructuring Puerto Rico’s debt—as President Trump and others have suggested—is an obvious first step. This would open up space for Island to borrow the money it needs to rebuild. Beyond that, PERI proposes a carbon tax to help fund public projects and provide rebates and subsidies for the energy transition into the future.

The other barrier is time. “There is no time to redesign the system or apply new technologies at a large scale now,” Carlos Reyes from EcoEléctrica told FiveThirtyEight. The Governor has set a quick timeline for recovery—one that doesn’t allow for a complete overhaul of the grid to optimize for renewables. This urgency is understandable. Weeks after the storm, hospitals don’t have access to life-saving electricity and food is scarce. The problem is that the groups brought in are rebuilding the same failing system and locking Puerto Rico into an unsustainable grid for the next 70 years. By doing so, they also failing to change the exact system that is vulnerable to storms like Maria—storms that are only going to intensify as climate change accelerates.

Instead of funneling money into a grid that will be obsolete in the near future, we should look to alternative short-term solutions that are already on the ground like Resilient Power Puerto Rico. They have developed a three-part plan to “bring as much energy to as many people as possible as quickly as possible, using a proven, mobile solar electric system that targets the hardest-hit and most remote communities first.” Such a renewal from disaster is not unprecedented. Higashi Matsushima in Japan, devastated in the wake of the 2011 tsunami, turned to a renewable-based microgrid system to create a safe, clean energy reality. Greensburg, Kansas is now powered by 100 percent renewable energy after being levelled by a devastating Tornado in 2007.

While Elon Musk and others could be a part of this vision— helping to set up community solar projects with panels and laying town microgrids in coordination with coops and EIDs— the relationship would have to be managed with intention, ensuring that the island isn’t preyed upon by companies in the urgency of getting the grid up and running. Any deal should ensure that those benefitting ultimately are the Puerto Rican people, both in the short and long term.

Johanna Bozuwa

Johanna Bozuwa

Co-Manager, Climate and Energy Program, The Democracy Collaborative more

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