Puerto Rico to reduce power generation amid cash shortfall

SAN JUAN, Puerto Rico – Puerto Rico’s electricity utility said Friday it will dial down the power generation starting this weekend as a federal control board urgently seeks a $300 million loan for the troubled utility after a judge rejected a previous $1 billion loan request.

The announcement comes as nearly 400,000 power customers across the island remain in the dark more than five months after Hurricane Maria hit the island, causing the longest blackout in U.S. history.

Ernesto Sgroi, president of the governing board of Puerto Rico’s Electric Power Authority, said the reduction in power generation would start Sunday and was not expected to interrupt service. But he warned it could destabilize a power grid still being repaired after it was heavily damaged by Maria.

“Without the loan, and given the potential risk to its operations, we have no other responsible option than to begin implementing a limited operational emergency plan,” Sgroi said. “We fear this setback will result in the exacerbation of human hardship as potable water, power for medical procedures, communications, and open schools are at risk of disappearing again.”

Officials did not provide further details, including by how much generation would be lowered and which units would be targeted. Power company spokesman Geraldo Quinones did not immediately return a request for comment.

Before dawn Friday, the control board filed the scaled-back loan request and said Puerto Rico will have to further reduce power generation and personnel if it does not obtain the funds by Tuesday. It also said that the power authority is in jeopardy and that $300 million would allow the utility to operate only until late March, which it warned would leave “many customers” without power.

A federal judge found Thursday that neither the board nor government officials provided sufficient evidence to prove the power company needed a $1 billion loan, despite warnings the U.S. territory would have to start rationing electricity.

Gov. Ricardo Rossello, who was in Philadelphia on Friday, called on the U.S. Treasury Department to release a separate billion-dollar loan that Congress approved in October for disaster recovery efforts as officials warn the Puerto Rican government is running out of money.

“This is an urgent situation,” he said. “If the power goes out in Puerto Rico, if there’s an inability to buy fuel, it is a humanitarian crisis.”

Meanwhile, some Puerto Ricans fumed on social media about receiving expensive power bills despite not having lights. They also criticized the government’s threat to impose outages due to a lack of funds, with one person saying it would be like reliving Sept. 20, the day Hurricane Maria destroyed two-thirds of the power distribution system.

Opposition legislator Jesus Manuel Ortiz said Puerto Rico’s current administration lacked credibility since it wasn’t able to convince the judge it needed the $1 billion loan. He condemned threats of rationing electricity.

“The uncertainty of implementing selective blackouts in Puerto Rico, while … clients are still in the dark and when the rest of the island is starting to see a bit of normalcy, is devastating,” he said.

Ortiz also demanded that Rossello publicize revised fiscal plans for the power company, in addition to its water and sewer agency.

On Friday, the control board announced that it was still reviewing those plans, along with Puerto Rico’s overall fiscal plan, and that it had extended a deadline to approve them by more than a month.

Just hours before the board filed its latest loan request, the power company announced it was reducing employee working hours from seven to five days a week for safety reasons. It is unclear how that measure will impact power-restoration efforts across the island, and union leader Angel Figueroa did not immediately respond to a request for comment.

The board also said in its filing that it would seek an additional large loan in the next two to four weeks to help keep the power company running. Board members and Puerto Rico government officials said they would meet with a group of creditors later Friday, although they did not provide any details.

On Wednesday, a group of creditors offered a $534 million competing loan that the government has not accepted. Puerto Rico’s power company is already $9 billion in debt and operating with infrastructure that is nearly three times older than the industry average. The U.S. territory suffered frequent blackouts even before the hurricane, including an island-wide power outage in 2016.

Given the dire situation, Gov. Ricardo Rossello announced last month that he plans to privatize the company in the next 18 months.

Company director Justo Gonzalez said on Friday that power restoration efforts are ongoing and that work was completed on a key transmission line of 230,000 volts that would provide more stability to the damaged grid. He also said that 2,600 transformers will arrive next week, along with nearly 10,000 electrical posts and 922 miles of electric cable in the next two weeks.

“Although we have reached another significant goal, I want to assure those customers that still don’t have power that we haven’t forgotten about them,” he said. “Our work is not done…No one deserves to be without power, so we appreciate your patience.”