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Puerto Rico on its way to privatizing power generation despite widespread skepticism

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SAN JUAN, Puerto Rico — Puerto Rico’s government. One step closer to privatizing power generation on the island. Despite widespread skepticism among consumers. Who crave a reliable source of electricity after decades of random blackouts.

Board members of the Puerto Rico Public-Private Partnership.

Authority approved an agreement to operate and maintain power generation units owned. By the Puerto Rico Electric Power Authority. The public corporation currently responsible for power generation in the U.S. territory.

Fermin Fontanes Gomez, executive director of the Puerto Rico Public-Private Partnership Authority. Announced the approval of the agreement in a press release Sunday. Fontanes Gomez did not name the private company. That would take over the power generation unit. He said the details will be disclosed once the agreement is formalized.

The agreement must be approved. By the governing board of the Puerto Rico Electric Power Authority. And signed by Governor Pedro Pierluisi before it can be implemented. It is expected to get full approval soon.

Puerto Rico’s power generation units are about 45 years old on average, twice as old as those on the US mainland. Some units are said to be as old as six decades. They are dependent on fossil fuels.

Unless the deal is made public, Puerto Ricans are left with more questions than answers when it comes to the future of Puerto Rico’s power grid.

“Everybody knows that most of these power plants are obsolete.” Sergio Marksuach, policy director of the Center for a New Economy. A Puerto Rico-based nonpartisan think tank, told NBC News in Spanish.

Marxuach wondered whether the potential private company would. “Run the existing system until Puerto Rico is able to produce more renewable energy? It’s unclear.”

According to local policy, 40% of Puerto Rico’s electricity must come from renewable energy sources. By 2025, with a goal of achieving 100% renewable electricity by 2050. Currently less than 4% of Puerto Rico’s electricity generation comes from renewable energy.

“, how much is it going to cost? They’re not going to do it for free,” Marxuach said. “And third, how will this affect our electric bill?”

Power customers in Puerto Rico endured seven electric rate hikes last year. Even though Puerto Ricans already pay twice as much as mainland U.S. customers for unreliable service.

Queremos Sol, a coalition of organizations and individuals. Advocating for Puerto Rico’s sustainable future. Said officials should learn from the process of privatizing the island’s power transmission.

“The same mistakes cannot be repeated,” the group told lawmakers in a letter Friday.

Luma Energy, Canada’s Atco and Texas’ Quanta Services Inc. A consortium consisting of, took over Puerto Rico’s power transmission. And distribution system in June 2021. The system was before operated by the Puerto Rico Electric Power Authority.

At the time, government officials promised Luma Energy. And the partial privatization of Power Grid would improve electric service. Instead, residents face frequent outages, long service restoration times. Poor customer service and voltage fluctuations that often damage appliances. And other home electronics.SAN JUAN, Puerto Rico. Puerto Rico’s government is one step closer to privatizing power generation on the island. Despite widespread skepticism among consumers. Who crave a reliable source of electricity after decades of random blackouts.

Board members of the Puerto Rico Public-Private Partnership. Authority approved an agreement to operate and maintain power generation units owned. By the Puerto Rico Electric Power Authority. The public corporation currently responsible for power generation in the U.S. territory.

Fermin Fontanes Gomez, executive director of the Puerto Rico Public-Private Partnership Authority. Announced the approval of the agreement in a press release Sunday. Fontanes Gomez did not name the private company. That would take over the power generation unit. He said the details will be disclosed once the agreement is formalized.

Puerto Rico’s power generation units are about 45 years old on average, twice as old as those on the US mainland. Some units are said to be as old as six decades. They are dependent on fossil fuels.

Unless the deal is made public, Puerto Ricans are left with more questions than answers. When it comes to the future of Puerto Rico’s power grid.

“Everybody knows that most of these power plants are obsolete.” Sergio Marksuach, policy director of the Center for a New Economy. A Puerto Rico-based nonpartisan think tank, told NBC News in Spanish.

Marxuach wondered whether the potential private company would. “run the existing system until Puerto Rico is able to produce more renewable energy? It’s unclear.”

According to local policy, 40% of Puerto Rico’s electricity must come from renewable energy sources. By 2025, with a goal of achieving 100% renewable electricity by 2050. Currently less than 4% of Puerto Rico’s electricity generation comes from renewable energy.

“, how much is it going to cost? They’re not going to do it for free,” Marxuach said. “And third, how will this affect our electric bill?”

Power customers in Puerto Rico endured seven electric rate hikes last year. Even though Puerto Ricans already pay twice as much. As mainland U.S. customers for unreliable service.

Queremos Sol, a coalition of organizations. And individuals advocating for Puerto Rico’s sustainable future. Said officials should learn from the process of privatizing the island’s power transmission.

“The same mistakes cannot be repeated,” the group told lawmakers in a letter Friday.

Luma Energy, Canada’s Atco and Texas’ Quanta Services Inc. A consortium consisting of, took over Puerto Rico’s power transmission and distribution system in June 2021. The system was before operated by the Puerto Rico Electric Power Authority.

At the time, government officials promised Luma Energy. And the partial privatization of Power Grid would improve electric service. Instead, residents face frequent outages, long service restoration times. Poor customer service and voltage fluctuations. That often damage appliances and other home electronics.

The privatization process follows ongoing issues surrounding. The bankruptcy of the Puerto Rico Electric Power Authority. In 2017, the corporation in charge of the electric grid declared bankruptcy. After years of low liquidity, limited access to capital markets. And long-term debt burdens.

A few months later, Puerto Rico was hit by Hurricane Maria. One of the largest and deadliest natural disasters to hit US territory in 100 years. Further worsening an already-fragile and isolated power grid.

When faced with Hurricane Fiona in September 2022. The grid was unable to withstand the Category 1 storm. Triggering an island-wide blackout that took more than two weeks to reverse.

Between Luma Energy’s takeover and Fiona. A series of fires left millions of customers without power. With the largest occurring in April 2022. On other occasions, Luma Energy blamed bad weather. And sargassum, a type of seaweed, for outages.

Luma Energy says it has reduced outage frequency by 30% over the past year. And initiated 251 funded projects to patch-up grid rebuilds. After Hurricanes Maria and Fiona.

Queremos Sol’s letter was addressed to two Puerto Rican lawmakers.

Who before opposed the privatization of power generation units. But recently changed their minds. They agreed to support Pierluisi’s push for privatization. As long as the deal included certain conditions.

Some of these include that any savings resulting from.  And prohibiting the company from subcontracting to any partners, affiliates, subsidiaries. Or other entities associated with the company. Instead giving preference to companies on the island.

It is unclear whether the agreement with the potential company. Seeking to take over power generation addresses those issues.

Problems with subcontractors tied to the parent company have. Already come to light with Luma Energy’s contracts, Marksuach said. “That way they’re able to make more money.”

Queremos Sol also warned that the privatization of power generation could. “Further delay the transition to renewable energy.” If companies decide to continue “operating existing fossil fuel-fired plants”.

The bankruptcy of the Puerto Rico Electric Power Authority continues. As the public corporation tries to restructure its $9 billion in public debt. The largest of any government agency. It is unclear whether the privatization process will have any impact on such efforts.

NBC News reached out to the Rico. Public-Private Partnership Authority about the new deal. How it could affect Rico’s transition to renewable energy. And whether it will affect the power authority’s bankruptcy proceedings.

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