One of the most onerous problems faced by all Puerto Rico commercial and industrial enterprises, large or small, is the high cost of energy. For most of the year, the price of the island’s energy has been about 29¢ to 30¢ per kilowatt-hour (kWh). This rate, as far as I know, is higher than in 49 of the 50 states of the Union. In most U.S. states, electricity rates are less than 20¢ per kWh, which represents a substantial difference compared with Puerto Rico’s.

Some people in public office try to justify our very high electricity rates by indicating that because Hawaii’s rates are even higher than ours, and because it is also an island, it is the only reasonable location to compare costs with. However, those who try to justify our high costs by looking at Hawaii’s, fail to provide any information about the differences in energy production and distribution in Hawaii compared with Puerto Rico’s.

In the first place, Hawaii isn’t just one main island with a generating capacity of more than 4,500 megawatts like Puerto Rico. The state of Hawaii is a chain of islands and islets that is 1,523 miles long, which includes Hawaii, Kahoolawe, Maui, Molokai, Kauai, Nilkau, Lanai and Oahu. All Hawaiian islands require considerably larger and costlier infrastructure and distribution lines, plus oil and natural gas pipelines, the latter of which only service about 30% of Puerto Rico’s population.

Assuming that most, if not all major islands of Hawaii must be interconnected, the cost to build and maintain undersea electric power lines is considerably higher than by land. In addition, the area, in square miles, that receives service in the Hawaiian islands is substantially larger than our 3,435 square miles. We also have a much higher population density, where a 10-mile-long power line serves many more clients than it would in the Hawaiian islands.

In a modern society, electric power service for residential, commercial and industrial clients is as important to a community’s economic development as the blood’s circulatory system in the human body. Without electricity, society comes to a standstill. As a result, any capable and efficient government must decide that an economically well-run electric power system is of the highest priority. To try to justify our very high electricity rates by comparing them with Hawaii is a disservice to Puerto Rico.

We must do whatever needs to be done to cut costs for our electric power generation and distribution, while also reducing any environmental pollution that results in the generating process. There’s no doubt that wind and solar power are practically nonpolluting, inexhaustible energy-producing systems. However, energy isn’t produced when there is no wind for the turbines nor sun for the solar panels.

These systems’ inability to constantly produce capacity creates serious problems for power distribution, which substantially increases costs to build adequate, interconnected wind and solar-energy producing facilities. Nevertheless, because wind and solar energy are clean and inexhaustible, we must work to develop these systems to make our energy costs less expensive and more dependable.

The island’s past administration worked hard to reduce our dependency on coal and oil for power generation, because both are highly polluting and the costs to meaningfully reduce their environmental impact are quite high. However, natural gas is much cleaner than coal and oil. Our nation’s natural gas deposits are enough to produce electric power for at least 100 years.

I firmly believe the past administration, together with the executive director of the Electric Power Authority’s (Prepa) board, made the right decision to quickly reduce and put an end to our dependency on oil by substituting it for natural gas, which is less expensive and much cleaner. However, two mistakes were made.

The first was to decide, during the 2008 election campaign, to scrap the natural gas pipeline already being built in the southern part of Puerto Rico. This decision was made without careful and professional study to determine whether any changes could have been made to finish the pipeline and reduce the costs to transport the fuel from the receiving dock to the power generating plant.

The second error was to begin construction of a pipeline through the «Cordillera Central» (central mountain range) and then toward the north part of Puerto Rico without having conducted sufficient environmental studies and analysis of routes and alternatives. However, what’s worse is that contracts were signed and construction commenced without sufficient public information and discussion, which left the project vulnerable to a demagogic negative campaign that couldn’t effectively be refuted because of the lack of public awareness.

However, the past administration created a well-structured plan to modify all existing generating units to use natural gas. The powerplants would generate sufficient electric power by using natural gas, and the resulting cheaper electric power could be used to reduce energy costs for residential clients who weren’t receiving rate subsidies. In other words, this plan would have reduced the rates for more than 900,000 working families.

The first generating units to be modified for natural gas were No. 5 and No. 6 of the Costa Sur powerplant in Guayanilla. Once these units started generating power from natural gas, the new tariff for their 900,000 nonsubsidized clients would go into effect. The tariff was approved by the Prepa board and all clients were notified via two local newspapers.

After the new tariff temporarily went into effect, public hearings were held. Only one person appeared to testify. The examining officer prepared a report and recommended the new tariff be made permanent. The rate produced a reduction of about 15% on the monthly bills.

Today, the administration has publicly claimed that the past administration hid information from the Prepa board. Obviously, this claim is a lie to divert positive attention from the rate reduction and use any savings to meet the salary increases demanded by the union and create new executive positions for unneeded directors, subdirectors and other well-paid executive positions for the government’s cronies and highly paid political hacks, which only adds to Prepa’s costs and inefficiencies.

The past administration’s approved rate-reduction plan was designed so any savings from the conversion of oil to natural gas could be passed on to the rest of Prepa’s clients, until everyone was covered. The current administration’s accusation that the special tariff was approved in violation of the law is false. As a matter of fact, Law 83 of May 2, 1941 authorizes Prepa to establish necessary rates to bill clients.

If the media and administration still have doubts, why don’t they ask engineer Sebastián Banuchi and Francisco Ramos, who presented the tariff changes to Prepa’s board. To the current administration, the people are saying they want Prepa to stop increasing its expenditures to hire political hacks, who will eliminate the much needed rate reductions approved by the past administration.

Carlos Romero Barceló is a two-term former governor of Puerto Rico (1977-84), a two-term former resident commissioner (1993-2000) and a two-term former mayor of San Juan (1969-78). He was president of the New Progressive Party for 11 years. He is now a consultant involved in real estate, doing business as CRB Realty. His email address is rbarcelo@prtc.net. Comments on this article are welcome at caribbeanbusiness.pr. Go to the «Sign in» link on the homepage to participate. Emails also may be sent to column@caribbeanbusiness.pr.