Puerto Rico Governor Stands to Lose Influence at Power Utility

(Bloomberg) -- A top Department of Energy official used a House hearing Wednesday to blast political interference in Puerto Rico’s electricity monopoly, saying lawmakers should wrest board seats from the governor.

The official, Assistant Secretary Bruce Walker, also said lawmakers should take away Governor Ricardo Rossello’s ability to appoint members to the Puerto Rico Energy Commission, an oversight body.

“Let’s have a backbone,” he said, speaking at the hearing on Puerto Rico Wednesday before the House Natural Resources Committee, which has been monitoring the island’s recovery from last year’s hurricanes.

The hearing was meant to address a management crisis at the Puerto Rico Electric Power Authority, known as Prepa, which just this month has had one chief executive resign, one replacement withdraw and five board members quit, blaming political interference. It also came as the bankrupt utility contends with years of mismanagement, crippling debt and aging infrastructure that was heavily damaged last year by Hurricane Maria.

But Walker’s proposal stopped short of the scenario that several Puerto Rican politicians, including Rossello, have warned about this week: a potential federal takeover of the utility. Walker explicitly denied such a movement was afoot, as did Representative Rob Bishop, the Utah Republican who chairs the committee.

Chairman Bishop said the federal government taking over the troubled utility was ridiculous.

“We are going to be working with the island,” Bishop said after the hearing. “I am certainly not advocating going to the island and doing anything unilaterally.”

Still, the federal government has allocated $6 billion to help fix Prepa’s energy grid after 2017’s Hurricane Maria, according to Walker. Several lawmakers have demanded more accountability for how that money is spent.

Rather than a complete federal takeover, some lawmakers want legislation that would have a person or entity oversee money that Washington is allocating to the utility, according to a committee aide. It would also help overhaul the company to make it less subject to local politics, according to the committee aide, who asked not to be identified.

Removing politics from Prepa and providing good and reliable energy to Puerto Ricans is essential for improving the island, Bishop said during the hearing. The commonwealth is in a decade-long recession and is seeking to reduce most of its more than $70 billion of debt through a bankruptcy process.

“If we don’t get this right, then the rest of the restoration is not going to happen,” Bishop said.

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