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Puerto Rico Floats $20 Billion Overhaul for Battered Power Grid

Puerto Rico Floats $20 Billion Overhaul for Battered Power Grid

(Bloomberg) -- Puerto Rico’s government-owned electricity company announced a $20 billion plan to modernize and strengthen a power grid that was devastated by Hurricane Maria two years ago, even as a backlash against a small fee increase underscored the financial challenge facing the bankrupt utility.

Jose Ortiz, the executive director of the Puerto Rico Electric Power Authority, known as Prepa, announced the plan at a press conference with Governor Wanda Vazquez in San Juan. He said that the project will rebuild the failure-prone power system with a web of so-called micro grids, funded in part with federal and private funds over the next decade.

The ambitious overhaul contrasted with the pushback over a planned bump to utility fees announced Wednesday to fund energy-efficiency programs. The change would result in increases of between $0.64 and $ 1.79 per month starting in November but was criticized by the governor for foisting added costs on residents of the U.S. territory.

Vazquez said in a statement Wednesday that she “strongly” opposes the rate increase, calling on electricity regulators to instead seek out “independent sources of income” including “collaborative agreements or the possibility of accessing federal funds, so that the responsibility for energy efficiency is not at the expense of the people of Puerto Rico.”

During the press conference with Ortiz, she reiterated her position, telling reporters “we must look for alternative sources that are not increases in rates.”

On Thursday morning, the president of the Puerto Rico Energy Bureau’s board of directors, Edison Aviles, said that the increase could possibly be put on hold until January as it studied other methods of funding.

Puerto Rico Senator Miguel Romero, like Vazquez a member of the ruling New Progressive Party, said he will present a proposal to the island’s legislature mandating the energy efficiency initiatives not be bankrolled by increases to customers’ bills.

Puerto Rico’s power grid was laid waste by September 2017’s Hurricane Maria and still remains in a fragile state, with power outages common around the island, particularly during the summer rainy season.

To contact the reporter on this story: Michael Deibert in San Juan at mdeibert@bloomberg.net

To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, William Selway, Michael B. Marois

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