Puerto Rico Candidate Wants to Revisit Energy Privatization
(Bloomberg) -- One of the front-runners in Puerto Rico’s Nov. 3 gubernatorial race said he’s inclined to cancel the estimated $100 million contract that the island’s power authority recently signed with Luma Energy, a joint venture between Quanta Services Inc. and Atco Ltd.
In an interview, Carlos Delgado Altieri said he has established a committee to review the 15-year contract that gives Luma the right to run the transmission and distribution grid, and he expects to have a list of possible changes and recommendations by the end of this month.
“My preliminary take on the contract is that I don’t like it,” Delgado Altieri said Tuesday. “I understand that there’s room to improve it, to make it better for the people of Puerto Rico and less favorable to Luma. My inclination is to exit the contract.”
The current administration -- and many in Washington -- see the Luma deal as a first step in fixing the island’s ailing and expensive power grid that’s controlled by the Puerto Rico Electrical Power Authority, one of the U.S.’s largest public utilities.
Luma Chief Executive Officer Wayne Stensby said the company went through a “very rigorous” 18-month process to secure the contract in June and that it remains focused on fulfilling the agreement. President Donald Trump’s announcement last week that the government was earmarking an additional $9.6 billion to repair Puerto Rico’s power grid was seen as further validation of Luma’s new role.
“It solidifies the need for a credible, capable, competent operator to really manage and administer those funds over, potentially, the next decade,” he said.
Delgado Altieri, the mayor of the northern town of Isabela, became a front-runner in the Nov. 3 governor’s race when he beat two well-known politicians, including San Juan Mayor Carmen Yulin Cruz, to win the nomination for the Popular Democratic Party, known as the PPD. Although he has a long career in politics, he has fashioned himself as an outsider from a small municipality at the other end of the island from metropolitan San Juan.
For a story on the Luma contract, click here.
While he’s facing a handful of other rivals, his principal competitor will be the island’s former delegate to the U.S. House of Representatives, Pedro Pierluisi, who is representing the incumbent New Progressive Party, or PNP.
Delgado Altieri, 60, sees the island through a municipal lens and says he intends to decentralize the government, giving local mayors larger budgets and more responsibilities.
He blames the PNP and the power concentrated in San Juan for creating bottlenecks that have slowed the recovery from Hurricane Maria in 2017.
Delgado said that his municipality alone has submitted 163 projects due for repairs after Maria. Of those, only six have been approved and he’s received no funding.
“Let me be in charge of those projects and I can hire local contractors who shop at the local hardware store and inject money into the local economy,” he said of his decentralized approach. “With centralization, what we’ll have is big American companies coming in, subcontracting out the work and most of the money won’t stay in Puerto Rico.”
The U.S. commonwealth of 3.2 million people has seen better days. With its economy and population in decline, the Caribbean island has been in bankruptcy proceedings since 2017, even as it has been battered by natural disasters and political instability. For the last four years governors have had to work with a federally-appointed Financial Oversight and Management Board, or FOMB, which controls the island’s purse strings.
Unlike some independent candidates who say they won’t recognize the board’s authority, Delgado Altieri, said he plans to work with the body to deliver four consecutive balanced budgets -- a prerequisite to eventually dissolving the board. Even so, the Puerto Rican government needs to play a larger role in debt negotiations that the board is spearheading in U.S. court, he said.
“I will not be submissive to the board’s whims, but we have to work with them to balance the budget,” he said. “That’s just reality. We need to work with the board.”
The PNP and PPD have dominated Puerto Rico’s politics for decades and their most stark difference comes down to the island’s political status. The PNP favors statehood and Governor Wanda Vazquez has called for a non-binding referendum on that issue to be held on election day.
Delgado Altieri and the PPD are advocates for improving the current commonwealth status and say the referendum is an empty gesture because the U.S. Congress has no intention of making the island the 51st state.
The rival PNP “is trying to distract voters and turn the elections into a plebiscite that has nothing to do with reality,” he said. “The issue of our status will not be resolved during the next four-year administration. We have to focus on our own issues.”
The Nov. 3 election will be the first time that voters will get to choose a leader after mass protests helped drive Governor Ricardo Rossello out of office in August 2019.
Delgado Altieri said the spirit of those protests cleared the way for someone like him.
“I think the country is looking for someone who’s not a traditional politician,” he said, “and has experience as an administrator.”
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