CNE – Centro Para Una Nueva Economía – Center for a New Economy
Non-profit, economic research and policy development organization
Hurricane Maria devastated Puerto Rico’s energy system. After the storm, the island essentially has had to re-activate its energy system from the equivalent of a system-wide “blackstart”, which is the technical term for restarting an energy system from a complete shutdown.
Recently, the Government Accountability Office (GAO) published a report on Puerto Rico’s debt. The report’s main findings should not be a surprise to anyone. The GAO finds that Puerto Rico’s fiscal crisis was caused by the government incurring significant annual deficits, especially after 2000, and that it used debt to finance them.
On April 19, six members of the Fiscal Control Board (FCB) approved the Fiscal Plan for the government of Puerto Rico. In conceptual terms, the Plan consists of implementation of (1) a program of structural reforms; (2) a fiscal consolidation program; and (3) a reconstruction program financed by the federal government.
The business model for electrical generation companies, including PREPA, traditionally known as “build and grow,” is based on (1) the construction of ever larger and more efficient generating plants using cheap fossil fuels and (2) a constant increase in electrical consumption.
On February 12, Governor Ricardo RosellĂł presented the third iteration of his Fiscal Plan for Puerto Rico. In general terms, this version of the Plan has three main components: (1) a revision of the base economic scenario taking into consideration the appropriation of federal funds for the reconstruction of the infrastructure destroyed by Hurricane Maria; (2) an austerity plan; and (3) a structural reform program.
For the fifth year in a row, Puerto Rico’s Center for a New Economy (CNE) has been included in the most recent edition of the 2017 Global Go To Think Tank Index Report published by the University of Pennsylvania’s renowned Lauder Institute.
The administration of Governor Ricardo Rosselló recently announced its intention to privatize the Puerto Rico Electric Power Authority. I agree with the governor that the time has come to take drastic measures with respect to PREPA, as it has proved incapable of reforming itself and has been immune to several administrations’ efforts to modernize and restructure its operations.
Devising economic development opportunities for Puerto Rico and strengthening execution capabilities are the most pressing goals for policymakers in Puerto Rico and the United States. But achieving long-term, sustainable economic growth and development is a complex endeavor: there are no quick fixes or silver bullets. The task requires building realistic goals and managing execution capabilities.
