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<div id="reader-header" class="header" style="display: block;"> <font
size="-2"><a id="reader-domain" class="domain"
href="https://theintercept.com/2018/01/10/puerto-rico-electricity-prepa-hurricane-maria/">https://theintercept.com/2018/01/10/puerto-rico-electricity-prepa-hurricane-maria/</a></font>
<h1 id="reader-title">Armed Federal Agents Enter Warehouse in
Puerto Rico to Seize Hoarded Electric Equipment</h1>
<div id="reader-credits" class="credits">Kate Aronoff - January
10, 2018<br>
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<p><span><u>On Saturday, a</u> day after becoming aware
of a massive store of rebuilding materials being
held by the Puerto Rico Electric Power Authority,
the U.S. federal government — the Federal Emergency
Management Agency, the U.S. Army Corps of Engineers,
along with their security detail — entered a Palo
Seco warehouse owned by the public utility to claim
and distribute the equipment, according to a
spokesperson for the Corps.</span></p>
<p><span>Rumors of a tense standoff had been circulating
on the island, but the encounter was confirmed to
The Intercept in a statement from the U.S. Army
Corps of Engineers. Asked if the federal officers
were armed when they entered the warehouse, USACE
spokesperson Luciano Vera said they were indeed
accompanied by security detail and quickly began
distributing the material after seizing it. Vera
declined to say whether there was a confrontation at
the entrance, saying only that PREPA officials
ultimately toured the warehouse along with the feds:</span></p>
<blockquote>
<p><span>Leadership responsible for restoring the
Puerto Rico power grid and their security detail
toured the warehouse in cooperation with PREPA.
USACE conducted a full inventory and immediately
sent out critical materials to contractors at work
sites. USACE will continue to distribute critical
materials from the site to contractors. The hope
is to strengthen the partnership between PREPA and
its restoration partners, while increasing
visibility of the inventory of all materials on
the island. PREPA has invited FEMA and the Corps
to visit its warehouses anytime and to distribute
material as needed.</span></p>
</blockquote>
<p><span>The federal government “began distributing
[supplies] to contractors,” Vera said, including
hard-to-find full-tension steel sleeves, critical to
rebuilding. “</span><span>We obtained several
hundred of these sleeves on Saturday,” Vera added.</span></p>
<p>The armed encounter comes as around half of Puerto
Ricans still remain without electricity well over 100
days after Hurricane Maria. As PREPA hoards crucial
resources that could help remedy the island’s dire
situation, the Puerto Rican government is attempting
to annihilate the power provider’s only regulator.</p>
<p><span>“Warehouse 5” — the one which USACE and FEMA
entered Saturday — “falls under the control of the
[PREPA] transmission division and has lacked
transparency in inventory and accountability,” the
email from Vera continued. Carlos Torres, appointed
by Puerto Rico Gov. Ricardo Rosselló to oversee
power restoration, was on site as well. </span></p>
<p><span>“Due to the size of the warehouse,” Vera said,
accounting for everything contained therein is still
underway days later. Among the materials recovered
so far are “2,875 pieces of critical material to
contractors” along with the sleeves of full-tension
steel, a component of Puerto Rican electrical
infrastructure required to erect new power lines.
PREPA did not respond to The Intercept’s request for
comment, though in a </span><a
href="https://apnews.com/1ccde02ad9de439eb2bc58f62f7baaff"><span>statement</span></a><span>
to the Associated Press, it rejected allegations
that it had failed to distribute the warehouse’s
contents. The AP only reported that “officials over
the weekend also discovered some needed materials in
a previously overlooked warehouse owned by Puerto
Rico’s Electric Power Authority.” How they
discovered them and how they were obtained is a
story that has not been fully told.</span></p>
<span><u>Together, FEMA and</u> the USACE are the main
federal agencies responsible for getting Puerto Rico’s
grid up and running after it was leveled by Hurricane
Maria. Under the Stafford Act, utilities can receive
reimbursement from FEMA for reconstruction efforts in
the wake of a major disaster. Another standard
practice is for utilities to enter into mutual aid
agreements with public and private utilities. For
reasons that remain unclear, PREPA chose not to do so
in Maria’s immediate aftermath, instead signing a
series of controversial deals with private
contractors. The most dubious of those — with the
novice Montana-based firm Whitefish Energy — was
withdrawn amid public outrage on the mainland and the
island alike.</span>
<p><span>Still, the Whitefish contract was far from the
only issue plaguing PREPA’s recovery efforts and
keeping Puerto Ricans from getting their lights
turned back on. Even now that PREPA is finally
pursuing mutual aid agreements with mainland power
companies, supply problems — the kind the unified
command’s warehouse raid might help alleviate — have
kept linemen on the island from being able to do
their jobs. </span></p>
<p><span>A security contractor who recently returned
from Puerto Rico told </span><span>The Intercept </span><span>that
crews of linemen brought down from the U.S. were
frustrated about the lack of rebuilding materials,
which made it virtually impossible for them to fix
downed infrastructure. Paraphrasing conversations
with the electric crews he accompanied, the source
said one worker told him that “we just sat in the
truck and watched a movie because we have nothing to
do today. … Around Christmas, a lot of the power
workers were saying, ‘We’re going on vacation
because we couldn’t do our job because PREPA was
making it so difficult.’” The source’s job involved
escorting contractors tasked with reconstructing
downed power lines; he was deployed on the island
for over a month by a subcontractor of Cobra
Acquisitions LLC, which in the fall received a</span><a
href="https://theintercept.com/2017/10/31/puerto-rico-electric-contract-cobra/">
<span>$200 million contract</span></a><span> with
PREPA to repair its grid.</span></p>
<p><span>“They didn’t have anything to do or to work
on,” he said of many of the linemen he interacted
with. “They had had a bunch of poles but no lines,
or any of the stuff that goes on the poles. They
were just setting bare poles, getting as far as they
could go.”</span></p>
<p><span>“We were in a town for two weeks and barely got
anything done because they didn’t have the
supplies,” the source noted of one crew they
accompanied on the island’s southeast. UTIER — the
utility workers’ union — has leveled </span><a
href="http://www.primerahora.com/noticias/gobierno-politica/nota/el60delosabonadostieneelectricidaddiceaee-1262883/"><span>similar
complaints</span></a><span> against their
employer.</span></p>
<p><span>Frustrated by the slow pace of recovery, a
number of mayors around the island have begun taking
matters into their own hands, reportedly buying grid
restoration supplies out of municipal budgets.
Javier Jiménez Pérez, mayor of San Sebastián,
compiled a team of electricians, retired PREPA
employees, and volunteers to form the </span><a
href="https://www.elnuevodia.com/noticias/locales/nota/pepinopowerauthorityrestauraelservicioelectricoa2000casas-2385897/"><span>Pepino
Power Authority</span></a><span>, referring to a
longer version of the town’s name in Spanish. As of
December 28, the makeshift recovery crew had
restored power to 2,000 homes, with smaller teams
splitting up to return electricity to different
neighborhoods. Residents in some areas of San
Sebastián told </span><span>El Nuevo Dia </span><span>they
never saw PREPA post-Maria.</span></p>
<p><span>Mismanagement is not a new phenomenon for
PREPA, which for decades has been Puerto Rico’s sole
power provider. For most of that time, it had been
self-regulated, with a board comprised largely of
political appointees with little to no background in
the electricity sector. The lack of oversight
created conditions for corruption and disinvestment,
with its generation and transmission capacity
falling into severe disrepair over many years.</span></p>
<p><span>In 2014, Puerto Rico’s legislature undertook a
reform effort. That involved moving the board
selection process away from its reliance on
political appointments, as well as the establishment
of the Electric Commission, a three-member body
tasked with regulating PREPA and setting rates.</span></p>
<p><span>Ramón Luis Nieves served in Puerto Rico’s State
Senate from 2013 to 2016 and was part of the push to
get PREPA’s house in order. During his tenure in the
legislature, he chaired the Senate Energy Committee,
responsible for creating the Energy Commission in
2014 through Act 57. “For the first time in seven
decades of existence,” he told </span><span>The
Intercept </span><span>of the board reforms, “PREPA
had the benefit of having a governing board composed
of non-partisan professionals.” </span></p>
<p><span>“When the current administration was in the
opposition,” Nieves says of Rosselló’s New
Progressive Party, “they opposed all the energy
reform bills. Now that they are in power, they have
been trying to eliminate the energy regulator and
the reforms that were passed.”</span></p>
<p><span>When Rosselló moved into the governor’s mansion
early last year, his administration quickly reverted
back to the previous board selection process and
replaced much of the utility’s leadership. Among
those ousted in the process were the board’s three
elected consumer advocates, who — as a former member
told me in September — had to be removed via special
legislation.</span></p>
<p><span>Since that time, the governor has been
outspoken about his support for privatizing PREPA
and other government services, a position he shared
with the Washington-appointed Fiscal Oversight Board
now overseeing the island’s finances. </span></p>
<span><u>On Wednesday, Rosselló</u> is set to present a
new fiscal plan to the board that may well move in
that direction. Already, though, his office has
unveiled a number of sweeping, board-friendly policies
under the auspices of the New Government Law, approved
by the legislature just before Christmas. On Monday,
Puerto Rico’s Secretary of Public Affairs and Public
Policy Ramón Rosario Cortés</span> <a
href="https://www.elnuevodia.com/noticias/politica/nota/elgobiernoanunciacincoconsolidacionesdeagencias-2388446/"><span>announced</span></a><span>
five proposals to dramatically reorganize the island’s
government in pursuance with the new law — including
what would amount to a liquidation of the Energy
Commission. </span>
<p><span>The plan would consolidate five separate
regulatory agencies into a single, three-member
commission, eliminating the Telecommunications
Regulatory Board, Public Service Commission, Energy
Commission, Energy Administration, and the
Independent Office for Consumer Protection as
independent entities. In their place would stand the
Public Service Regulatory Board, which officials
argue would operate along the lines of state-level
Public Utility Commissions in the U.S. It’s unclear
which functions of the previous agencies would
continue in the new body.</span></p>
<p><span>Rosselló’s proposal is billed as a cost-saving
measure, although neither the Telecommunications
Regulatory Board nor the Energy Commission, at
least, receive funding from the state or federal
governments. The former is funded via a fee on
telecommunications’ customers monthly bills, and the
latter by PREPA via its ratepayers, who furnish the
independent commission with its annual $5 million
budget.</span></p>
<p><span>While Nieves — like many — favors some level of
private investment in PREPA, which is $9 billion in
debt, he’s weary of attracting corporations to the
utility without a competent regulator. “If you do
away with an independent and strong regulator,
you’ll have Whitefish all over again,” he said. “If
they remove the Energy Commission, they should
rename PREPA the Whitefish Energy Company of Puerto
Rico.”</span></p>
<p><span>Since its establishment, the Energy Commission
has taken a number of steps to help bring the
island’s electricity sector into the 21st century,
including an Integrated Resource Plan that laid out
a path for transitioning the island off expensive
imported oil and toward renewables. It helped defend
ratepayers against the island’s bondholders, too;
when the National Public Finance Guarantee
Corporation </span><a
href="https://npfg.com/pdf/PressRelease/Petition_Rate_Review_Temp_Rate_WEIL_95433694_20.pdf"><span>pushed</span></a><span>
for a 4.2 cent per kilowatt hour rate hike in
September, the commission</span> <a
href="https://www.reuters.com/article/us-usa-puertorico-prepa/puerto-ricos-prepa-extends-creditor-agreement-negotiates-with-insurers-idUSKCN0RV59U20151001"><span>denied</span></a><span>
the request.</span></p>
<p><span>The commission also just recently unveiled the
country’s first-ever regulatory rulebook for
microgrids, a form of decentralized power generation
that allows small geographic areas — neighborhoods
or hospitals, for instance — to generate power
locally and bring electricity back online quickly
after major natural disasters and outages. Included
in the suite of regulations was a mandate that any
microgrids developed on the island use renewable
fuel sources, although the rule would not apply to
microgrids developed by PREPA itself.</span></p>
<p><span>Those regulations were opened for public
comment this week, yet the future of that and other
Energy Commission-created rules will be up in the
air if the governor’s proposal is eventually
approved by the legislature and fiscal control
board. </span></p>
<p><span>Another likely casualty of the reorganization
proposal would be the Independent Office for
Consumer Protection, which helps customers bring
complaints against PREPA and seek remuneration for
any utility wrongdoing. The agency’s 2014
establishment was heavily pushed for by the AARP,
which received complaints from elderly Puerto Ricans
about their electricity service. A</span><a
href="https://www.aarp.org/money/budgeting-saving/info-2014/2014-aarp-survey-of-puerto-rico-residents-age-25-and-older-on-el.html">
<span>survey</span></a><span> conducted that same
year by the group found that 82 percent of Puerto
Ricans ages 25 and older “do not believe their
interests are fairly represented and taken into
consideration when electric rates are set by PREPA”;
86 percent supported the establishment of a consumer
advocate office. </span><br>
</p>
<div class="img-wrap align-bleed large-bleed width-auto">
<p class="caption overlayed">A Puerto Rico Electric
and Power Authority lineman attaches an electrical
insulator to a new utility pole in a residential
area in Gurabo, Puerto Rico, on Nov. 29, 2017.</p>
</div>
<span><u>The push to</u> upend popular regulation over
PREPA, of course, comes after several decades of
austerity, jumpstarted after the PROMESA bill — passed
by Congress in 2016 — that tasks the Fiscal Oversight
Board with getting the island’s fiscal house in order
and handling its at least $74 billion in municipal
debt. Other recently announced cost-cutting measures
include the governor’s Voluntary Transition program
aimed at incentivizing public employees to quit their
jobs and seek work with non-profits or the private
sector, and the privatization of the Puerto Rico
Institute of Statistics. </span>
<p><span>As American Statistical Association President
Lisa LaVange pointed out in a recent letter, such a
move would be darkly ironic considering the
government’s gross miscounting of the number of
deaths that have occurred since Maria. LaVange
chided the governor for not allowing experts to help
revise the death count and his proposal to disband
PRIS. “Government statistics play a powerful role in
any democracy. They empower the economy, serve the
health and welfare of its citizens, improve
governance, and inform decisions and policies in the
public and private sector, among many other vital
functions,” she wrote.</span></p>
<p><span>And though media attention has largely cycled
away from Puerto Rico, conservative think tanks are
continuing to outline plans for still more massive
blows to the island’s public sphere. In a December</span><a
href="http://www.aei.org/publication/puerto-ricos-economic-challenges/">
<span>statement</span></a><span> before the Fiscal
Oversight Board, American Enterprise Institute
Resident Fellow Desmond Lachman argued that “what is
desperately needed” in Puerto Rico “is a
comprehensive IMF-style structural adjustment
program,” including a deep cut to the island’s
minimum wage. Oversight Board member Andrew Biggs
has been a resident scholar at AEI since 2008. </span></p>
<p><span>The path to any economic recovery from Puerto
Rico will ultimately run through its ability to
rebuild a functional energy grid — a future all too
unlikely amid austerity and deregulation. Combined
with other kinds of storm damage, the loss of power
has fueled a rapid uptick in emigration from the
island, as people struggle to attain jobs and basic
services; an estimated 300,000 people have moved to
Florida alone, a scale of emigration that could
further downsize the island’s already shrinking tax
base. Nieves calls those who’ve left “energy
refugees,” for whom “the lack of energy was the last
straw.” </span></p>
<p><span>“Most of them,” he predicts, “will not return.”</span></p>
<p><strong>Update: Jan. 10, 2018, 7 p.m.</strong></p>
<p>Sen. Eduardo Bhatia, minority leader of the Senate of
Puerto Rico, provided a statement to The Intercept on
the hoarded electrical equipment:</p>
<blockquote>
<p>The news that has come out today about the
discovery made by armed federal agents of thousands
of electrical spare parts hidden in an PREPA
warehouse borders on a criminal act by its managers.
It is time for people to stand up and demand
answers. Hundreds of thousands of families have been
in the dark for more than 125 days, people keep
dying, and businesses continue to close due to the
lack of energy while the necessary spare parts were
in the possession of PREPA. Lying about not having
the parts to cover the inefficiency of PREPA is
outrageous and those responsible must be taken
before state and federal authorities to be
criminally processed immediately.</p>
</blockquote>
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