Report calls for independent energy regulatory agency in Puerto Rico

A new Center for American Progress report recommends that policymakers in Puerto Rico maintain an independent regulatory agency and strengthen it in ways that will help the island’s electricity utility serve residents and businesses, while also building a cleaner, more affordable, and more reliable energy system

The Puerto Rico Electric Power Authority (PREPA), the island’s sole electric utility, faced numerous challenges even before the storm. Hurricane Maria destroyed the electricity grid, thrusting Puerto Rico into the longest and largest blackout in U.S. history. Without independent watchdogs to hold PREPA accountable, the utility is unlikely to meet the necessary quality standards to restore its system or make the investments needed to build a 21st-century grid.

According to the report, that’s why it is important to maintain the Puerto Rico Energy Commission (PREC) as a strong and independent regulatory commission. Empowering PREC will ensure that PREPA meets its energy goals and has the potential to transform Puerto Rico’s electricity grid. It also would help boost efforts to integrate low-cost clean energy sources and potentially enable a transition to a performance-based regulation system that would be better equipped to hold PREPA accountable and prioritize affordability, reliability, and emissions reductions.

“We examined the policies and electricity sector governance systems in six states at the forefront of grid modernization and found that there are several tools that these six states have in common, including a regulatory commission that is responsible for overseeing electricity prices and other utility regulations alongside ambitious targets for integrating renewable energy sources,” said Bonnie Krenz, former senior policy adviser for energy and climate change policy at the U.S. Domestic Policy Council. “It is critical that Puerto Rico makes smart investments in building a 21st-century electric grid to create the transparent, trustworthy system of utility governance that Puerto Ricans deserve.”

Based on best practices in other states, the lessons and recommendations for Puerto Rico include:

• Prevent political interference at PREC and strengthen the independent regulatory commission
• Redouble efforts to reach the goals set out in the commonwealth’s renewable portfolio standard and increase ambition
• Consider transitioning from a cost-of-service utility model to one that utilizes performance-based regulation
• Design and enforce reliability standards that reflect Puerto Rico’s island context
• Prioritize establishing strong governance standards over any particular utility model