Why Puerto Rico’s power players are feuding

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Jul 19, 2024 View in browser   By Gloria Gonzalez Presented by Chevron Solar panels supply energy to a community center and school in Puerto Rico. | Lester Jimenez/AFP via Getty Images Puerto Ricans dealing with blackouts and costly rate hikes have a new problem: The territory’s public utility and the manager of its power grid have been sniping at each other. The feud between the government-owned utility Puerto Rico Electric Power Authority and privately run grid manager LUMA Energy is drawing new attention to Puerto Rico’s power struggles. The territory continues to be plagued by outages and heat advisories during a hurricane season that forecasters predict could be the most active on record. About 350,000 of the 1.5 million electricity customers across multiple municipalities lost power in mid-June. The territory’s plight makes Puerto Rico an example of what happens when a warming climate collides with a tottering electric grid. Years of underinvestment and poor maintenance by the heavily indebted public utility left Puerto Rico’s grid vulnerable to frequent blackouts. But Hurricane Maria caused horrific destruction in 2017, killing almost 3,000 people and plunging parts of the territory into blackouts that lasted nearly a year. That same year, the territory filed the largest municipal bankruptcy claim in U.S. history. Public outrage over blackouts and access to affordable electricity has put the spotlight on the public and private managers of the system. LUMA, already facing calls for its ouster, has received fresh condemnation over price hikes for a customer population that already pays some of the highest average rates in the United States. “Puerto Ricans are paying the highest price for the worst electric service," Rep. Nydia Velázquez (D-N.Y.) told POLITICO. LUMA’s decision in June to defer $65 million worth of maintenance and improvement projects came under fire. The grid operator made the decision during the same month a damaged transformer disrupted power for people living in the Santa Isabel, Coamo and Aibonito municipalities. Mario Hurtado, LUMA’s chief regulatory officer, says the failure of the transformer points to the design and operational deficiencies the company inherited since assuming responsibility for managing the grid in June 2021.  Josué Colón-Ortiz, PREPA’s executive director, accused LUMA of “glaring inefficiencies” in a letter to the Financial Oversight and Management Board, the independent entity charged with overseeing Puerto Rico’s finances. Robert Mujica, executive director of the financial oversight board, declared that “it’s time to stop the finger pointing” and called officials from LUMA, PREPA and other interests in for a meeting last week to hash out the issue. The federal government has set aside billions to repair Puerto Rico’s power grid, and LUMA is tapping those funds to replace outdated equipment and clear vegetation — the No. 1 cause of outages. Hurtado said LUMA isn’t responsible for the rate hikes, blaming spiking fuel prices driven by global events given Puerto Rico’s dependence on imported oil. But Velazquez said LUMA knew what it was getting into. “They agreed to do a job, they got the money and they have to deliver,” she said. “Enough with excuses.”   It's Friday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Gloria Gonzalez. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to jkirkland@eenews.net.   A message from Chevron: Energy demand is projected to reach record highs and continue to rise in the future. Chevron is responding to that growing need while innovating to help do so responsibly. All to help us provide energy that’s affordable, reliable, and ever-cleaner.   Listen to today’s POLITICO Energy podcast Today in POLITICO Energy’s podcast: A new $5 billion deal could give the Navajo Nation better access to safe drinking water. POLITICO’s Annie Snider breaks down why the deal is so important to the Navajo Nation and how Congress could upend it.   A message from Chevron:   Power Centers Former President Donald Trump speaks during the final night of the Republican National Convention at Fiserv Forum in Milwaukee, Wis., July 18, 2024. | Francis Chung/POLITICO The cost of political chaos Clean energy investors have accepted that America’s rowdy politics add up to policy uncertainty. But that’s in a normal year. Dizzying political chaos is something entirely different, Peter Behr writes. Venture capitalists and energy analysts are paying attention to the most hair-raising presidential election campaign this century. For investors and companies funneling money into U.S. solar factories, transmission projects, battery makers in the Midwest or fusion research, the possibility of another total U-turn on energy policy is raising the stakes for investment decisions before the November election. “Emerging technologies require policy clarity, policy security, and you’re not seeing that right now,” said David Brown, research director for Wood Mackenzie’s energy transition group. “If anything, the last few weeks and months there’s been increased policy risk in the United States.” But investors also said clean energy industries may be growing rapidly enough to withstand a 180-degree turn under a Trump administration. Still, the pace of investment could slow, and that’s a risk for energy technology and climate change. Climate hawks: 'Pass the torch' More Democratic lawmakers on Friday called on President Joe Biden to drop his reelection bid, including some notable climate hawks, Timothy Cama reports. Sen. Martin Heinrich (D-N.M.), a senior member of the Energy and Natural Resources Committee; California Rep. Jared Huffman, a top Democrat on the House Natural Resources Committee; and Rep. Sean Casten (D-Ill.) all said the time had come for Biden to “pass the torch to a new generation.” All three joined dozens of lawmakers who have called on the 81-year-old president to open the door to another candidate at the top of the Democratic ticket, possibly Vice President Kamala Harris. Misery in Houston Hurricane Beryl exposed the dangers of what happens when a storm cuts off power and a heat wave follows in its wake. In a visit to Houston as it slowly recovered after more than 2 million utility customers lost power during 100-degree heat, Chelsea Harvey explored the human toll of intensifying storms and heat. It’s a phenomenon known as a compound disaster — when multiple extreme weather events collide at once. Heat-related hospitalizations spiked after Beryl struck the Gulf Coast on July 8, and at least three people have died from the high temperatures. It was a similar story for Hurricane Ida in 2021. More than 1 million customers lost power, and the Louisiana Department of Health said 10 people died because of heat in the days that followed.   Understand 2024’s big impacts with Pro’s extensive Campaign Races Dashboard, exclusive insights, and key coverage of federal- and state-level debates. Focus on policy. Learn more.     In Other News Asian plateau: China, the world’s biggest source of carbon dioxide emissions, appears to be on the verge of flattening its steep emissions growth curve. European demand: Chinese wind turbine-makers clinched their first order in Germany as European leaders debate the economic threat China poses to domestic companies.   A message from Chevron: Oil and gas are still an important part of the global energy system. To help responsibly address growing needs, Chevron is stepping up. Our Gulf of Mexico facilities are some of the world’s lowest carbon intensity operations, and our technological advances enable us to reach previously unviable oil and gas reserves there. In the Permian Basin, we’re harnessing new drilling and completion technologies to increase the amount of oil we recover. We expect to reach 1 million barrels of oil-equivalent there per day by 2025. Providing energy that’s affordable, reliable, and ever-cleaner. That’s energy in progress.   Subscriber Zone A showcase of some of our best subscriber content. Congresswoman Mary Miller, in foreground, and state Rep. John Cabello, right, praised Donald Trump's speech at the Republican National Convention on Thursday, July 18, 2024. | Shia Kapos/POLITICO Donald Trump, the GOP nominee for president, led chants of "drill, baby, drill" and pledged to get rid of the Biden administration's "green new scam" in a speech Thursday night that capped the four-day Republican National Convention. Car companies and electric utilities need to cooperate to ensure electric vehicles benefit the grid — rather than burden it, according to two major reports. The Biden administration's carbon emissions rule for coal and some gas-burning power plants cleared a federal circuit court, but trade groups swiftly promised to ask the Supreme Court to intervene and stay the Environmental Protection Agency regulation. That's it for today, folks. Thanks for reading, and have a great weekend!   SUBSCRIBE TO GLOBAL PLAYBOOK: Don’t miss out on POLITICO’s Global Playbook, our newsletter taking you inside pivotal discussions at the most influential gatherings in the world. Suzanne Lynch delivers the world's elite and influential moments directly to you. Stay in the global loop. SUBSCRIBE NOW.       Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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