In the glory days of the House of Representatives, congressional hearings were a place where ideas were exchanged, where members would call in experts to help them craft legislation in the public interest.
A Trump-era version of that back-and-forth played out this week, with befuddled Republicans on the Natural Resources Committee flummoxed as officials from the Department of Energy, led by none other than Rick Perry, repeatedly insisted that renewable energy is an economical way to power Puerto Rico as it continues to rebuild from Hurricane Maria.
It’s not clear that any of it sank in.
Rep. Tom McClintock, R-Calif., used his time at the hearing Wednesday on the future of the Puerto Rico Electric Power Authority to try and paint several of the panelists’ recommendations to expand clean energy on the island as politically motivated.
“We’re hearing a lot about renewables, presumably wind and solar. Those are the most expensive ways of generating of electricity that we have available to us,” he said. “In a system that is impoverished and in desperate need of simple generation — particularly on an island favored by trade winds — why aren’t we pursuing much less expensive and much more reliable conventional electricity generation?”
Assistant Energy Secretary Bruce Walker responded flatly, “Your assertion that it’s the most expensive generation would assume that you’re sitting in Arizona paying 1.6 cents per kilowatt. However, when you’re sitting in Puerto Rico paying 20-plus cents per kilowatt, some of the cost effectiveness of wind and solar actually become economical,” he said, noting that Energy Department modeling — “the most sophisticated in the world” — takes into account both energy costs and other market factors. “Recognizing that Puerto Rico relies on bunker [oil] fuel for the most part for their energy and/or coal, hitting below those price points is not that hard,” Walker added.
McClintock doubled down, flustered: “Why aren’t we making a simple economic … I don’t have a dog in that fight. My sense is that the simplest way to produce electricity is the best way to proceed. What is the cheapest way to produce electricity in this market, and why are we making a political decision and not an economic decision?” In his time on Capitol Hill, oil and gas companies have donated $208,100 to McClintock’s campaigns, including $41,500 from Occidental Petroleum.
Walker noted the fact that high-voltage transmission lines in Puerto Rico currently have to cross the mountainous center of the island, to bring it from centralized coal- and oil-fired plants in the south to where most of the energy demand is in the north, around San Juan, at tremendous cost. On top of that, all of the fossil fuels used in Puerto Rico need to be imported, tacking on significant costs.
“Why,” McClintock pressed, undaunted, “aren’t we looking at it strictly in terms of economics and not in terms of politically favored sources of energy?”
Patiently, Walker reiterated: “I guess I’m not really sure where you’re going. When you go to Puerto Rico and you look at the geography — where you’ve got mountaintop distribution systems — the cost of running the distribution system up the mountaintop via traditional means is uneconomical compared to being able to utilize things like wind and solar by placing the generation exactly where the load is.”
In other words, putting solar panels on a roof might be expensive up front, but compared to running power lines up and down a mountain, it’s cheap.
McClintock wasn’t alone in his professed confusion. Rep. Don Young, R-Alaska — after receiving an even-handed explanation about the “due diligence” that would need to be done in figuring out a timeline for PREPA’s privatization — sniped that it “shouldn’t take that long. …We are going to privatize this unit” before rambling something about how “everybody’s smokin’ pot.” Since 1989, Young has accepted $1,405,113 from oil and gas interests.
Shortly after another panelist, Thomas Emmons of Pegasus Capital Advisors, explained that “in Puerto Rico, solar power is cheaper than imported fossil fuels,” Rep. Doug LaMalfa, R-Calif., spoke about how the U.S. has “abundant natural gas that we export, and we’re seeking to export more of, across the Atlantic and other areas, to share with Europe and others. The island is much closer than those areas. If it’s economical for Europe to import, why would it not be economical for Puerto Rico to do so?”
LaMalfa is elected to represent roughly 700,000 people in Congress. Since he first came to Washington in 2011, he’s accepted $95,750 in campaign contributions from the oil and gas industry.
Of wind and solar, LaMalfa said, “Those alternatives seem terrible to me,” compared to building new natural gas infrastructure. Proposals to do so have been reliably shot down by local environmental groups for more than a decade.
The hearing was held on the 120th anniversary of Puerto Rico becoming a colony of the United States, an opportunity LaMalfa took to angrily tell Puerto Rico Senate Minority Leader Eduardo Bhatia that bringing up Puerto Rico’s status as literal property of the US — per the Constitution — “really isn’t helping your case. I have a great respect for the people of Puerto Rico and I want to see them prosper. Making that argument does not help your cause.”
Natural Resources Committee Chair Rob Bishop then quipped, “I’m from Utah. I understand what it’s like for the federal government to control other property,” evidently comparing U.S. control over economic life on an island without voting rights to the management of federal land in Utah. Since his first run for Congress in 2001, Bishop has taken $452,866 from the oil and gas industry.
Echoing Walker, from the DOE, Bhatia repeatedly made the case Wednesday that the island’s energy system should look to start shifting away from fossil fuels, urging in his opening statement that the “time has come to evolve from fossil fuels into solar and hydroelectric energy. … Puerto Rico should be the showcase in America — la vitrina — of renewable energy.”
If you don’t happen to take tens or hundreds of thousands of dollars from the oil and gas industry, the economics of phasing out fossil fuels in Puerto Rico look fairly straightforward. There aren’t any fossil fuel reserves on the island to be mined, meaning that all traditional fuels need to be shipped there. Currently, Puerto Rico gets about 90 percent of its fuel from costly imported oil, having spent $27.7 billion on it between 2002 and 2017 — in some years, as much as 61 percent of its yearly operating budget. Renewable energy can be produced locally, and the island is particularly well-equipped to produce high-quality wind and solar power. One report estimates that Puerto Rico could get 40 percent of its energy from renewable sources by 2028.
PREPA’s acquisition of fossil fuels has also been wrought with corruption. A recent study from the Institute for Energy Economics and Financial Analysis finds that PREPA’s Fuel Office arranged through a series of doctored lab tests to pay premium prices for low-quality fuel for as long as the last three decades. The report’s authors argue, as well, that this kind of chronic mismanagement when it comes to contracting is unaddressed in the bill authorizing PREPA’s privatization, passed through the island’s legislature and signed by the governor in June.
The proposed privatization would, in fact, see PREPA strike more deals with private contractors, not less, as they bid to take over different pieces of the island’s energy grid. Bishop, who oversaw yesterday’s hearing, this spring suggested turning Puerto Rico into an “energy hub” for the Caribbean, a base from which U.S.-based fossil fuel companies could ship imported natural gas out to the region. He said as well that he had been in conversations with oil and gas companies about the idea.
“They want to keep Puerto Rico energy dependent as an energy market for fuels, instead of promoting energy self-sufficiency for the island. I think that’s the main struggle,” Arturo Massol told me of Congress’s designs for the island. “It’s not so much if it’s public or private. It’s a matter of being energy self-sufficient or fossil fuel-dependent.”
Massol is the director of an organization called Casa Pueblo, based out of its titular pink house in Adjuntas, Puerto Rico. They were an early adopter of solar power on the island, first installing panels onto their headquarters in the late 1990s. After Maria, those same panels meant that Casa Pueblo was one of the only places in the area with power — an “energy oasis,” as Massol calls it.
“The conversation has completely shifted” on solar after the storm, he said. In an effort to spread decentralized renewables around the island, Casa Pueblo is trying to proliferate energy oases and has hosted several workshops on how to install your own solar arrays. Massol said they “fill up in 24 hours every time we do it. … People see solar power now as a way to modernize and move forward. They know the quality of life can improve through it.”
Energy sourcing is just one of many challenges facing PREPA, the island’s monopoly public power provider. The utility has suffered from years of disinvestment that became apparent after Hurricane Maria battered the island and its electricity infrastructure, which still hasn’t been fully repaired. PREPA currently sits in about $9 billion in debt, part of the at least $74 billion that the island is now saddled with and that the Washington-appointed fiscal control board is tasked with reigning in. The utility has shuffled through three separate directors in the last several weeks, with five out of six board members resigning at one point after Gov. Ricardo Rosselló urged them to rein in short-lived director Rafael Diaz-Granados’s $750,000 salary following public outcry.
In keeping with other privatization efforts in sectors like education and transportation, federal authorities and politicians on the island have, since before Maria hit, been keen to privatize PREPA, ostensibly to correct for persistent mismanagement and the slow pace of recovery. Yet while there’s a virtual consensus on the island that PREPA is in need of serious reforms, many doubt that selling it off — especially to fossil fuel interests — will improve matters.
It’s not as if PREPA is completely public as is. About 30 percent of its power generation capacity comes from two privately owned plants, and PREPA management have awarded generous contracts out to private contractors post-Maria — most infamously a $300 million deal with the novice Montana-based firm Whitefish Energy.
“PREPA’s past history of contracting scandals kind of taints the credibility of what they say they’re trying to do with this privatization,” report co-author and IEEFA Energy Analyst Cathy Kunkel told me. “A very large amount of money has been extracted through these contracts, stolen really. If you are going to do a privatization that is basically just a series of more contracts — and do that without reforming in a serious way the contracting processes and the failures that have already happened — why is that going to result in anything that’s any better for the consumers?”
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