Power Problems: Puerto Rico's Electric Utility Faces Crippling Debt The island's power authority owes $9 billion. Power costs are already high, but bondholders are pushing for rate hikes. That may deter employers, which would further hurt the territory's weak economy.

Power Problems: Puerto Rico's Electric Utility Faces Crippling Debt

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Puerto Rico is facing a different kind of crisis. After years of borrowing to cover budget deficits, the U.S. territory is more than $70 billion in debt. The biggest chunk of the debt, more than $9 billion, is owed by one of the island's most troubled public agencies - its power company. NPR's Greg Allen reports.

GREG ALLEN, BYLINE: With tropical weather and beautiful beaches, Puerto Rico has a lot going for it, but there are downsides to living on an island. A big one is the cost of energy produced by Puerto Rico's Electric Power Authority, also known as PREPA. Power in the U.S. territory costs more than any U.S. state except Hawaii, and that's not the biggest problem.

LISA DONAHUE: PREPA is very damaged. PREPA needs a lot of work.

ALLEN: Lisa Donahue is an expert on fixing utility companies that are in trouble. Since last year, she's been the executive leading the effort to overhaul Puerto Rico's power company. She recently testified before skeptical members of the island's Senate.

DONAHUE: But I maintain that it's critically important, and I think we have one chance to do this right and to set PREPA on the right path and to fix it for the future of Puerto Rico.


UNIDENTIFIED MAN: (Speaking Spanish).

ALLEN: On talk radio in San Juan and throughout Puerto Rico, the high cost of electricity and the problems with the power company are a leading topic. Sonia Vazquez says the monthly power bills for her home make no sense.

SONIA VAZQUEZ: Why am I paying so much of this? What the heck is this, you know? It's really difficult to understand it.

ALLEN: Standing outside the power company offices in San Juan, Vazquez is carrying her big file of bills and correspondence in a shopping bag some eight inches thick. Nearly four years ago, she began contesting part of her bill each month. Vazquez, a fearless 60-year-old, now owes the power company nearly $10,000 and says she has no intention of paying.

VAZQUEZ: They're supposed to detail to me everything that they're charging me. Why am I paying something that I don't know what is contained in it?

ALLEN: Many in Puerto Rico share Sonia Vazquez's dissatisfaction with the island's state-owned power company, including, perhaps surprisingly, Jose Maeso. Maeso is Puerto Rico's top energy official. There are many problems with PREPA, he says.

JOSE MAESO: We have about 50 percent more of the capacity that we need right now. Along with that, we have most of the plants are very old - 50, 60 years. The infrastructure is not prepared to be modern, you know, to be competitive.

ALLEN: It's a grid and series of power plants built when Puerto Rico nurtured dreams of industrialization. Decades later, many power plants sit idle, but customers are still paying for them - but only some of the customers. Nearly a third of PREPA's accounts received subsidized rates that required them to pay little or nothing. That includes many large users - city governments and hotels are officially exempt from paying. Maeso says others, including the schools and the island's train system, simply don't pay.

MAESO: All of us are subsidizing whatever somebody else doesn't pay, even the government itself. But that definitely needs to stop in order for us to fix the whole system.

ALLEN: After decades of mismanagement, for Puerto Rico's power company, time has run out. It's $9 billion in debt and now unable to make scheduled payments to creditors. It's operating week-to-week under a series of temporary agreements with Wall Street firms. And some of those bondholders have said they want to raise rates. Maeso is concerned about the impact that would have on the island's economy and its ability to retain factories and other large employers who may consider moving elsewhere. As for residential customers, like Sonia Vazquez, Maeso says they'll adjust by turning off lights and not using their air conditioners. It's advice that makes Sonia Vazquez angry.

VAZQUEZ: They don't really care about us, you know? They just tell me don't use the dryer. Why don't you put your clothes outside? That's what they think. They really think that the way we can do it is sacrificing and paying more, but, you know, they subsidize everyone except the people that work.

ALLEN: Puerto Rico's energy problems may come to a head in July when the power authority is expected to default. If that happens, it will be another blow to the island's already staggering economy. Greg Allen, NPR News.

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