uZI
Jidv 1966 A SPECIAL REPORT ON 7fr
PUERTO RICO
*
Cornrrionwealth ojPuerto Rico
Government Development Bank for Puerto Rico San Juan, Puerto Rico
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PUERTO RICO WATER RESOURCES AUTHORITY
1941 - Our Growth - 1966
Data for the twelve months ending Times
June 30, 1941(D
Sales of electricity (Kwh) Revenues from sales Custonoiers (number) Average sales per customer (Kwh) Average revenue per customer
Generation requirements (Kwh) Annual peak demand (Kw)
66,582,000 $ 1,258,000 27,500 2,969 $ 56.11
$
80,749,000 575,000 6,430 144.04
64 21 2 2.6
53 38
29,690
891,220
30
$ $
82,348,000 44,127,000
64 103
856,000
$
38,221,000
25,000
$
$ 1,285,000 $ 429,000 $
Other contractual obligations
26^,000
8,845,000
354
29,583,000
114 135
Contractual obligations (total)
$
285,000
$
38,428,000
Net revenue
$
570,000
$
959,000
Electrical plant in service (at cost) Construction work in progress
54
4,254,855,000 688,500
Balance of revenues available for debt service . . $ Contribution in lieu of taxes
3,604,795,000 $
increased
80,737,000 17,960
Generating capacity installed (nameplate Kw) . .
Operating revenues Operating expenses
March 31, 1966
1.7
$ 9,076,000 4,963,000
$ 429,282,000 57,585,000
47 12
Electric plant (at cost)
$14,039,000
$ 486,867,000
35
Long term debt and outstanding notes
$ 7,919,000
$ 342,904,000*
43
Equity of the people of Puerto Rico
$13,003,000
$ 115,349,000
9
o) Excludes the San Juan and Mayaguez electric systems integrated with the Authority's system in 1942 and pur chased in 1944.
* With the present balance of revenues for debt service, if expansion needs required, the Authority could issue roughly $130,000,000 in additional revenue bonds within the limits established by the Trust Indenture securing these bonds.
i-j
Commonwealth of Puerto Rico PUERTO RICO WATER RESOURCES AUTHORITY
ES'9929%
Governing Board
Officers
Chairman: HON. ROBERTO SANCHEZ VILELLA Governor of the Commonwealth of Puerto Rico Vice-Chairman: HON. FRANCISCO LIZARDI
Secretary of Public Works Member: HON. MIGUEL HERNANDEZ AGOSTO
Secretary of Agriculture
RENAN COLON
Chief Engineer FELIX CORDOVA DIAZ
General Manager — Services and Supply HAROLD TORO
General Manager — Irrigation Services JOSE VILA RUIZ General Counsel
CARLOS VELAZQUEZ TORO
Principai Officers
Head, Production and Transmission Division
RAFAEL V. URRUTIA
HUMBERTO CORDERO
Executive Director
Head, Distribution and Sales Division
DR. MODESTO IRIARTE
WALDEMIRO VELEZ
Assistant Executive Director — Electrical Planning,
Head, Electrical Planning and Research Division
Construction and Research
JOSE A. MATOS
EDUARDO LUBE
Head, Power Design and Construction Division
Assistant Executive Director — Finance
JOSE I. DIAZ Controller
JULIO NEGRONI
Assistant Executive Director — Power Operations
LOUIS ROIG MARTINEZ Treasurer
FERNANDO TORRENT
Assistant Executive Director—Industrial Relations and Personnel
JAVIER CUEVAS BENITEZ
Head, Purchasing Division JUAN F. DOVAL
Head, Personnel Division HECTOR M. MORALES
Head, Transportation and Services HERMANN MUNOZ Public Relations Officer
RAFAEL D. CHERVONI Head, Safety Division Trustee
First National City Bank, New York, N. Y. Consulting Engineers Jackson and Moreland Division
of United Engineers and Constructors Inc. Auditors
I z
Arthur Andersen & Co.
Bond Counsel
Mitchell, Pershing, Shetterly & Mitchell 1
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P'3 s
Puerto Rico
Water Resources
Authority
The year 1966 marks a very significant milestone in the history of the Puerto Rico Water Resources Au thority. It is the year in which the Authority celebrates its SILVER ANNIVERSARY — 25 years of exis tence as an autonomous public service corporation and instrumentality of Puerto Rico's government. It was 25 years ago, in 1941, that Puerto Rico's
Legislative Assembly passed the law whereby the Puerto Rico Water Resources Authority, in its present form, was created. However, the Authority's origin dates back much further, to the year 1915, when an other government agency, the Puerto Rico Irrigation Service, built the first government-owned power plant on the island. The Puerto Rico Irrigation Service evolved into another government agency, known as "Utilization of the Water Resources," created in 1927, and the latter in turn was replaced by the present Puerto Rico Water Resources Authority. The purpose of Puerto Rico's Legislature in creat ing the Authority, in 1941, was to ensure a growth in the supply of electricity which would be adequate for the future needs of Puerto Rico's economic develop ment. Subsequently, during the World War II fuel shortage, the two large private electric utilities on the Island were taken over by the United States Govern ment as an emergency measure and their operation entrusted to the Authority. In 1944, these systems were purchased by the Authority and, at a later date, the electric facilities of various irrigation services were integrated into the Authority's system. When the Authority began operations in 1941, the
Island's economy was primarily agricultural and heavily dependent on a single crop — sugar. In the
tion Bootstrap." By 1956, for the first time in Puerto Rico's history, net income from manufacturing sur passed that from agriculture. Today over 1,000 new factories, promoted under the economic development
program, are in operation with a total direct employ ment of 74,400. Such rapid growth and profound change in the basic character of the economy has created a continuous and rapid rise in the demand for energy.
Throughout the twenty-five years elapsed since the Authority came into being its growth has been steady and most impressive. The comparative figures shown on the inside of the cover page speak for themselves. From its inception the Authority has had to con stantly build new hydro and thermo-electric plants to keep up with, and anticipate, the mounting demand for electric power. New generating capacity has been added almost every year. Since 1944 total name plate rating of the Authority's generating plant has risen
from 64,440 Kw to the present capacity of 890,420 Kw. Annual capital construction programs in recent years have reached as high as $47,000,000. The capital construction program for 1966-67 is estimated at $48 million. It includes work on three 100,000 Kw units for the San Juan Steam Plant,
scheduled for completion in August 1966, March 1967 and January 1968 respectively. Other important projects are the installation of three 20,000 Kw and one 10,000 Kw jet peaking units, throughout the system. This program also includes general transmis
sion and distribution facihties, rural electrification projects, the acquisition of land and the construction of buildings, and miscellaneous items. When current
latter half of that same decade, an industrialization
projects are completed, total generating capacity will
program for the Island was begun as part of "Opera
be 1,260,420 Kw.
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South Coast Steam Electric Plant, Guayanilla Bay, has an installed capacity of 263,000 kw in two 44 tnw, two 82.5 mw steam units and a 10 mw jet peaking power pack.
supply about 94 percent of the electric energy gen erated. The Authority's four thermal-electric generat
The Authority has grown to become the second largest municipally owned, integrated electric utility in the United States as is indicated by the following
ing stations have a total installed name plate rating
tabulation:
of 766,000 Kw. City of Los Angeles Puerto Rico Department of Water Resources Water and Power Authority
Net Plant . . . . Electric Revenues .
City of Seattle Department of
Lighting
As of June JO, 1965
As of Mar. i/, 1966
As of Dec. 31, 1965
$821,742,757 $159,368,362
$403,022,000
$ 80,749,000
$246,330,592 $ 44,150,884
Number of
Customers . . .
1,028,099
Steam-Electric Stations
The Palo Seco Steam Plant, near San Juan, was
placed in service in 1960 and has two 82,500 Kw steam-electric units and one 10,000 Kw jet peaking
unit powered by a kerosene-burning aviation-type jet motor. This unit is used for peaking and for emer Present Electric System
gencies, being designed for automatic synchroniza tion to the line from a cold start in only two minutes.
The total installed generating capacity of the Author ity at the end of March 1966 had a name plate rating of 890,420 Kw and maximum dependable ca pacity of 942,960 Kw. The physical plant presently consists of twenty-three generating stations, of which eighteen are hydroelectric, four are thermal-electric
A desalinization pilot plant has also been inaugurated, to provide 14,400 gallons a day of make-up water for
and one is nuclear. Thermal-electric facilities now
44,000 Kw, two 82,500 Kw steam-electric units and
the main unit boilers. The desalinization process is new and uses waste heat from the turbine condenser system to evaporate sea water in a vacuum. The South Coast Steam Plant, near Ponce, has two
a 10,000 Kw jet peaking unit. One of the outstanding features of this plant is that it can bum either low cost refinery pitch or Bunker C fuel oil. This plant currently receives its fuel by direct pipe line from the nearby refinery of the Commonwealth Oil Refining
have reservoirs which permit regulation of plant out put by collecting and storing water inflows during the rainy season for utilization during the dry season, and the remaining four operate on run-of-the-river flows. Eleven of the hydroelectric plants are non-attended
Co.
and fully automatic.
The San Juan Steam Plant has an installed capacity of 278,000 Kw in four 20,000 Kw, two 44,000 Kw and one 100,000 Kw steam-electric units and a 10,000 Kw jet peaking unit. Work on three other 100,000 Kw
Nuclear Power Plant
A nuclear power plant with a rated capacity of 16,500 Kw and utilizing a new and advanced type of boiling water reactor and nuclear superheater, located on the western tip of Puerto Rico, was placed in ser vice in January 1966. It was constructed under the terms of a contract between the Authority and the Atomic Energy Commission. The Authority has pro vided the plant site and the conventional generating components; the AEC,the nuclear reactor. This proj ect is giving the Authority the necessary experience to undertake large scale generation by means of nuclear reactors, when such generation becomes economically
units, scheduled for completion in August 1966, March 1967 and January 1968, is under way. The Mayaguez Plant is equipped with two gas tur bine generators whose rated capacity is 20,000 Kw each. The main purpose of these turbines is to handle peak loads. A 10,000 Kw, jet peaking unit was in stalled recently. Hydroelectric Stations
There are 18 hydroelectric plants with a total installed capacity of 107,920 Kw. Fourteen of these plants
PUERTO
RICO
WATER
feasible.
RESOURCES
AUTHORITY
ELECTRIC SYSTEM •AtAMON SO,000
KW rXTENSlOW
PALO^SECO
CONSTRUCTlONj
CAMa|k\ACHt
e*-j? VEOA
Alos ancc
AlTA
U?. OS BOCAS IS.OOO
coccgio-xtsocvaa
barrancoitas CAONtLLA
\3.000 KVA OO K A
KG 2 4.000
A CIORA
CACUAS NO. 7
AIDONIIO OHO NEGRO NO
SCOOkva
BA40 KW
NUi r.zooKw ARZAS N0.2
YAUCO MO 2
COAHO NOI^ •CAUP ALLtH
A"?!
OUTM C0A5
LEGEND □ THERMAL PLAMTS
3BKV SUBMARINE POWER CAB.E
30 KV ELECTRIC TRanSUisSiON LINES
joJl NUCLEAR PLANT (BOHUS)
EXISTING 115 KV electric TRANSMISSION LINES
O mtoro electric plants
o 115 KV iLfriRic transmission lines (Unde. Coniifue
iA TRANSMISSION SUBSTATIONS A DISTRIBUTION
SUBSTATIONS
RESERVOIRS
^^^,£QUB5
GROWTH OF THE ANNUAL LOAD OF THE SYSTEM SINCE 1941 Sales
(Million Kwh)
Revenue
Average
Kilowatt
per
Revenue
Customers
Maximum Peak Load
Load
Hours per
(End of Period)
(ICw)
(Kw)
Customer
Kilowatt Hour
Customer
(June 30)
(Thousands of Dollars)
1940-41
$ 3,610
139.0
100,402
18,000
9,000
1,383
$.0260
$ 35.93
1945-46
5,764
258.6
124,959
63,000
39,000
2,069
.0223
46.13
1950-51
13,006
488.2
185,090
109,000
69,000
2,638
.0266
70.27
1955-56*
25,216 28,693 33,973 35,781
930.8
314,853 338,685 363,032 385,592
210,000 249,000 272,000 314,000 355,000 398,000 439,000 498,000 560,000 637,000 737,000
129,000 153,000 181,000 198,000 231,000 261,000 294,000 335,000 388,000 436,000 507,000
2,956 3,184 3,578 3,687 4,080 4,350 4,664 5,053 5,522 5,771 6,453
Fiscal Year
1956-57*
1957-58* 1958-59*
1963-64*
40,441 45,304 50,846 57,520 65,865
1964-65*
72,952
1965-66t
83,618
1959-60* 1960-61* 1961-62*
1962-63*
1,078.4 1,298.8 1,421.6 1,667.4 1,892.4 2,145.4 2,465.6 2,858.4 3,186.3 3,755.7
408,671 435,019 459,995 487,991 517,682 552,111 582,000
per
.0271
80.08
.0266
84.72
.0262
93.58
.0252
92.79
.0243
98.96
.0239
107.34
.0237
113-44
.0233
121.20
.0230
130.85
.0229
132.13
.0223
143.67
* Includes amount recovered through Fuel Oil Adjustment, t Estimate including Fuel Oil Adjustment.
Transmission and Distribution Systems
The Authority's transmission system consists of 1,507 Replacing oil breakers at Monacillos Transmission Center.
circuit miles of 115 Kv and 38 Kv lines, controlled and sectionalized at 116 substations and sectionalizer
stations, with a total name plate transformer capacity of 1,686,875 Kva located at suitable points through out the system to insure stability of service and pro
vide an adequate islandwide network. The transmis sion system also includes a submarine cable 9.5 miles long which was placed in service during May 1963 to connect the island of Vieques to the Au thority's system. Distribution facilities include 187 substations owned
by the Authority with a capacity of 728,322 Kva which, supplied from the transmission network, con vert the electric power for distribution at 2400/4160 Y, 4800/8320 Y and 7,620/13,200 Y volts
through distribution feeders which traverse 76 cities and towns and nearly all of the rural area. In addition, there are 149 privately owned distribution substations
with a total capacity of 307,882 Kva to serve indus trial customers, making a total installed capacity of 1,036,204 Kva.
I
.Sun Juan ThcrttmeU'clric
Station. The three targe smolcestack.i belong to Units Nos. I to 6. aggregating
168,000 KW. The two tall structures with four small stacks are the new Units
Nos. 7 and 8. rated at
100,000 KW each, now nearing completion.
Rural Electrification
Through successive amendments to an original loan contract for $6,376,000, entered into in 1952 be
tween the Authority and the Rural Electrification Administration of the United States, the Authority has borrowed to date $74,040,000 on bonds bearing interest at the rate of 2% under a loan contract now
totaling $74,040,000. These funds have been loaned
by REA for the construction of generation, transmis sion and distribution facilities to serve rural custom ers.
By law, the Commonwealth Government contrib utes to the Authority the annual amounts required to
guarantee that the Authority recovers the complete cost of service to customers served under the REA
program, in the case that revenues do not provide an adequate contribution to fixed costs. Financing System Growth
Under its enabling legislation, the Authority has the power to borrow money and issue revenue bonds for its corporate purposes and to secure the payment of these bonds under a Trust Indenture. It also has full
authority to set and collect adequate rates and other charges for the use of its facilites, and has complete
control and supervision over its properties and activi ties. Properties may be acquired by the Authority by any lawful means, including the power of eminent domain.
For many years the Authority has followed a policy of initially financing the construction of facilities under its Capital Improvement Program with short term bank loans. From time to time, issues of revenue
bonds are sold for the repayment of such loans and for the continuance of construction. In this way the
facilities producing income for the support of longterm obligations are to a large extent already in oper ation by the time such obligations are issued. Bonds outstanding, including the REA issues, totaled $324,404,000 as of March 31, 1966. In addition, a substantial amount of the Capital Improvement Program has been financed directly from revenues of the Authority. In the period from May 1, 1947 to March 31, 1966, a total of $466,872,000 was invested in capital improvements. Of this amount $346,283,000 has been provided from the net proceeds of bond issues and bank borrowings,
NUMBER OF CUSTOMERS
SALES OF ELECTRICITY - KWH
Thousands
Millions of KWH
4.000
600
3.000 500
Industrial
Commercial
2.500 â–
-fli Residential
400
2.000 â– 300
200
100
0 Fiscal '!56
Years
'57
'58
'59
'60
'61
'62
'63
'64
'65
'66*
Fiscal '56
'57
'58
'59
'60
'61
'62
'63
'64
'65
'66*
Years * Estimated
Source: P.R.W.R.A. Financial Reports.
and $120,589,000 had come mainly from net revenues of and contributions to the Authority. On March 31,
New Bond Issue
1966, total net assets amounted to $483,127,000,
In July 1966, the Authority proposes to sell $32,000,-
operating and appropriated reserves were $28,288,000, contributed capital and unappropriated net rev enues were $87,062,000 and outstanding debt was $342,904,000.
000 par value Electric Revenue Bonds for the pur
Total revenues for the twelve months ended March
31, 1966, were $83,680,000. Current expenses were $44,293,000, leaving a balance of $39,387,000 avail able for debt service requirements and other contrac tual obligations. The maximum debt service for any
pose of liquidating current bank borrowings and con tinuing the Capital Improvement Program.
Preliminary calculations indicate that the Au thority's maximum annual debt service, upon the completion of the financing, will approximate $17,829,000 and will be covered over 2.20 times by net
earnings for the twelve months ending May 31, 1966.
future year on outstanding issues was $15,907,000, indicating a coverage of 2.48 times on present debt.
Looking Ahead
Accruals for contributions to the Commonwealth and
Continuous studies of power needs, constantly re
municipal governments in lieu of taxes amounted to
viewed and revised by the Authority and its consulting engineers, now indicate that peak demand of the system will increase from 845,000 Kw in 1966-67 to 961,000 Kw in 1967-68, 1,079,000 Kw in 1968-69 and 1,226,000 Kw in 1969-70. It is expected that
$8,845,000 during the same period. The rapid expansion in facilities and improvement of service over the past decade has been carried out without raising the Authority's rates. Constant in creases in demand have consistently resulted in a
over 30,000 new customers will be added yearly. To
yearly growth in revenues and in substantial reserves
meet this demand, the Authority's generating capacity
adequate to meet the Authority's operating expense
will be raised to a name plate rating of 1,660,420
and contractual obligations.
Kw by June 1970.
Puerto Rico Water Resources Authority
Condensed Balance Sheet As of March 31, 1966
ASSETS
NET UTILITY PLANT:
Gross utility plant Less accumulated provision for depreciation
$486,867,418 83,845,399
Net utility plant
$403,022,019
OTHER PHYSICAL PROPERTY
183,618
BOND REDEMPTION, RESERVE AND CONSTRUCTION FUNDS
16,966,627
CURRENT ASSETS:
Funds and working advances
$ 19 848 238
Accounts receivable — Less Reserve for uncollectible accounts
17,368,098
Materials and supplies
11 913 405
Prepayments, special deposits, etc
868,766
49,998,507
DEFERRED DEBITS:
Debt discount and expense in process of amortization
Other
$11 262 046
li694i512 TOTAL ASSETS
12,956,558
$483,127,329
LIABILITIES
CONTRIBUTED CAPITAL
$ 37,792,183
UNAPPROPRIATED NET REVENUES .
49,269,430
LONG-TERM DEBT: Electric revenue bonds
Notes payable
$324,404,000 18,500,000
342,904,000
6,675,733 3,415,064 2,525,449 6,774,844 5,117,366
24,508,456
CURRENT LIABILITIES:
Accounts payable Customers' deposits and accrued interest . . Accrued interest on Electric Revenue Bonds . Accrued contributions in lieu of taxes . . . Other
DEFERRED CREDITS
365,715
RESERVES: Self-insurance
Injuries and damages Revenue stabilization
Appropriated sinking fund . . . TOTAL LIABILITIES 8
5,558,504 4,121,792 1,129,401 17,477,848
28,287,545
$483,127,329
Puerto Rico Water Resources Authority
Condensed Statements of Revenues and Expenses (For Revenue Fund Purposes per Trust Indenture)
Twelve Months Ending 1962
June 30 1963
June 30 1964
June 30 1965
March 31 1966
$50,845,979
$57,519,700 1,409,175
$65,864,594 1,501,989
$72,952,446
1,284,837
1,644,048
$80,748,876 1,598,981
$52,130,816
$58,928,875
$67,366,583
$74,596,494
$82,347,857
June 30
REVENUES:
Other operating revenues
Total operating revenues
675,433
742,361
970,985
1,182,929
1,331,929
$52,806,249
$59,671,236
$68,337,568
$75,779,423
$83,679,786
$ 7,360,603
$ 8,542,762 $ 9,358,232
Other income Total revenues
CURRENT EXPENSES:
Operation — $10,709,138
$11,572,890
Other current expenses . .
14,104,870 6,104,009 529,768
15,353,872 7,160,923 709,753
18,304,172 8,871,283 879,071
19,894,285 9,339,608 750,520
21,914,210 9,931,207 874,903
Total current expenses
$28,099,250
$31,767,310
$37,412,758
$40,693,551
$44,293,210
Fuel
Other operating expenses Maintenance
Balance of revenues after current ex
penses (per Trust Indenture) . . $24,706,999 $27,903,926 $30,924,810 $35,085,872 $39,386,576 SINKING FUND PAYMENTS:
Interest account (exclusive of interest
charged to construction and reimburse ment from the Commonwealth Govern
ment of Puerto Rico) $ 6,867,883 $ 7,718,486 $ 8,162,797 $ 8,426,525 $ 8,815,351 Bond redemption account (exclusive of reimbursement from the Common
wealth Government of Puerto Rico) . Reserve account
3,373,776
3,837,000
4,299,656
4,631,960
5,534,742
1,179,206
1,343,538
1,466,002
220,116
155,478
Total sinking fund payments . . . . $11,420,865 $12,899,024 $13,928,455 $13,278,601 $14,505,571 Balance
$13,286,134 $15,004,902 $16,996,355
$21,807,271
$24,881,005
TRANSFERS TO:
General reserve fund — provision for selfinsurance
$
Renewal and replacement fund Total transfers
542,178 $
6,882,337
598,185 $
7,680,380
640,668 $
8,384,582
678,078 $
12,397,814
709,189
14,367,865
$ 7,424,515 $ 8,278,565 $ 9,025,250 $1^^5,892 $15,077,054
Balance available for contributions in
lieu of taxes, etc
$ 5,861,619 $ 6,726,337 $ 7,971,105 $ 8,731,379 $ 9,803,951
PROVISIONS FOR CONTRIBUTIONS IN LIEU OF TAXES
Balance
5,563,099
6,298,353
$
427,984
7,212,100
$
298,520
$
$
149,260 $
213,992 $
$
149,260 $
213,992 $
759,005
7,989345
$
742,034
8,844,970
$
958,981
379,503 $
371,017 $
479,491
379,502 $
371,017 $
479,490
PROVISION FOR:
Transfer to sinking fund reserve account Balance transferred to unappropri ated net revenues
9
Public LighUnii, town plaza, Riiwon.
During the period from July 1, 1965 through June 30, 1969, It is anticipated that the Authority will invest $207,703,000 in further capital improvements.
Resources Authority Sinking Fund. The Authority has covenanted to deposit in this fund a sufficient
Of this amount, the sale of bonds will provide some
amount of its revenues, after expenses for main tenance and operation of its electric properties, to
$117,782,000. About $81,572,000 or 39% will be
pay the principal of and the interest on all bonds
derived principally from revenues of the Authority, compared with an average of 26% accrued from earnings and contributions during the last nineteen years. The remainder of $8,349,000 will be available from previous bond issues. The above four-year program compares with cap ital expenditures actually made during the past nine teen years, distributed as follows: steam production
issued as they become due, as well as to create
plant $163,341,000, nuclear production plant $5,960,000, hydraulic production plant $36,206,000, gas turbine production plant $11,082,000, transmis sion plant $61,225,000, distribution plant $137,597,-
Indenture to the credit of the General Reserve Fund
000 and other facilities $51,461,000 for a total of $466,872,000.
Security for the Bonds
Bonds issued by the Authority under the Trust Indenture are payable from the Puerto Rico Water
reserves for such purposes.
The Authority has also covenanted that it will at all times fix and collect reasonable rates and charges
sufficient for the payment of maintenance and oper ating expenses and bond principal and interest, and to create certain reserves. Rates must also provide
for the making of deposits required by the Trust and the Renewal and Replacement Fund, and for payments in lieu of taxes to the Commonwealth and
the municipalities it serves.
In order for the Authority to issue additional bonds under the Trust Indenture, the average annual bal ance of revenues from its electric properties for the preceding twenty-four months, after deducting the cost of maintaining, repairing and operating these properties during the same period, must be not less than 150 percent of maximum debt service payable
in any succeeding fiscal year on all bonds, including
the proposed issue. By supplemental indenture, to become effective only when all presently outstanding bonds heretofore issued have been retired, this per centage will be reduced to 140. The bonds and the income therefrom are, under
Government History
Puerto Rico came under United States sovereignty by
the Treaty of Paris on December 10, 1898. The Con gress of the United States provided for a civil govern
provisions of Acts of Congress now in force, exempt
ment for the island in 1900. It provided for a Gov
from Federal and State taxation. These bonds are also
ernor, an Executive Council which also acted as a Cabinet, a Senate and a Supreme Court Judiciary, all
legal investments for savings banks and trust funds in the state of New York and for savings banks in California and are eligible for deposit by banks in Puerto Rico to secure public funds, and by insurance companies to qualify them to do business in Puerto
Rico. The bonds are rated "A" by Moody's Invest ment Service and by Standard and Poor's.
In the credit history of Puerto Rico, its municipali ties, authorities, agencies and other political sub divisions, there is no known record of default or de
appointed by the President of the United States; only a House of Delegates was elected by the People of Puerto Rico.
Over succeeding years strong feeling develope or a more autonomous form of government and in favor of United States Citizenship. The original Act was
superseded in 1917 by the Organic Act or Jon^ c , which granted United States citizenship to Puerto Ricans, as well as unrestricted suffrage for loca pur poses. It also provided that members of bot
linquency in the payment of principal of or interest on any obligation, nor has there been any forced or "managed" refunding of maturing bonds to avoid
Executive and Judicial branches remained
default.
trol of Washington through appointment by t e
The growth of imliistfial plants in Puerto Rico requires constantly expanding electric pon'er production.
and House were to be elected by the people, but tne
as Governor. In 1947 the Jones Act was amended to
stitution was drafted by a freely elected constitutional convention, overwhelmingly approved in a special ref erendum, and approved by Congress and the Presi dent. It became effective upon proclamation of the
permit Puerto Ricans to elect their own Governor,
Governor of Puerto Rico on July 25, 1952.
who in turn was empowered to appoint his Cabinet and members of the Supreme Court with the consent
The Commonwealth Government
ident with the consent of the Senate.
No further change occurred until 1946 when the President for the first time appointed a Puerto Rican
of the local Senate.
The next advance toward complete local govern ment occurred in 1950 when, in accordance with the
The Constitution recognizes and assures a separation of powers among the executive, legislative, and judi
wishes of the People of Puerto Rico,the 81st Congress enacted Public Law 600, approved July 3, 1950. This law, which is "in the nature of a compact," became effective upon its acceptance by the electorate of Puerto Rico. It provides that those sections of the Organic Act which define the political, economic and fiscal relationship between Puerto Rico and the United
cial branches as in the Federal Constitution, and as in
States shall remain in full force and shall be there after known as the Puerto Rican Federal Relations
Act. It also authorized the People of Puerto Rico to draft and approve their own constitution. The Con
those of the States. Both the Governor and the bi
cameral legislature are subject to regular election every four years. The Legislature operates under standard parliamentary and legislative rules. Writs of error and appeals from judgments of the District Court of the United States for Puerto Rico may be taken to the United States Court of Appeals for the First Circuit and to the Supreme Court of the United States and writs of error and appeals from judgments of the Supreme Court of Puerto Rico may be taken to
TOTAL REVENUES, BALANCE AFTER CURRENT EXPENSES, AND DEBT SERVICE REQUIREMENTS
REVENUE FROM SALES OF ELECTRICITY
Millions of Dollars
Millions of Dollars
90
90
H Total Revenues
Residential
~f~n Balance After Current Expenses " ^ Debt Service Requirements
^ _;S ■! I| l| 0 -
•65
Fiscal '56
'66-
Fiscal Years
Source- P.R.W R.A Financial Reports.
12
■! li iilllii
til II I nil
i II 11 11 11 11 11 11 11 1 1 "56
'57
'58
'59
'60
'61
'62
* Estimate - Including Fuel Oil Adjustment. Source: P.R.W.R.A. Financial Reports.
'63
'64
The Palo Seco Steam Plant
has two generating units in service of 82.5 MW each
and a 10 MW jet powered peaking tinit shown in the foreground dose to the hori zontal tank.
the Supreme Court of the United States, in the same manner and under the same terms and conditions as
writs of error and appeals may be taken from other Federal and State courts.
Governmental responsibilities assumed by the Commonwealth are greater than those normally as
the Water Resources Authority and the Aqueduct and Sewer Authority. Air and sea port facilities are ad ministered by the Ports Authority. The bonded debts of these public corporations are supported entirely by revenues derived from their operations.
sumed by a State government. Municipalities which combine both rural and urban areas are the only local
Improved Commonwealth Status and Plebiscite
political subdivisions and are comparable to counties to levy ad valorem taxes are the Commonwealth Gov
Since 1952, when Congress authorized and Puerto Rico accepted the present commonwealth form of
ernment and the municipalities. There is, therefore, no other overlapping taxation or bonded indebtedness
government, it has been recognized that this being a new concept of political status within the framework
in scope. The only units of government with the right
payable from taxes. The Commonwealth Government assumes responsibility for a number of important functions normally performed by local governments in the Continental United States. Among these are
police and fire protection, education, all major street and highway construction, and public health pro grams. In addition, the Commonwealth Government supervises municipal fiscal affairs to a very substantial extent.
Commonwealth and municipal governments are
relieved of most of the responsibility for constructing
and financing electric, water, and sewer systems by
of the government of the United States it should in due course be subject to improvement. No significant changes were proposed until 1961 when, through
direct vote by Puerto Ricans, and with the approval of Congress (1) control of the Commonwealth debt limit was removed from the Federal Relations Act
and incorporated by referendum in the Puerto Rican Constitution, and (2) appeals of decisions of the Su preme Court of Puerto Rico were to be taken directly to the U. S. Supreme Court, instead of through the U. S. First Circuit Court of Appeals.
On July 25, 1962, the 10th Anniversary of the
Commonwealth, the Governor of Puerto Rico stated that sufficient time had elapsed, and enough experi ence had been acquired, to consider improvement and refinement of the commonwealth concept. Once this was attained, measures could then be taken to hold a plebiscite in which the people could express their preference for a perfected commonwealth status, or for the classical forms of government of statehood or independence. The Legislature of Puerto Rico, by al most unanimous vote, adopted a Resolution petition ing Congress to provide the basis for such plebiscite. In response to this, a Resolution (HR 5945) was introduced on April 30, 1963, in the United States House of Representatives, and was passed by the House on October 23, 1963 and by the Senate on February 18, 1964. The Resolution provides for the
President of the United States, plus two each selected
by the Senate and the House of Representatives, and six appointed by the Governor of Puerto Rico. The Commission is to render its report to the President
and the Congress of the United States and to the Gov ernor and the Legislative Assembly of Puerto Rico not later than September 1966.
It is expected that this study will result in the basis of a clarification and perfection of commonwealth status in such a manner that a subsequent plebiscite
can express the basic preference and choice of the voters of Puerto Rico as to their future political status.
Rapid Economic Progress For over two decades, economic growth in Puerto
mission on the Status of Puerto Rico" which is to
Rico has been rapid and continuous. Commonwealth gross product has increased over ninefold, from $287
study all factors which may have a bearing on the present and future relationship between the United
income of Puerto Rico has more than kept pace.
establishment of a "United States-Puerto Rico Com
million in 1940 to $2,757 million in 1965. The net
States and Puerto Rico. The membership of the Com
During the same period it rose from $225 million to
mission consists of three persons appointed by the
$2,321 million, registering a 9.6% increase in 1965,
The Shift Supervisor at the Monaciilos Transmission Center distributes the load among the power system plants. To the left the Area Dispatcher controls switching operations on transmission lines.
-y- m
Siifl 0 - - B -.
■ ■
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Qo
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This high-tension insulator washer, mounted on a truck, is used by the Authority in transmission line maintenance.
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mm
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-
JS JiF"
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• i>
Control room,
^ »• BONUS Nuclear Electric
"* ^41
Station (16,500 Station (16,500 kw), kw). Rincon.
Especially significant, net income per capita after
and has under construction a $22 million plant to
adjustment for price changes has shown an average annual increase for the last twenty-five years of about 5% compounded. In fact, the rate of increase has been accelerating, from 4.2% in the decade 1941-50, to 4.9% in the decade 1951-60, 7.3% in 1961-65, making the Commonwealth's economy one of the fast est growing in the world. Equally impressive has been the transformation of the Commonwealth's economy from over-depend ence on sugar to a high degree of industrialization and diversification. While net income from agricul ture has expanded from $71 million in 1940 to $195 million in 1965, that from manufacturing has multi
produce alcohol intermediates. Petroleum refineries are operated by Caribbean Refining Co., which recently completed an expansion program, and the Commonwealth Oil Refining Co., which is currently adding a $33 million investment in petrochemical
plied twenty times, from $27 million in 1940 to $540 million in 1965, and now provides 23% of Commonwealth net income. Whereas in 1940, sugar products accounted for nearly two thirds of exports,
in 1965 they provided less than an eighth. Currently more than two thirds of manufacturing income is generated by the production of new types of goods, principally for shipment to the continental United
operations. An addition to Puerto Rico's petro
chemical complex is Puerto Rico Chemical Co., which has constructed a $6 million anhydrous ben
zene bicarboxylic plant. Phillips Petroleum has broken ground for a $45 million refinery which will produce basic feedstocks for a series of additional chemical
plants using petroleum derivatives. The first such
plant to be anounced is a raw nylon plant to be built jointly by Phillips and Rhone-Poulenc, S. A. of France at a cost of approximately $50 million. During cal endar year 1965 some 179 new factories were estab lished on the island as a result of Puerto Rico's in
dustrial development program. Over 1,000 plants promoted or otherwise established under this program are now in existence in Puerto Rico.
States. Such shipments have jumped from $23 million
Food processing has also been a significant growth area in recent years. Two rice mills and a large flour
in 1949 to $640 million in 1965.
and feed mill supply an important share of Puerto
These new products cover a wide range such as apparel, petroleum derivatives, and electronic prod ucts. Large, heavily capitalized manufacturing opera
Rico's food requirements. Four large tuna canneries
tions have shown a significant increase in recent
years as compared to those labor-intensive operations promoted during the early part of the industrialization program. These include the Union Carbide & Chem ical Corp., which operates a $28 million glycol plant
are now in operation; and, with two additional plants under construction, the island has become one of the leading suppliers of canned fish in the United States
market. A soya bean processing plant, producing cake for the growing cattle and dairy industry and oil for the domestic market and for the tuna canneries, com
menced operations recently. A subsidiary of Libby,
McNeill and Libby has established a plant for the can ning of tomato sauce and juice produced from local crops.
Further, many of the plants are branches or sub sidiaries set up by such firms as General Electric, Consohdated Cigar, U. S. Rubber, American Can, Phelps Dodge, Sperry Rand, Daystrom, Carborun dum, Sprague Electric, Van Camp Sea Food, General Foods, Van Raalte, Hooker Chemical, B. V. D., Bell & Howell, International Shoe, and W. R. Grace. One significant addition to Puerto Rico's blue chip roster is Ford Motor Co.'s $15 million ball bearing plant, one of the most modem facilities of its kind in the world.
Helping to bring about such extraordinary changes in Puerto Rico's economy has been the Common wealth Govemment's comprehensive development program, especially those phases directed at encour aging manufacturers in the continental United States to expand and locate their new plants in Puerto Rico. As a result, annual direct investment in Puerto Rico
from extemal sources has increased from $8 million in 1947 to $174 million in 1965. The cumulative total of such investment in the Commonwealth as of June
30, 1965 was estimated at $1,328 million. Other types of investments have also been encouraged with the consequence that continental investors hold about
$790 million in long term obligations of Puerto Rico govemmental units and around $609 million in pri vate and public housing obhgations. Other invest ments total approximately $517 million. Total ex ternal investments in the Commonwealth were valued
at $3,244 million at June 30, 1965.
The Puerto Rican people have benefited greatly from the economic expansion achieved since 1940.
Life expectancy has increased from 46 years to 70 years, and the death rate has declined from 18.4 per thousand to 6.9 per thousand. Personal income per family has risen from $611 to $4,244. Public and private day school enrollment has increased from
297,000 to 689,000. University and college enroll ment has grown from 5,000 to 37,000.
Monacillos Transmission and Distribution Center — The building at the left, with the tower, houses the system load dispatchers. Other faciiities shown include electrical and transformer shops, warehouses and metropolitan area distribution offices.
•Si.. ■ 't
PUERTO RICO WATER RESOURCES AUTHORITY San Juan, Puerto Rico
The Community We Serve An Expanding Economy: 1940
Fiscal Years 1965(1)
% Increase or (Decrease)
Gross Product — $ Millions Net Income — $ Millions
287
Personal Income Per Family — $ . . .
611
2,757 2,321 4,244
Debits — $ Millions
73
1,661
Private Savings Accounts — $ Millions
17
298
$ Millions Income Tax Collections — $ Millions . .
312
2,503
702
2
127
Power Generation — Millions of KWH .
166
3,819
6,250 2,200
1,869,000 39.0 18.4 46 286,000 5,000
2,626,000 30.9 6.8 70 626,000 37,000
225
861 931
595
Banks:
2,175 1,652
Assessed Value of Taxable Property —
A Healthier, Better Educated Population: Population Birth Rate - Per Thousand Death Rate — Per Thousand Life Expectancy — Years Public Day School Enrollment University and College Enrollment
41 (21) (62) 52 119 640
A More Balanced Economic Life:
Percentage
Per cent of Net Income from:
Change
Points
Manufacturing Agriculture
Commonwealth and Municipal Government Trade Other
Per cent of Exports from: Exports by New Factories"-' Sugars (Raw and Refined) Other
o Preliminary figures. Promoted by the Economic Development Administration. Does not include exports of other new factories.
Source: Puerto Rico Planning Board.
12
23
31
8
11
(23)
8
13
5
12
17
5
37
39
2
68
68
62
11
38
21
(51) (17)
AO ASTRA PCR