•X - - ■ ii; .ft
March 1968
COMMONWBAUTH OF PUERTO RICO
GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO SAN JUAN. PUERTO RICO
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PUERTO RICO WATER RESOURCES AUTHORITY
1950 - Our Growth - 1967
Data for the twelve months ending Times
June 30, 1950
December 31, 1967
Increased
Sales of electricity (Kwh)
411,727,000
Revenues from sales
Customers (number) Average sales per customer (Kwh) . . . . Average revenue per customer
4,620,631,000 98,838,000 $ 619,915 7,592
11.2
$11,170,000 177,000 2,419 $
$
162.39
2.5
. Generation requirements (Kwh) Annual peak demand (Kw) Generating capacity installed (nameplate Kw).
519,014,000 96,230 140,560
5,408,791,000 892,400 1,118,340
10.4
.
$11,317,000
. . Balance of revenues available for debt service .
$ 5,390,000 $ 5,927,000
$ 102,466,000 55,219,000 $ 47,247,000 $
Revenues (total)
Current expenses
65.64
8.0
$ 516,304,000 68,817,000
9.3
$80,943,000
$ 585,121,000
7.2
$60,545,000
$ 399,503,000*
6.6
Electrical plant in service (at cost) . . . .
.
9.1 10.2
$55,572,000 25,371,000
$
Long term debt and outstanding notes . .
8.0
9.5
$ 4,859,000
Electric plant (at cost)
9.3
46,117,000
.
Construction work in progress
3.1
9.2
$
Contractual obligations (total)
3.5
10,828,000 35,289,000
$ 1,178,000 3,681,000
Contribution in lieu of taxes
Other contractual obligations
8.8
Equity of the people of Puerto Rico . . . . . $24,905,000
$
136,927,000
9.6
2.7
5.5
* With the present balance of revenues for debt service, if expansion needs required, the Authority could issue roughly $188,000,000 in additional revenue bonds within the limits established by the Trust Indenture securing these bonds.
ON THE COVER
Equipment for High Pressure Washing of Transmission Conductors.
Commonwealth of Puerto Rico PUERTO RICO WATER RESOURCES AUTHORITY
)/7-
l^S'O
Governing Board
Officers RENAN COLON
Chairman; HON. FRANCISCO LIZARDI
Secretary of Public Works
Chief Engineer FELIX CORDOVA DIAZ
Vice-Chairman: ANTONIO CUEVAS VIRET Director, Personnel Office
Members; HON. JENARO BAQUERO Secretary of Commerce
General Manager — Services and Supply HAROLD TORO
General Manager — Irrigation Services JOSE VILA RUIZ
RAFAEL DURAND
General Counsel
Administrator, Economic Development Administration
CARLOS VELAZQUEZ TORO
ANTONIO M. BIRD
HUMBERTO CORDERO
Attorney at Law
Head, Distribution and Sales Division
Head, Production and Transmission Division
WILLIAM CANDELARIO
Head, Electrical Planning and Research Division JOSE A. MATOS
Principal Officers
Head, Power Design and Construction Division
RAFAEL V. URRUTIA Executive Director
JOSE I. DIAZ Controller
DR. MODESTO IRIARTE
LOUIS ROIG MARTINEZ
Assistant Executive Director — Electrical Planning,
Treasurer
Construction and Research
JAVIER CUEVAS BENITEZ
EDUARDO LUBE Assistant Executive Director — Finance JULIO NEGRONI
Assistant Executive Director — Power Operations
Head, Purchasing Division RAFAEL VAZQUEZ COLQN Head, Personnel Division HECTOR M. MORALES
Head, Transportation and Services FERNANDO TORRENT
Assistant Executive Director — Industrial Relations
HERMANN MUNOZ Public Relations Officer
and Personnel
RAFAEL D. CHERVONI
Head, Safety Division
Consulting Staff
Trustee
First National City Bank, New York, N. Y. RAFAEL R. RAMIREZ
Consulting Engineers
Power Consultant
Jackson and Moreland Division PEDRO COLON PAGAN
of United Engineers and Constructors Inc.
Consultant — Engineering and Construction Auditors Arthur Andersen & Co.
Bond Counsel
Mitchell, Petty & Shetterly
^/opieot
latter half of that same decade, an industrialization
program for the Island was begun as part of "Opera tion Bootstrap." By 1956, for the first time in Puerto
Rico's history, net income from manufacturing sur passed that from agriculture. Today over 1,400 new faetories, promoted under the economic develop ment program, are in operation. Sueh rapid growth and profound change in the basic character of the economy has created a continuous and rapid rise Rafael V. Urrutia
in the demand for energy.
Executive Director
Throughout the twenty-six years elapsed since the Authority came into being its growth has been steady
and most impressive. The comparative figures shown
Puerto Rico
Water Resources Authority
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 1,118,340
The supply of electric energy in Puerto Rico's fast growing economy is the responsibility of the Puerto Rico Water Resources Authority, an autonomous
Kw. Annual capital construction programs in recent years have reached as high as $58,000,000.
public service corporation and instrumentality of the Government of the Commonwealth of Puerto Rico.
estimated at $62 million. It includes work on three 100,000 Kw units for the San Juan Steam Plant.
The origin of the Authority goes back to the opera tion of two government agencies which began the development of hydroelectric power in Puerto Rico — the Puerto Rico Irrigation Service, which built its first generating plant in 1915, and the Utilization of
Two units have already been completed. The other is scheduled for completion in March 1968. Also two 200,000 Kw units are in construction at the Palo Seco Steam Plant. Other important projects are the
Water Resources of Puerto Rico, created in 1927. In
throughout the system. This program also includes general transmission and distribution facilities, rural electrification projects, the acquisition of land and the construction of buildings, and miscellaneous items. When current projects are completed, total gener
1941, the Authority was established by law to replace the Utilization of Water Resources and ensure a
growth in the supply of electricity which would be
adequate for the future needs of Puerto Rico's eco nomic development. Subsequently, during the World War II fuel shortage, the two large private electric utilities on the Island were taken over by the United
The capital construction program for 1967-68 is
installation of five 20,000 Kw jet peaking units,
ating capacity will be 1,718,340 Kw.
The Authority has grown to become the second largest municipally owned, integrated electric utility
States Government as an emergency measure and
in the United States as is indicated by the following
their operation entrusted to the Authority. In 1944, these systems were purchased by the Authority and,
tabulation:
at a later date, the electric facilities of various irri
City of Los An/^eles Puerto Rico Department of Water Resources Water and Power Authority
gation 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
City of Seattle Department of Lighting
As of
As of
As of
Dec. 31,1967
Dec. 31, 1967
Dec. 31,1967
Electric Revenues
$954,089,308 $179,848,683
$481,969,410 $ 98,838,076
Number of Customers . .
1,070,364
Net Plant . . .
$295,991,907 $ 46,789,059
Present Electric System The total installed generating capacity of the Author
ity at the end of December 1967 had a name plate rating of 1,118,340 Kw and maximum dependable capacity of 1,202,320 Kw. The physical plant pres ently consists of twenty-three generating stations, of which fifteen are hydroelectric, four are thermalelectric, one is nuclear, one is diesel and two are jet peaking units. Thermal-electric facilities now supply about 96 percent of the electric energy generated. The Authority's four main generating stations have a total installed name plate rating of 966,000 Kw. 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 gencies, being designed for automatic synchroniza tion to the line from a cold start in only two minutes. A desalination pilot plant has also been inaugurated,
to provide 14,400 gallons a day of make-up water for the main unit boilers. The desalination process is new and uses waste heat from the turbine condenser
system to evaporate sea water in a vacuum.
Arrival of the stator of a 200,000 Kw generator for the Palo Seco Steam Plant. With this addition the plant will have
an installed capacity of 375,000 Kw Name Plate Rating in 1969.
The South Coast Steam Plant, near Ponce, has two 44,000 Kw, two 82,500 Kw steam-electric units and
a 10,000 Kw jet peaking unit. One of the outstanding features of this plant is that it can burn either low
cost refinery pitch or Bunker C fuel oil. This plant currently receives its fuel by direct pipe fine from the nearby refinery of the Commonwealth Oil Refining Co.
The San Juan Steam Plant has an installed capacity of 478,000 Kw in four 20,000 Kw, two 44,000 Kw and three 100,000 Kw steam-electric units and a
10,000 Kw jet peaking unit. Work on another 100,000 Kw unit, scheduled for completion in March 1968, is under way. This wiU increase the capacity of the plant to a name plate rating of 578,000 Kw.
The Mayaguez Plant is equipped with two gas turbine 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 15 hydroelectric plants with a total installed capacity of 104,840 Kw. Eleven of these plants have reservoirs which permit regulation of plant out put by collecting and storing water inflows during the
PUERTO RICO WATER RESOURCES AUTHORITY
ELECTRIC SYSTEM DECEMBER 31. 1967
AA(
«TENS,
SAN JUAN [lOCpOO KW EXTENSION 4T«Aoo R nL uNoen cohstauction
J
S.ooo KVA ^0* VIAPUCTO-».200
Acos ANCCLCS 3750 avA
COROIAL S.OOOHV*
7.500 RVA
CAONILLA
2aaoo,#;^
lAOOavA
TORO KESRO NO.2 RO NE6R0
I.»10
VAUCO NO
6ARZA NO.I UOOKB
•40 IN
vJeoues CAVEY
COAMO NO fSO RVA
AUCO N0 2
BA.JfJAVA^/ »J>00 ■ 7A00M
3,072KVaX
PONCt
.7J00 RXk
BUtNA vbta^iSOOKVA
•0,000
3,200
LEGEND □ THERMAL PLANTS ^1 NUCLEAR PLANT
(BONUS)
O htoro-elcctric plants
)A TRANSMISSION SUBSTATIONS DISTRIBUTION
■BBi JET
TBKV SUBMARINE POWER CABLE —— 30 RV ELECTRIC TRANSMISSION LINES
EXISTING IISKV ELECTRIC TRANSMISSION LINES ■ 115 RV electric transmission LINES (Undtr C««>liueli««| RESERVOIRS
SUBSTATIONS
POWER PACR
UNITS
rainy season for utilization during the dry season, and the remaining four operate on run-of-the-river flows. Ten of the hydroelectric plants are non-attended and fully automatic. 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
and sectionalized at 132 substations and sectionalizer
stations, with a total name plate transformer capacity of 1,919,675 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 200 substations owned
by the Authority with a capacity of 895,028 Kva which, supplied from the transmission network, con vert the electric power for distribution at 2,400/4,160 Y, 4,800/8,320 Y and 7,620/13,200 Y volts through distribution feeders which traverse all the Island. In addition, there are 182 privately owned distribution substations with a total capacity of
feasible.
448,411 Kva to serve industrial customers, making a total installed capacity of 1,343,439 Kva.
Transmission and Distribution Systems
Rural Electrification
The Authority's transmission system consists of 1,545
Through successive amendments to an original loan contract for $6,376,000, entered into in 1952 be-
circuit miles of 115 Kv and 38 Kv lines, controlled
tween the Authority and the Rural Electrification
ties. Properties may be acquired by the Authority by
Administration of the United States, the Authority has borrowed to date $76,040,000 on bonds bearing
any lawful means, including the power of eminent
interest at the rate of 2% under a loan contract for a like amount. These funds have been loaned
domain.
For many years the Authority has followed a policy of initially financing the construction of facilities
by REA for the construction of generation, trans
under its Capital Improvement Program with short
mission and distribution facilities to serve rural
term bank loans. From time to time, issues of revenue bonds are sold for the repayment of such loans and
customers.
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 facilities, and has complete control and supervision over its properties and activi
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 $374,703,000 as of December 31, 1967.
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 December 31, 1967, a total of $578,602,000 was invested in capital improvements. Of this amount $416,775,000 has been provided from the net proceeds of bond issues and bank bor rowings, and $161,827,000 had come mainly from net revenues of and contributions to the Authority.
GROWTH OF THE ANNUAL LOAD OF THE SYSTEM SINCE 1946 Sales
Maximum Peak
Average
Kilowatt
Load
Hours per
Revenue per
Revenue
(Million Kwh)
Customers
(June 30)
(Thousands of Dollars)
Load
(End of Period)
(Kw)
(Kw)
Customer
Kilowatt Hour
Customer
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*
930.8
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
210,000 249,000 272,000 314,000 355,000 398,000 439,000 498,000 560,000 637,000
1965-66*
83,734
1966-67*
93,233 105,100
314,853 338,685 363,032 385,592 408,671 435,019 459,995 487,991 517,682 552,111 581,369 608,462 638,500
129,000 153,000
1964-65*
25,216 28,693 33,973 35,781 40,441 45,304 50,846 57,520 65,865 72,952
2,956 3,184 3,578 3,687 4,080 4,350 4,664 5,053 5,522 5,771 6,488 7,053 7,573
Fiscal Year
1956-57* 1957-58* 1958-59*
1959-60* 1960-61*
1961-62* 1962-63* 1963-64*
1967-68t
3,771.7 4,291.8 4,835.4
* After applying fuel oil adjustment clause, t Estimate.
737,000 825,000 930,000
181,000 198,000 231,000 261,000 294,000 335,000 388,000 436,000 506,000 575,000 644,000
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
.0222
144.03
.0217
153.23
.0217
164.60
H-
Phillips Petroleum Company's recently inaugurated core plant.
On December 31, 1967, total net assets amounted to
adequate to meet the Authority's operating expense
$576,385,000, operating and appropriated reserves
and contractual obligations.
were $32,159,000, contributed capital and unap propriated net revenues were $107,640,000 and out standing debt was $401,985,000. Total revenues for the twelve months ended De
cember 31, 1967, were $102,466,000. Current ex
penses were $55,219,000, leaving a balance of $47,247,000 available for debt service requirements and other contractual obligations. The maximum debt service for any future year on outstanding issues was $19,359,000, indicating a coverage of 2.46 times
on present debt. Accruals for contributions to the
New Bond Issue
In March 1968, the Authority proposes to sell
$38,000,000 par value Electric Revenue Bonds for the purpose of liquidating current bank borrowings and continuing the Capital Improvement Program. Preliminary calculations indicate that the Author ity's maximum annual debt service, upon the comple tion of the financing, will approximate $21,678,000 and will be covered over 2.19 times by net earnings for the twelve months ended December 31, 1967.
Commonwealth and municipal governments in lieu of taxes amounted to $10,828,000 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
Continuous studies of power needs, constantly re viewed and revised by the Authority and its consulting engineers, now indicate that peak demand of the system will increase from 930,000 Kw in 1967-68 to
yearly growth in revenues and in substantial reserves
1,056,000 Kw in 1968-69, 1,194,000 Kw in 1969-70
Looking Ahead
NUMBER OF CUSTOMERS
SALES OF ELECTRICITY - KWH
Thousands
Millions of KWH
700
5.000
Other
Industrial Commercial Residential
Fiv(al
59
*60
'61
*62
*63
*64
*65
*66
*67
"BS*
Yrars
Years • F stimale
Source. P.R.W.R A. Financial Reports.
and 1,349,000 Kw in 1970-71. It is expected that over 30,000 new customers will be added yearly. To meet this demand, the Authority's generating capacity will be raised to a name plate rating of 2,118,340 Kw by June 1971.
During the period from July 1, 1967 through June
30, 1971, it is anticipated that the Authority will invest $328,946,000 in further capital improvements. Of this amount, the sale of bonds will provide some $229,324,000. About $97,742,000 or 30% will be
derived principally from revenues of the Authority, compared with an average of 28% accrued from
earnings and contributions during the last twenty
* Fslimate
Source. P H.W.R A Financial Reports
ing the normal growth of the system. The Economic Development Administration has been promoting the establishment of these plants. Since these plants
are expected to be the core of industrial complexes which will foster general economic development,
the Authority under special agreements with the Commonwealth Government is willing to provide
power at prices based on the incremental cost of power of the larger units. In order to make the con struction of the larger units economically feasible for the Authority, the Legislature of Puerto Rico approved Law #82 of 1967 which guarantees to reimburse the Authority for any part of the annual
years. The remainder of $1,880,000 will be available
charges on whatever portion of the extra capacity
from previous bond issues. It will be noted that the capital improvement pro
that remains unsold during the period 1971 to 1974
gram shows a substantial increase over the next four
up to a limit of $3,250,000 during each of these four years. Such amounts would be deducted from the
years. The reason for this is that the Authority has
contribution in lieu of taxes payable to the Common
found it necessary to increase the size of the gener
wealth Government.
ating units scheduled for 1971 and 1972 to 400 MW to serve large metallurgical processors, thus exceed
tal expenditures actually made during the past twenty
The above four-year program compares with capi
Puerto Rico Water Resources Authority
Condensed Balance Sheet As of December 31, 1967
ASSETS
NET UTILITY PLANT:
Gross utility plant Less accumulated provision for depreciation
$585,120,926 103,151,516
Net utility plant
$481,969,410
OTHER PHYSICAL PROPERTY
174,836
BOND REDEMPTION, RESERVE AND CONSTRUCTION FUNDS
15,239,751
CURRENT ASSETS:
Funds and working advances
$ 26,063,827
Accounts receivable — Less Reserve for uncollectible accounts
20,411,005
Materials and supplies
18,550,760
Prepayments, special deposits, etc
940,234
65,965,826
$ 11,621,214 1,413,471
13,034,685
DEFERRED DEBITS:
Debt discount and expense in process of amortization Other TOTAL ASSETS
$576,384,508
LIABILITIES
CONTRIBUTED CAPITAL
$ 40,945,306
UNAPPROPRIATED NET REVENUES
66,694,532
LONG-TERM DEBT:
Electric revenue bonds Notes payable
$374,703,000 24,800,000
Lease-purchase obligation, less portion included in current liabilities . . .
2,482,228
401,985,228
CURRENT LIABILITIES:
Accounts payable Customers' deposits and accrued interest Accrued interest on Electric Revenue Bonds Accrued contributions in lieu of taxes
$ 13,394,652 4,550,578 6,237,325 5,684,790
Other
4,513,802
DEFERRED CREDITS
34,381,147
219,034
RESERVES:
Self-insurance
$
7,018,913
Injuries and damages
2,872,075
Revenue stabilization
1,272,093
Appropriated sinking fund TOTAL LIABILITIES
20,996,180
32,159,261 $576,384,508
Puerto Rico Water Resources Authority
Condensed Statements of Revenues and Expenses (For Revenue Fund Purposes per Trust Indenture)
Twelve Months Ending June 30
June 30
June 30
June 30
December 31
1964
1965
1966
1967
1967
$65,864,594 1,501,989
$72,952,446 1,644,048
$83,734,015 1,890,939
$93,232,606 2,085,113
$ 98,838,076 2,124,739
$67,366,583 970,985
$74,596,494 1,182,929
$85,624,954 1,369,968
$95,317,719 1,420,789
$100,962,815 1,503,559
$68,337,568
$75,779,423
$86,994,922
$96,738,508
$102,466,374
$ 9,358,232 18,304,172 8,871,283 879,071
$10,709,138 19,894,285 9,339,608 750,520
$12,035,637 22,518,518 10,717,943 1,045,519
$13,671,019 25,011,077 11,840,030 1,010,175
$ 15,059,377
$37,412,758
$40,693,551
$46,317,617
$51,532,301
$ 55,219,448
penses (per Trust Indenture) . . $30,924,810
$35,085,872
$40,677,305
$45,206,207
$ 47,246,926
$ 8,162,797
$ 8,426,525
$ 9,061,921
$ 9,555,562
$ 10,081,313
4,299,656
4,631,960
5,992,000
5,710,000
6,085,500
REVENUES:
Sales of electric energy . . Other operating revenues . . Total operating revenues Other income
Total revenues CURRENT EXPENSES:
Operation — Fuel
Other operating expenses Maintenance
Other current expenses. . Total current expenses
26,522,477 12,813,961 823,633
Balance of revenues after current ex
SINKING FUND PAYMENTS:
Interest account (exclusive of interest charged to construction and reimburse ment from the Commonwealth Govern
ment of Puerto Rico)
Bond redemption account (exclusive of reimbursement
from
the
Common
wealth Government of Puerto Rico) .
1,466,002
220,116
207,304
207,304
426,965
Total sinking fund payments . . . $13,928,455
$13,278,601 $21,807,271
$15,261,225 $25,416,080
$15,472,866 $29,733,341
$ 16,593,778 $ 30,653,148
Reserve account
Balance
$16,996,355
TRANSFERS TO:
General reserve fund — provision for selfinsurance
$
Renewal and replacement fund . Reserve for improvements Total transfers
640,668 $ 678,078 $ 730,902 $ 824,926 $ 8,384,582 12,397,814 14,617,510 12,393,200 —
—
—
5,160,000
859,281 9,665,301 8,170,425
$ 9,025,250
$13,075,892
$15,348,412
$18,378,126
$ 18,695,007
$ 7,971,105
$ 8,731,379
$10,067,668
$11,355,215
$ 11,958,141
Balance available for contributions in
lieu of taxes, etc PROVISIONS FOR CONTRIBUTIONS IN LIEU OF TAXES
7,212,100
7,989,345
10,827,675
9,172,130
10,213,261
$
759,005
$
742,034
$
895,538
$ 1,141,954
$
1,130,466
Transfer to sinking fund reserve account $ Balance transferred to unappropri
379,503
$
371,017
$
447,769
$
570,977
$
565,233
379,502
$
371,017
$
447,769
$
570,977
$
565,233
Balance PROVISION FOR:
ated net revenues
$
years, distributed as follows: steam production plant $206,947,000, nuclear production plant $6,080,000,
to create certain reserves. Rates must also provide for the making of deposits required by the Trust
hydraulic production plant $36,241,000, gas turbine production plant $14,166,000, transmission plant $72,865,000, distribution plant $167,568,000 and
Indenture to the credit of the General Reserve Fund
other facilities $74,735,000 for a total of $578,602,000.
Security for the Bonds Bonds issued by the Authority under the Trust Indenture are payable from the Puerto Rico Water Resources Authority Sinking Fund. The Authority has covenanted to deposit in this fund a sufficient amount of its revenues, after expenses for main tenance and operation of its electric properties, to
pay the principal of and the interest on all bonds issued as they become due, as weU as to create 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
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 issued prior to 1965 have been retired, this percentage will be reduced to 140. The bonds and the income therefrom are, under
provisions of Acts of Congress now in force, exempt from Federal and State taxation. These bonds are also
legal investments for savings banks and trust funds
TOTAL REVENUES, BALANCE AFTER CURRENT EXPENSES, AND DEBT SERVICE REQUIREMENTS Millions of Dollars
REVENUE FROM SALES OF ELECTRICITY Millions of Dollars
no
110
90
Total Revenues
80
I
I Balance After Current Expenses -
Residential
Debt Service Requirements 70
60
iiii|ili|i| 1 1111 Fiscal
59
'60
Years
• Estimate Including Fuel Oil Adjustment ooufce P.R.W.R A Financial Reports
10
'Estimate Including Fuel Oil Adjustment Source: P.R.W.R.A Financial Reports
I i|i|
10,000 Kw turbo-jet "power pack" jor peaking and emergency generation, San Juan Steam Plant.
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
United States; only a House of Delegates was elected by the People of Puerto Rico. Over succeeding years strong feeling developed for
companies to qualify them to do business in Puerto
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 Jones Act, which granted United States citizenship to Puerto Ricans, as well as unrestricted su&age for local pur
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 linquency in the payment of principal of or interest
poses. It also provided that members of both Senate and House were to be elected by the people, but the Executive and Judicial branches remained under
on any obligation, nor has there been any forced or "managed" refunding of maturing bonds to avoid
control of Washington through appointment by the
default.
President.
No further change occurred until 1946 when the President for the first time appointed a Puerto Rican Government History
as Governor. In 1947 the Jones Act was amended to
Puerto Rico came under United States sovereignty by
permit Puerto Ricans to elect their own Governor,
the Treaty of Paris on December 10, 1898. The Con gress of the United States provided for a civil govern ment for the Island in 1900. It provided for a Gov ernor, a Cabinet, a Senate and a Supreme Court
Judiciary, all appointed by the President of the
who in turn was empowered to appoint his Cabinet and members of the Supreme Court.
The next advance toward complete local govern
ment occurred in 1950 when, in accordance with the
wishes of the People of Puerto Rico,the 81st Congress
enacted Public Law 600, approved July 3, 1950. This
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
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
the Supreme Court of the United States, in the same
Organic Act which define the political, economic and
manner and under the same terms and conditions as
fiscal relationship between Puerto Rico and the United
writs of error and appeals may be taken from other
States shall remain in full force and shall be there after known as the Puerto Rican Federal Relations
Federal and State courts.
Act. It also authorized the People of Puerto Rico to
draft and approve theh own constitution. The Con stitution was drafted by a freely elected constitutional
convention, overwhelmingly approved in a special referendum, and approved by Congress and the President. It became effective upon proclamation of the Governor of Puerto Rico on July 25, 1952.
The Commonwealth Government
The Constitution recognizes and assures a separation
of powers among the executive, legislative, and judi cial branches as in the Federal Constitution, and as in 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
San Juan Steam Plant unit No. 9 with a Name
Plate Rating of 100,000 Kw. A similar unit is scheduled
for completion in March 1968. With these additions the plant will have a total capacity
of 578,000 Kw.
Governmental responsibilities assumed by the Commonwealth are greater than those normally as sumed by a State government. Municipalities which combine both rural and urban areas are the only local political subdivisions and are comparable to counties
in scope. The only units of government with the right to levy ad valorem taxes are the Commonwealth Gov
ernment and the municipalities. There is, therefore, no other overlapping taxation or bonded indebtedness 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 construction, and public health programs. In addi
tion, 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 the Water Resources Authority and the Aqueduct
fiii^
Sail Juan's changing skyline.
and Sewer Authority. Air and sea port facilities are administered by the Ports Authority, and major highway construction is financed by the Highway
(1) With Commonwealth attaining 60-40 margin over Statehood there can be no question about the
Authority. The bonded debts of these public corpora tions, with the exeeption of the Highway Authority,
ulated strong and consistent economic growth. (2) With only 4,248 votes in favor of Indepen
are supported entirely by revenues derived from their operations. Bonds issued by the Highway Authority will be supported by a portion of the
dence out of over 700,000 votes cast, there can not be the slightest doubt that Puerto Rieo is an integral
gasoline tax. 1967 Plebiscite
In a speeial plebiscite held July 23, 1967, the people of Puerto Rico strongly reaffirmed their desire to continue their present Commonwealth form of government permanently associated with the United States. Almost two-thirds (66.3%) of all registered
voters participated and a clear expression of the will of the majority of the people is shown in the results below.
425,132 (60.4%)voted to continue Commonwealth Status
274,312 (39.0%)voted to request Statehood
4,248 ( 0.6%)voted to seek Independence
The results of the plebiscite demonstrate two sig nificant factors concerning the political status of Puerto Rico.
continuation of the favorable climate which has stim
part of the United States with permanent American citizenship for Puerto Ricans. The recent plebiscite had its origin in 1962 in a
petition to the Congress of the United States by the Puerto Riean Legislature requesting a settlement of the future political status of Puerto Rico and pro
posing the submission to the vote of the people the status formulas of Commonwealth, Statehood, and
Independence. In response to the petition, the Con gress approved a bill in 1964 providing for the establishment of a United States-Puerto Rico com
mission to study all the factors involved. The mem bership of this commission consisted of three persons appointed by the President of the United States, two
each selected by the Senate and the House of Rep resentatives, and six appointed by the Governor of Puerto Rico. The Commission concluded that the
people of Puerto Rico should decide which status
they preferred and, in December. 1966, the Puerto
Rican Legislature passed an act providing for the holding of the plebiscite. Any subsequent plebiscites
Commonwealth Oil Refinery.
on the political status of Puerto Rico can be autho rized only by act of Congress or of the Puerto Rican Legislature.
Political stability, one of the prime requisites of a sound, attractive investment climate, is outstandingly demonstrated in Puerto Rico. Only a declining, and
now insignificant, minority party favors indepen dence. Both major parties hold maintenance of per manent ties with the United States as a basic princi
ple, and differ only as to the form which that future political relationship should take. Expansion and Diversification of the Economy of Puerto Rico Economic growth in Puerto Rico since 1940 has been very rapid. Gross product of the Common wealth has increased more than 11 times over its
1940 level and has more than doubled during the past eight years. In the year ended June 30, 1967 gross product totalled an estimated $3,360 million, representing an increase of 10.6% over the prior year.
Net income of the economy has increased from a level of $225 milhon in 1940 to $2,775 miUion in
1967. Income, measured in current prices, has shown an average increase during the last five years of about 10.1% compounded annually and in the year ended June 30, 1967 it increased by 9.9%. Per capita net income is now $1,037 compared to $121 in 1940.
The Commonwealth Government's program of industrialization has aided the economy to shift from one principally agricultural to one much better diver
sified between industry and agriculture. Concurrently
with the expansion in net agricultural income from $71 million in 1939-40 to about $183 million in
1966-67, manufacturing income increased from $27 million to $678 million, substantially surpassing agri culture as a source of income.
Puerto Rican manufacturing has been increasingly diversified during the last two decades. In 1939-40 the manufacture of sugar products accounted for 35% of manufacturing income. By 1966-67 about 4.5% of manufacturing income resulted from this
industry. Manufacturing income is now generally derived from the production of new types of manu factured commodities, principally for shipment to the United States. Such shipments amounted to only $23 million in 1948-49. By 1966-67 they had reached a total of about $926 million.
These new products cover a wide range such as
apparel, petroleum derivatives, and electronic prod ucts. Large, heavily capitalized manufacturing opera tions have shown a significant increase in recent years as compared to those labor-intensive operations promoted during the early part of the industrializa tion program. These include the Union Carbide & Chemical Corp., which operates a $53 million glycol plant and has recently constructed a $22 million plant to produce alcohol intermediates. Union Car bide Food Products Incorporated, a subsidiary of Union Carbide Corporation, will build a $15 mil lion plant at Barceloneta, Puerto Rico for the pro duction of food casings. Food casings are used by meat processors in producing sausage and other processed meats. The new plant is due to be in operation by 1970. Union Carbide Caribe, Inc.,
another subsidiary of Union Carbide, began petro chemical operations on the Island in 1959. Caribbean Gulf Refining Co. which recently com pleted an expansion program, operates a petroleum refinery. Petrochemicals are of greatly increasing impor tance to the economy of the Commonwealth, a recent development being the addition of a $41 million aromatic plant to Commonwealth Oil Refining Com pany's $105 million refinery. Corco has invested $180 million in Puerto Rico in the past ten years and the present plans call for increasing the com pany's investments to approximately $300 million by 1970. It is anticipated that the joint venture proj ects will probably add another $75 million by 1970. Commonwealth Oil Refining Company also an nounced that it plans to build, with Foster Grant Co., Inc., a monostyrene plant at Penuelas with a capac ity of 400 million pounds annually. This would be the first plant in Puerto Rico for production of mono styrene which is the base material in the manufacture of polystyrene, other thermoplastics and synthetic
Helicopter placing two conductors simultaneously. Helicopters have helped to speed construction of rural lines.
rubber. This plant is scheduled for completion in early 1970. In addition to the monostyrene facility, the joint project provides for a second plant to produce
ethylbenzene by synthesis as feedstock for the mono styrene plant. This would supplement the supply of ethylbenzene manufactured by Styrochem Corpora tion, Corco's wholly owned subsidiary which has be gun production in its new $5.5 million plant. Feedstock for the monostyrene plant would also include benzene from Corco's aromatics plant and ethylene from the $55 million Corco-Pittsburgh Plate Glass Company olefins plant which is sched uled for completion in mid-1969. Another addition to Puerto Rico's petrochemical
complex involves the Puerto Rico Chemical Com pany which has constructed a $6 million phthalic anhydride plant.
Phillips Puerto Rico Core, Inc. has already inau
gurated its Guayama plant at a cost of $58 million. The company has announced its plans of investing $600 million in petrochemicals over a ten-year
period. One of the first industries to be established is a joint venture with Rhone-Poulenc for manufacturing nylon. The Phillips refinery will constitute the nucleus of a complex of satellite plants producing raw mate rials, intermediates, and consumer goods using petro leum derivatives.
Food processing has also been a significant growth area in recent years. Three rice miUs and a large flour and feed mill supply an important share of Puerto Rico's requirements. Four large tuna canner
ies are now in operation, and with one additional
plant under construction the Island has become one of the leading suppliers of canned fish in the United States market. A soybean processing plant producing
cake for the growing cattle and dairy industry, and oil for the domestic market and for the tuna canner
ies was also established. A subsidiary of Libby, Mc
Neill and Libby has established a plant for the canning of tomato sauce and juice produced from local crops and Standard Brands, through one of its subsidiaries, has established a plant for the manufac
turing of dessert preparations and baking powder. Further, many of the plants promoted by the Eco nomic Development Administration are branches or subsidiaries set up by such firms as General Electiic,
Power Planning Committee of the Authority discussing plant expansion, with Rafael V. Urrutia, Executive Director, presiding.
Consolidated Cigar, General Cigar, American Can,
Phelps Dodge, Daystrom, Carborundum, Sprague Electric, Van Camp Sea Food, General Foods, Van Raalte, Hooker Chemical, B.V.D., Bell & Howell, International Shoe, National Cash Register, Hercules Powder, Stanley Works, Pepsico, W. R. Grace, Ford
Motor Co., Phillips Petroleum, Babcock and Wilcox, Cutler-Hammer, Endicott Johnson, Jonathan Logan, Motorola, RCA and Westinghouse.
Underlying Puerto Rico's growing and changing economy there has been a steady expansion in invest ment. Gross fixed investment during the last five consecutive fiscal years, 1963-1967, ran at the high rate of almost 25% of gross product. It has increased from $112 million in 1950 to $884 million in 1967.
Inflowing long-term U.S. capital rose from $31 mil lion in postwar 1947 to an estimated $393 million in 1967.
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 6.1 per thousand at present, which is now about the same as the U.S. average. The birth rate has declined from 39.0 per thousand in 1940 to 27.9 per thousand in 1967. The people are better educated, with literacy increased from 68.5% to about 86% at present. School enrollment has in creased to about 87% of school age population. In stitutions of higher learning have also expanded rapidly. University and college enrollment which was only 5,000 in 1940, now has 45,131 students. It is significant that the Commonwealth Govern ment has in the last three years directed approxi mately 46% of its expenditures to education and health.
The Commonwealth Government will continue to
provide a climate inducive to further economic development and growth. Thus it is expected that in the years ahead a sustained rate of economic growth can be maintained. Present projections indi cate that gross product in terms of current prices should reach $7,391 milhon in 1975. This will mean
a personal income per capita of $1,791.
PUERTO RICO WATER RESOURCES AUTHORITY San Juan, Puerto Rico
The Community We Serve Approximate Times Increased or
(Decreased)
An Expanding Economy:
1940
1950
1967
Over 1950
Gross Product — $ Millions
287
755
3,360
4.5
Net Income — $ Millions
225
614
2,775
4.5
Personal Income Per Family — $
611
1,500
4,816
3.2
73
319
2,187
6.9
17
51
346
6.8
312
459
3,150
6.9
2
28
161
5.8
Banks:
Debits — $ Millions
Private Savings Accounts — $ Millions . Assessed Value of Taxable Property — $ Millions Income Tax Collections — $ Millions . A More Balanced Economic Life:
Percentage
Per cent of Net Income from:
Change
Points
Manufacturing Agriculture Commonwealth and Municipal Government.
12
14.5
31
24.3
6.6
8
11.4
13.9
24.4
9.9
(17.7) 2.5
Trade
12
16.6
17.8
1.2
Other
37
33.2
37.3
4.1
Per Cent of Exports from: Exports by New Factories* Sugars (Raw and Refined)
14.0
70.1
62
51.1
7.3
(43.8)
38
34.9
22.6
(12.3)
—
Other
A Healthier, Better Educated Population:
56.1
Per Cent
Change
Population
1,869,000
2,211,000
2,708,000
Birth Rate — Per Thousand
39.0
40.9
27.9
(31.8)
Death Rate — Per Thousand
18.4
10.5
6.1
(42.0)
Life Expectancy — Years Public Day School Enrollment . . . . University and College Enrollment . . . * Promoted by the Economic Development Administration. Does not include exports of other new factories. Source: Puerto Rico Planning Board.
22.5
46
47.1
70.0
48.6
286,000
408,000
651,000
59.6
5,000
12,497
45,131
261.1
ovTiu N T
AO ASTRA PER