May 1964 A SPECIAL
St®#' Commonwealth of Puerto Rico
Government Development Bank for Puerto Rico San Juan, Puerto Rico
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?67 Commonwealth of Puerto Rico PUERTO RICO WATER RESOURCES AUTHORITY
"t" Officers PEDRO COLON PAGAN
Chief Engineer FELIX CORDOVA DIAZ
General Manager — Services and Supply HAROLD TORO
General Manager — Irrigation Services JOSE VILA RUIZ General Counsel
CARLOS VELAZQUEZ TORO Director of Production and Transmission HUMBERTO CORDERO Director of Distribution and Sales WALDEMIRO VELEZ
Director of Electrical Planning and Research JOSE A. MATOS
Director of Power Design and Construction JOSE 1. DIAZ Controller
LOUIS ROIG MARTINEZ Treasurer
Governing Board Chairman: HON. LUIS MUNOZ MARIN Governor of the Commonwealth of Puerto
JAVIER CUEVAS BENITEZ Director of Purchasing Rico
JUAN F. DOVAL
Director of Personnel
Vice-chairman; HON. FRANCISCO LIZARDI Secretary of Public Works
Member: HON. LUIS RIVERA SANTOS Secretary of Agriculture
HECTOR M. MORALES
Director of Transportation and Services HERMANN MUNOZ Public Relations Officer RAFAEL D. CHERVONI
Principal Officers
Safety Officer
RAFAEL V. URRUTIA
Trustee
Executive Director
First National City Bank, New York, N. Y. EDUARDO LUBE
Assistant Executive Director — Finance
Consulting Engineers
lULIO NEGRONI
Jackson and Moreland Division
Assistant Executive Director - Electrical Planning,
of United Engineers and Constructors Inc.
Construction and Research RAFAEL R. RAMIREZ Assistant Executive Director - Power Operations
FERNANDO TORRENT Assistant Executive Director Personnel Relations
Auditors Arthur Andersen & Co.
Bond Counsel Industrial and
Mitchell. Pershing, Shetterly & Mitchell
ON THE COVER: Souih Coast Steam Plant —
253,000 KW i/?ciudini^ a fourth unit of 82,500 KW placed in service in December 1963.
r/7^ l^h
Rafael V. Urriitia, Executive Director
Water Resources
Authority The supply of electric energy in Puerto Rico's fast growing economy is the responsibility of the Puerto
Island's economy was primarily agricultural and heav
ily dependent on a single crop â&#x20AC;&#x201D; sugar. In the latter
Rico Water Resources Authority, an autonomous
half of that same decade, an industrialization program
public service corporation and instrumentality of the
for the Island was begun as part of "Operation Boot
Government of the Commonwealth of Puerto Rico.
strap." By 1956, for the first time in Puerto Rico's history, net income from manufacturing surpassed
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 â&#x20AC;&#x201D; the Puerto Rico Irrigation Service, which built its
that from agriculture. Today approximately 850 new factories, established through the economic
1941, the Authority was established by law to replace
development program, are in operation with a total direct employment of over 64,000. Such rapid growth and profound change in the basic character of the economy has created a continuous and rapid rise in
the Utilization of Water Resources and ensure a
the demand for energy.
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 11 fuel shortage, the two large private electric
The growth of the Authority has been impressive, as shown by the following data for fiscal years ending
first generating plant in 1915, and the Utilization of Water Resources of Puerto Rico, created in 1927. In
utilities on the Island were taken over by the United States Government 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 hydroelectric plants of various irrigation services were integrated into the Authority's system.
When the Authority began operations in 1941, the
June 30: 1948
Net Utility Plant Electric Revenues No, of Customers
1953
1958
1963
$47,207,000 $99,300,000 $193,526,000 $323,145,000 $ 9,280,000 $16,115,000 $ 33,973,000 $ 57,520,000 144,000 212,000 363,000 488,000
In the past five years, the Kwh sales of the Author ity have increased at the average rate of 14 percent
compounded. The 1960-61 recession barely affected Puerto Rico or the Authority. In the twelve months
PUERTO
RICO
WATER
RESOURCES
AUTHORITY
ELECTRIC SYSTEM JANUARY 3l, 1964
BAif vtEW bayamon 60.000
66.000 KWl UNDER CONSTRUCno^J
PALO^SECO
20.000 KVA^^
RPAAOO?-c\
•CVA^^
^
DC TIERRA-
VIAOOCTO-J^OO
Alos LUKSNS TC»»«tS-XO»?
U
"ty A A-^—A
COROIAl
COMERiO PLANTS
CAONILLAS NO I V VANASCO
4.600 KVA
7.600
®
\ \ >\^ \
- /
C0LEGJ0-]17!>0
. CACOAS
BARRANOUI
1 \\
\j.000 *
V COKE RIC
CAONILLAS;^,
MAYAGUE7
no2 4.ooo«w«
Vf)OOKVA
V
^ ClORA
TORO NEGRO NO.2m42&<^Hv* NEGRO NO X 320 HW ^LJ^OnOa.64o GARZAS RZAS\
CUATRO MERMANOS ^
NO I IZZ
VAUCO NO 2
I^GARZAS N0.2
aibonito CAtEV
C0A^o'-rO2.
5j;Caup
>8X100 * 3.200 KVA
carite
LEGEND □ STEAM plants (]
STEAM plants (UnOet Conilrucl.oi
38 KV ELECTRIC TRANSMISSION LINES
38 KV ELECTRIC TRANSMISSION LINIS (Un4rr Ce>r>wlion) » EXISTING 115 KV ELECTRIC TRANSMISSION LINES
O hydro-electric plants
115 KV ELECTRIC TRANSMISSION LINES (Und«r Conttioc
^ INTERCONNECTING SUBSTATIONS
RESERVOIRS
A SUBSTATIONS
ending March 1964, 2,765,674,000 Kwh of energy were sold to 510,000 customers producing electric revenues of $63,888,000. 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 733,920 Kw. Annual capital construction programs in recent years have reached as high as $31,000,000. The capital construction program for 1963-64 is estimated at $36,900,000. It includes work on two 100,000 Kw units for the San Juan Steam Plant,
cation projects, the acquisition of land and the con struction of buildings, and miscellaneous items. When current projects are completed, total generating ca pacity will be 990,420 Kw. The Authority has grown to become one of the largest municipally owned integrated electric utilities in the United States as is indicated by the following tabulation as of December 31, 1963: Citv of Los Angeles Puerto Rico Department of Water Resources Water and Power
Authority
City of Seattle Department of Lighting
.
$742,257,852
$333,457,116
$218,099,292
Electric Revenues
$148,386,362
$ 61,792,109
$ 42,193,088
993,000
501,809
240,459
Net Plant
.
.
Number of Customers
scheduled for completion in 1965 and 1966 respec tively. Other important projects are to complete BONUS, the 16,500 Kw nuclear power plant being
Present Electric System
built on the west coast, and the installation of four
The total installed generating capacity of the Author
10,000 Kw jet peaking units, one in each of the thermal plants. This program also includes general transmission and distribution facilities, rural electrifi
ity at the end of March 1964 had a name plate rating of 733,920 Kw and dependable capacity of 790,460 Kw. The physical plant presently consists of
IS,
li
BONUS 16,500 KW Nuclear-electric plant at Riitcdii, Puerto Rico.
^
-iju,
twenty-two generating stations, of which eighteen are hydroelectric and four are thermal-electric generating plants. Thermal-electric facilities now supply about 91 percent of the electric energy generated. The
Authority's four thermal-electric generating stations have a total installed name plate rating of 626,000 Kw.
The San Juan Steam Plant has an installed capacity
with a name plate rating of 168,000 Kw in four 20,000 Kw and two 44,000 Kw steam-electric units. The turbo-generator for a seventh unit, of 100,000 Kw, has been received. This unit is expected to be completed by June of 1965. Work on another 100,000 Kw unit, scheduled for completion in December 1965, is also under way.
The Mayaguez Plant is equipped with two gas tur
The Palo Seco Steam Plant, near San Juan, was placed in service in 1960 and has two 82,500 Kw
bine generators whose rated capacity is 20,000 Kw each. The main purpose of these turbines is to handle peak loads. A 5,000 Kw steam-electric unit, formerly held in cold standby, has been sold and is being
steam-electric units.
dismantled.
The South Coast Steam Plant, near Ponce, has two 44,000 Kw and two 82,500 Kw steam-electric units,
installed at each of the four thermal plants during
Steam-Electric Stations
the newest of which was placed in service in Decem ber 1963. 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 line from the nearby refinery of the Commonwealth Oil Refining Co.
A 10,000 Kw jet engine peaking unit will be calendar 1964.
Hydroelectric Stations
There are 18 hydroelectric plants with a total installed
«}»
i^-
Aerial view of Monacillos Transmission Center showing
a|y«e.i?-i»dw'^TB
recently built distribution facilities in the background.
capacity of 107,920 Kw. Four hydroelectric plants operate on run of river flows, and the remaining four teen have reservoirs which permit regulation of plant output by collecting and storing water inflows during the rainy season for utilization during the dry season. Eleven of the hydroelectric plants are non-attended and fully automatic.
undertake large scale generation by means of nuclear reactors when such generation becomes economically
feasible. The plant is expected to be operating during the last quarter of 1964.
Transmission and Distribution Systems
The Authority's transmission system consists of 1,304 Nuclear Power Plant
structure miles of 115 Kv and 38 Kv lines, controlled and sectionalized at 101 substations and sectionalizer
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, is being constructed on the western tip of Puerto Rico under the terms of a contract between the Authority and the Atomic Energy Commission. The Authority is financ ing the cost of the plant site and the conventional generating components at an estimated cost of $5,600,000. The AEC is investing some $14,578,000 in the construction of the nuclear reactor. This project will give the Authority the necessary experience to
stations, with a total name plate capacity of 1,410,750 Kva located at suitable points throughout the system to insure stability of service and provide an adequate islandwide network. The transmission 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 Authority's system. Distribution facilities include 13,401 structural
miles of lines and 181 substations owned by the Authority with a capacity of 552,767 Kva, which sup plied from the transmission network, convert the elec-
GROWTH OF THE ANNUAL LOAD OF THE SYSTEM SINCE 1941
(Million Kwh)
Customers
Maximum Peak Load
(End of Period)
(Kw)
(Kw)
Customer
Sales
Fiscal Year
'^(Thousands
(June 30)
of Dollars)
Revenue
Average
Kilowatt
per
Revenue
Load
Hours per
Kilowatt Hour
Customer
per
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
1951-52
14,880 16,115 17,825 19,799 25,216 28,693 33,973 35,781 40,441 45,304 50,846 57,520 65,506
565.1
195,061 211,567 228,205 245,058 314,853 338,685 363,032 385,592 408,671 435,019 459,995 487,991 513,000
122,000 140,000 155,000 178,000 210,000 249,000
77,000 87,000 97,000 109,000 129,000 153,000 181,000 198,000 231,000 261,000 294,000 335,000 386,000
2,897 2,955 3,067 3,162 2,956 3,184 3,578 3,687
.0263
76.28
.0258
76.17
1952-53*
1953-54* 1954-55* 1955-56* 1956-57*
1957-58* 1958-59* 1959-60* 1960-61*
1961-62* 1962-63*
1963-64t
625.3 699.9 774.9 930.8
1,078.4 1,298.8 1,421.6 1,667.4 1,892.4 2,145.4 2,465.6 2,852.0
272,000
314,000 355,000 398,000 439,000 498,000 580,000
4,080 4,484 4,787 5,196 5,559
.0255
78.11
.0255
80.79
.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
127.69
*Includes amount recovered through Fuel Oil Adjustment.
t Estimate including Fuel Oil Adjustment.
trie power for distribution at 2400/4160 Y and 4800/8320 Y volts through distribution feeders which traverse 76 cities and towns and most of the rural
area. In addition, there are 128 privately owned dis tribution substations with a total capacity of 229,897 Kva to serve industrial customers making a total installed capacity of 782,664 Kva.
are now being served under this program which will be substantially completed by 1965. 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.
Rural Electrification
Financing System Growth Through successive amendments to an original loan contract for $6,376,000, entered into in 1952 be
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
tween the Authority and the Rural Electrification Administration of the United States, the Authority has borrowed to date $66,710,000 on bonds bearing interest at the rate of 2%, including a $6,225,000 issue placed on February 20, 1964, under a loan con tract now totaling $70,910,000. These funds have been loaned by REA for the construction of genera tion, transmission and distribution facilities to serve
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 ties. Properties may be acquired by the Authority by any lawful means, including the power of eminent
rural customers. More than 115,000 rural families
domain.
these bonds under a Trust Indenture. It also has full
NUMBER OF CUSTOMERS
SALES OF ELECTRICITY-KWH
Thousands
Millions of KWH
600 1
3,000
500 t ::i Other
W-'/A Industrial i'-O-l Commercial Residential
2,000
300
1,500
200
100
Fiscal '55
'56
'57
'58
'59
Fiscal '55
'56
'57
'58
'59
60
'61
'62
'63
"64
. 05timaled
Source: P fi V/ R.A financial Reports.
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 $279,091,000 as of March 31, 1964.
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, 1964, a total of $371,782,000 was invested in capital improvements. Of this amount $285,796,000 had been provided
from the proceeds of bond issues and bank borrow ings, and $85,986,000 or about 23 percent, had come mainly from net revenues of and contributions to the Authority. On March 31, 1964, total net assets amounted to $408,992,000. operating and appropri
ated reserves were $22,956,000, contributed capital and unappropriated net revenues were $72,604,000 and outstanding debt was $295,591,000. Total revenues for the twelve months ended March
31, 1964, were $66,387,000. Current expenses were $36,051,000 leaving $30,336,000 to meet debt serv ice requirements and other contractual obligations. The maximum debt service for any future year on outstanding issues was $13,701,000, indicating a
coverage of 2.23 times on present debt. Accruals for contributions to the Commonwealth and municipal governments in lieu of taxes amounted to $6,996,000 during the same period.
Despite the rapid expansion of facilities and im provement of service over the past decade, the Authority's rates have not been raised. Constant in creases in demand have consistently resulted in a yearly growth in revenues and in substantial reserves adequate to meet the Authority's operating expenses and contractual obligations.
In May 1964, the Authority will sell $20,000,000 par value Electric Revenue Bonds, from which
[ ~wn
f
^
I .„Qq
V(,t,|.f,*;f.|
mLr' SSI £ •* .
i®## --. •«' i/ji/ ^• m» i iiraBi
Partial view of the control panels at BONUS — 16,500 KW Nuclear Plant at Rincon.
$16,500,000 of current bank borrowings will be retired and about $3,500,000 made available for new construction.
Looking Ahead
Continuous studies of power needs, constantly re viewed and revised by the Authority and its consult ing engineers, now indicate that peak demand on the system will increase from 580,000 Kw in 1963-64 to 667,000 Kw in 1964-65, 761,000 Kw in 1965-66 and 867,000 Kw in 1966-67. It is expected that over 25,000 new customers will be added yearly. To meet this demand, the name plate rating generating capac
ments. Of this amount, the sale of bonds will pro vide some $93,500,000. About $52,700,000 or 34% will be derived principally from revenues of
the Authority, compared with an average of 23% accrued from earnings and contributions during the last seventeen years. The remainder of $10,000,000 will be available from previous bond issues. The above four-year program compares with cap ital expenditures actually made during the past seventeen years, distributed as follows: steam pro duction plant $127,526,000, nuclear production
plant $5,128,000, hydraulic production plant $36,079,000, gas turbine production plant $8,318,000, transmission plant $50,409,000, distribution plant $106,494,000, and other facilities $37,827,000 for a total of $371,782,000,
ity of the Authority will be raised to 990,420 Kw by June 1966.
During the period from July 1, 1963 through June 30, 1967, it is anticipated that the Authority
Security for the Bonds
will invest $156,200,000 in further capital improve
Bonds issued by the Authority under the Trust
Puerto Rico Water Resources Authority
Condensed Balance Sheet As of March 31, 1964
ASSETS
NET UTILITY PLANT:
Gross utility plant Less accumulated provision for depreciation
$400,795,513 61,376,937
Net utility plant
$339,418,576
OTHER PHYSICAL PROPERTY
640,640
BOND REDEMPTION, RESERVE AND CONSTRUCTION FUNDS
22,085,191
CURRENT ASSETS:
Funds and working advances
$ 13,327,809
Accounts receivable â&#x20AC;&#x201D; Less Reserve for uncollectible accounts
11,282,091
Materials and supplies
11,943,664
Prepayments, special deposits and other
2,072,190
38,625,754
DEFERRED DEBITS:
Debt discount and expense in process of amortization Other
$ 7,199,555 1,021,935
TOTAL ASSETS
8,221,490
$408,991,651
LIABILITIES
CONTRIBUTED CAPITAL
$ 33,898,827
UNAPPROPRIATED NET REVENUES
38,704,691
LONG-TERM DEBT:
Electric revenue bonds
Notes payable
$279,091,000
16,500,000
295,591,000
CURRENT LIABILITIES:
Accounts payable Customers' deposits and accrued interest Accrued interest on Electric Revenue Bonds Accrued contributions in lieu of taxes Other
$ 4,645,163 2,539,806 2,224,638 5,352,043 2,478,775
DEFERRED CREDITS
17,240,425
600,590
RESERVES:
Self-insurance
Hydro-production equalization Injuries and damages Revenue stabilization
Appropriated sinking fund TOTAL LIABILITIES
$ 4,192,398
1,396,259 1,879,804 581,174
14,906,483
22,956,118 $408,991,651
Puerto Rico Water Resources Authority
Condensed Statements of Revenues and Expenses (For Revenue Fund Purposes per Trust Indenture)
Twelve Months Ending June 30 1960
June 30 1961
June 30 1962
June 30 1963
March 31
$40,440,678 994,844
$45,303,522 1,110,660
$50,845,979 1,284,837
$57,519,700 1,409,175
$63,887,730
$41,435,522 638,016
$46,414,182
$52,130,816 675,433
$58,928,875
$65,495,225
731,477
742,361
891,398
$42,073,538
$47,145,659
$52,806,249
$59,671,236
$66,386,623
$ 6,364,024
$ 6,885,447
$ 7,360,603
$ 8,542,762
12,135,940
13,381,840 4,495,076
14,104,870 6,104,009
$ 9,005,727 17,516,485
511,245
529,768
15,353,872 7,160,923 709,753
$22,836,920
$25,273,608
$28,099,250
$31,767,310
$36,051,019
$19,236,618
$21,872,051
$24,706,999
$27,903,926
$30,335,604
$ 5,226,952 $ 6,024,656
$ 6,867,883
$ 7,718,486
$ 8,048,030
2,549,700 856,675
2,930,621 1,003,767
3,373,776 1,179,206
3,837,000 1,343,538
4,215,867 1,487,497
Total sinking fund payments . . .
$ 8,633,327
$ 9,959,044
$11,420,865
$12,899,024
$13,751,394
Balance
$10,603,291
$11,913,007
$13,286,134
$15,004,902
$16,584,210
$
$
$
$
$
REVENUES:
Sales of electric energy Other operating revenues Total operating revenues Other income Total revenues
1964
1,607,495
CURRENT EXPENSES:
Operation â&#x20AC;&#x201D; Fuel
Other operating expenses
3,913,749 423,207
Maintenance
Other current expenses Total current expenses
8,580,989
947,818
Balance of revenues after current ex
penses (per Trust Indenture) . . 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 re imbursement from the Commonwealth
Government of Puerto Rico) . . . . Reserve account
TRANSFERS TO:
General reserve fund â&#x20AC;&#x201D; provision for selfinsurance
Total transfers
397,119 4,831,232
479,696 6,008,704
$ 5,228,351
$ 6,488,400
$ 5,374,940
$ 5,424,607
4,429,208
4,957,439
Renewal and replacement fund . . . .
542,178 6,882,337
598,185 7,680,380
627,036 8,091,152
$ 7,424,515
$ 8,278,565
$ 8,718,188
$ 5,861,619
$ 6,726,337
$ 7,866,022
Balance available for contributions in
lieu of taxes, etc.
PROVISION FOR CONTRIBUTIONS IN LIEU OF TAXES Balance
5,563,099
6,298,353
$
945,732
$
467,168
$
298,520
$
$
472,866
$
233,584
$
149,260
$
472,866
$
233,584
$
149,260
$
472,866
$
233,584
$
149,260
6,996,500
427,984
$
$
213,992
$
434,761
$
213,992
$
434,761
$
213,992
$
434,761
869,522
PROVISION FOR:
Transfer to sinking fund reserve account Total
Balance transferred to unappropri ated net revenues
9
tesS*'Ss>''-s.i
i/^. '-^r--
r y,Ji
iaJr"
'• Vs:''
■'>
h \\\\\A*
v\\\'®
San Juan Steam Plant —
\ V n \ I
168,000 KW, a seventh and eighth unit
Hfliv
of 100,000 KW each, are now under construction.
=-i
fj
^V\\l
^1 , -J
Indenture are payable from the Puerto Rico Water Resources Authority Sinking Fund. The Authority has covenanted to deposit in this fund a sufihcient 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 well as to create reserves for such purposes.
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. 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
The Authority has also covenanted that it will at
also legal investments for Savings Banks and Trust
all times fix and collect reasonable rates and charges
Funds in the states of New York and California and
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 Indenture to the credit of the General Reserve Fund 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
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 Investment 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
delinquency 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 default.
TOTAL REVENUES, BALANCE AVAILABLE FOR REVENUE FROM SALES OF ELECTRICITY
DEBT SERVICE AND DEBT SERVICE REQUIREMENTS Millions of Dollars
Millions of Dollars
70
70
60 -
■ Total Revenues
^ Residential
□ Balance After Current Expenses S Debt Service Requirements 50 ■
40 -
30 -
20
Fiscal Years
*55
■58
'59
'60
'61
'62
'63
* Estimate - Including Fuel Oil Adjustment. Source: P.R.W.R.A. Financial Reports.
nil Fiscal Years
'55
'56
II
'61
'62
'63
The Commonwealth of Puerto Rico
rum and tobacco, are returned to the Commonwealth
Puerto Rico is the fourth largest of the islands in the Caribbean area. It is about 100 miles long and 35 miles wide, having an area of 3,423 square miles and a population estimated at 2,534,000 as of June 30,
Treasury. This relationship with the Federal Govern ment is defined through the medium of the compact entered into by Congress and the People of Puerto Rico, and is further described hereafter.
1963.
Under its compact with the United States, the Commonwealth of Puerto Rico exercises virtually the same control over its internal affairs, following the same general procedures, as do the fifty federated States over theirs. It differs from the States primarily in its relationship to the Federal Government. In
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
brief, residents of Puerto Rico do not vote in the
ment for the Island in 1900 including a Governor,
national elections. They are represented in Congress
Cabinet, Senate and Supreme Court, all 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 developed for a less colonial form of government and in favor of United States citizenship. As a result, the original law was superseded in 1917 by the Organic Act or Jones Act, which granted United States citizenship to Puerto Ricans, as well as unrestricted suffrage for
by a Resident Commissioner who has a voice but no vote in the House of Representatives. Federal taxes do not apply in Puerto Rico except by mutual con sent, as is the case with social security taxes and unemployment insurance. No Federal income tax is collected from Puerto Rican residents on income
earned in Puerto Rico, and Federal excise taxes col
lected on exported Puerto Rican products, such as
11
INA&UA ROm
Above- Laying of submarine cable connecting Vieques
mm.
Island to the Authority's System.
Right: Authority's helicopter lifting an aluminum V, guyed transmission line structure.
local purposes. Both Senate and House were elected by the people, but the Executive and Judicial branches remained under control of Washington through ap pointment by the President.
No further change occurred until 1946 when the President for the first time appointed a Puerto Rican as Governor. In 1947 the Jones Act was amended to
permit Puerto Ricans to elect their own Governor, who in turn was empowered to appoint his Cabinet
This Act also authorized the People of Puerto Rico to draft and approve their own constitution. Such a constitution, similar to those of the various
states, was drafted by a freely elected constitutional convention in Puerto Rico, overwhelmingly approved in a special referendum, and approved by Congress of the United States and the President. It became
effective upon proclamation by the Governor of Puerto Rico on July 25, 1952.
and the 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 Con
gress 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 States shall remain in full force and shall be there after known as the Puerto Rican Federal Relations Act.
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 in those of the States. Both the Governor and the bicam
eral legislature are subject to regular election every four years.
Governmental responsibilities assumed by the Com monwealth are greater than those normally assumed by the State government. Municipalities, which com-
/4 pre.slressed concrete pole being tested to its breaking point by the Authority's Technical Research Department.
.m.;'
\ A bine 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
carries out a number of important functions usually performed by local governments in the continental United States. Among these are police and fire pro tection, education, all major street and highway construction, and public health programs. In addition, the Commonwealth Government supervises munici pal 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 and Sewer Authority. Air and seaport facilities are admin istered by the Ports Authority. The bonded debt of these public corporations is supported entirely by revenues derived from their operations.
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 independence.
Both major political parties, the popular Democratic Party and the Statehood Republican Party, hold maintenance of permanent ties with the United States as a basic principle, and differ only as to the form which that future political relationship should take.
Prospective Plebiscite
Since 1952, when Congress authorized and Puerto
Rico accepted the present commonwealth form of government, it has been recognized that this concept
of political status, being a new legal entity within the framework of the government of the United States, could in due course be subject to improvement. No significant changes were proposed until 1961 when, through direct vote by Puerto Ricans, and with ap
proval by Congress, the U. S. Congress provided for
^
Mai/i Office Building,
Plj San Juan, is equipped with H
f r 'u jfeh '.
a rooftop heliport and a
U
microwave communications
I
system.
removal of control of the Commonwealth debt limit
House of Representatives, and was passed by the
from the Federal Relations Act at such time as it was
House on October 23, 1963 and by the Senate on
incorporated by referendum in the Puerto Rican Constitution, and authorized appeal of decisions of
the Supreme Court of Puerto Rico 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 sufficient time had elapsed, and enough experience
had been gained, to consider improvement and refine ment of the commonwealth concept. Once this was
February 18, 1964. The Resolution provides for the establishment of a "United States-Puerto Rico Com mission on the Status of Puerto Rico" which is to
study all factors which may have a bearing on the present and future relationship between the United States and Puerto Rico. The membership of the Commission consist of three persons appointed by the President of the United States, plus two each
selected by the Senate and the House of Represen tatives, and six appointed by the Governor of Puerto
a plebiscite in which the people could express their preference for a perfected commonwealth status, or
Rico. The Commission is to render its report to the President and the Congress of the United States and to the Governor and the Legislative Assembly of
for the classical forms of government of statehood or
Puerto Rico not later than January 1966.
to be defined, measures could then be taken to hold
independence. The Legislature of Puerto Rico, by almost unanimous vote, adopted a Resolution peti
tioning Congress to provide the basis for such plebis cite.
In response to this, a Resolution (HR 5945) was introduced on April 30, 1963, in the United States
It is expected that this study will result in the basis of a clarification and perfection of common wealth 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.
Eleclronic data processing equipment used /or hilling, accounting, inventory controls and other purposes.
General
For over two decades, economic growth in Puerto Rico has been rapid and continuous. Commonwealth gross product has increased nearly eightfold, from
$287 million in 1940 to $2,233 million in 1963. The net income of Puerto Rico has more than kept pace, rising from $225 million to $1,811 million
during the same period. Especially significant, net income per capita after adjustment for price changes has shown an average annual increase for the last
tiplied sixteen times, from $27 million in 1940 to $432 million in 1963, and now provides 24% of Commonwealth net income. Whereas in 1940 sugar
products accounted for nearly two thirds of exports, in 1963 they provided less than a sixth. Nowadays more than half of manufacturing income is generated by the production of new types of goods, principally for shipment to the continental United States. Such shipments have jumped from $23 million in 1949 to $531 million in 1963.
twenty-three years of over 4.8% compounded. In fact, the rate of increase has been accelerating, from 4.1% in the decade 1941-50, to 5.1% in the decade 1951-60, 6.1% in 1961-62, and 7.2% in 1963,
These new products cover a wide range of items such as apparel, petroleum derivatives, and electronic products. Large, heavily capitalized manufacturing operations have shown a significant increase in re
making the Commonwealth's economy one of the
cent years as compared to those labor-intensive operations promoted during the early part of the industrialization program. These include the Union Carbide & Chemical Corp., which operates a $28 million glycol plant and is constructing a $22 mil
fastest growing in the world. Equally impressive has been the transformation
of the Commonwealth's economy from dependence on sugar to a high degree of industrialization and
diversification. While net income from agriculture has expanded from $70 million in 1940 to $220
million in 1963, that from manufacturing has mul
lion plant to produce alcohol intermediates. Petro leum refineries are operated by Caribbean Refining Co., which recently completed an expansion pro-
gram, and the Commonwealth Oil Refining Co., which is currently enlarging its operations. An addi tion to Puerto Rico's petrochemical complex will be Puerto Rico Chemical Co., which announced plans to establish a $6 million anhydrous benzene bicar-
boxylic plant. In calendar 1963, a record 302 new factories began operation on the Island, bringing t e total U. S. affiliated plants in Puerto Rico to 950.
Food processing has also been a sipificant growt area in recent years. Three rice mills an a arge flour and feed mill supply an important part ot Puerto Rico's food requirements. Four large tuna canneries are now in operation and, wit one a i
tional plant recently promoted, the Is an ÂŽ come one of the leading suppliers of canned fish m United States markets. The forthcommg es a
feed for the growing cattle and daij'mg mdust^, tuna
canneries. A subsidiary of Libby, McNeill & Libby has recently set up a plant for the canning o
"^MaoToitL p.an.s are branch, or anb.aiari.
set up by such firms as General Electnc, Consohdated Cigar Corporation, Sunbeam Corporation, American Can Company,Phelps Dodge ^orporahon, Sperry Rand Corporation, Daystrom Inc., CarborLum Corp., Sprague Electric, Van Camp Sea
16
Company. One significant addition to Puerto Rico's blue chip roster is the $15 million ball bearing plant now being constructed by Ford Motor Co., to be the most modern facility of its kind in the world.
Helping to bring about such extraordinary changes in Puerto Rico's economy has been the Common
wealth Government'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 of this program, the annual inflow of
capital from the continental United States for fixed investment in the Commonwealth has risen from $30 million in 1947 to $212 million in 1963. Annual fixed investment from all sources has risen from $62 mil
lion to $487 million during the same period and has
ment of a soya bean processing plant wi P^°
and oil for the domestic market and to
Food, Van Raalte, B.V D. Corp., and W. R. Grace
equalled 21 percent or more of gross product for the last four consecutive fiscal years 1960 through 1963. 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 18.2 per thousand to 6.8 per thousand. Personal income for
the average family has risen from $611 to $3,488. Public and private day school enrollment has in creased from 297,000 to 659,000. University and college enrollment has grown from 5,000 to 30,900.
PUERTO RICO WATER RESOURCES AUTHORITY San Juan, Puerto Rico
The Community We Serve Fiscal Years
An Expanding Economy: Gross Product — $ Millions Net Income — $ Millions
% Increase
1940
1963(1)
287
2,233
225
1,811
Personal Income Per Family — $
or (Decrease)
678 705
471
Banks:
Debits — $ Millions
Private Savings Accounts — $ Millions Assessed Value of Taxable Property —
73
1,170
17
260
1,502 1,429 609
312
2,211
Income Tax Collections — $ Millions . .
2
90
309
Power Generation — Millions of KWH. .
166
2,935
1,668
1,869,000
2,534,000
$ Millions
A Healthier, Better Educated Population: Population Birth Rate — Per Thousand .
39.0
28.9
Death Rate — Per Thousand
18.2
6.8
Life Expectancy — Years . . Public Day School Enrollment University and College Enrollment
36
(26) (63)
46
70
52
286,000
598,000 30,900
109
5,000
518
A More Balanced Economic Life:
Percentage
Per cent of Net Income from:
Change
Points
Manufacturing
12
24
12
Agriculture
31
12
(19)
8
13
5
12
16
4
37
35
(2)
Commonwealth and Municipal Government Trade Other
Per cent of Exports from: Exports by New Factories'-' Sugars (Raw and Refined) Other
II I Preliminary figures. Promoted by the Economic Development Administration. Does not include exports of other new factories. Source: Puerto Rico Planning Board.
60
60
62
17
38
23
(45) (15)
'
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