Puerto Rico’s Renewable Energy Mandate

Recommendations for an Equitable Transition

March 2023

This report is the final product of a 2022 Policy Workshop sponsored by the Princeton University School of Public and International Affairs (SPIA) as part of its Master in Public Affairs degree program. All members of the project team participated in discussion, debate, and preparation of this report.

Lead Professor

Eduardo Bhatia

Report Authors

Hannah Ceja

James Duffy

Cherrita Guy

Caroline Hayes

Ryan Klaus

Hilary Landfried

Shua-Kym McLean

Kacie Rettig

Bryson Rose

Parker Wild

Editors

Hannah Ceja

Cherrita Guy

Ryan Klaus

Parker Wild

Designers

James Duffy

Kacie Rettig

Suggested Citation

Princeton University. (2023). Puerto Rico’s Renewable Energy Mandate: Recommendations for an Equitable Transition. Policy Workshop Report. Princeton School of Public and International Affairs.

Disclaimer

The report presented here does not represent the views of Princeton University, any individual instructor, any individual student, or any person interviewed by this workshop.

Acknowledgements

On behalf of our report team and the Princeton School of Public and International Affairs, the authors would like to give a special thanks to the following individuals, organizations and community members for their insights, perspectives and willingness to meet with us before, during and after our time in Puerto Rico:

Communities of Puerto Rico

Community Members of Castañer

Community Members of Adjuntas

Community Members of Culebra

Organizations

Cambio PR

Casa Pueblo

Center for A New Economy (CNE)

Cooperativa Hidroeléctrica de la Montaña

Environmental Defense Fund (EDF)

Fundación Comunitaria de Puerto Rico / Puerto Rico Community Foundation

Hispanic Federation - Puerto Rico

LUMA Energy

Mujeres de la Isla

National Renewable Energy Laboratory of the U.S. Department of Energy (NREL)

Office of the Governor of Puerto Rico

Puerto Rico Energy Bureau (PREB)

Puerto Rico Electric Power Authority (PREPA)

Queremos Sol

Rocky Mountain Institute

Solar and Energy Storage Association of Puerto Rico (SESA)

U.S. Department of Energy

Individuals

Alberto Santiago

Alexis Massol González

Angel Figueroa-Jaramillo

Angel Rivera

Arturo Massol Deya

Charlotte Gossett Navarro

Clare Sierawski

CP Smith

Edison Avilés-Deliz

Elizabeth Arnold

Ferdinand Ramos-Soegaard

Francisco Berrios Portela

Ingrid Villa

Javier Rua

Jia Jun Lee

Josué Colón

Lillian Mateo Santos

Lord Nicholas Stern

Marisol Bonnet

Mario Hurtado

Michael Liebman

Nate Blair

PJ Wilson

Robin Burton

Roy Torbert

Ruth Santiago

Sergio Marxuach

Sylvia Ugarte Araujo

Vernice Miller-Travis

Executive Summary

Puerto Rico is currently not on track to comply with the first renewable energy target of Act 17, requiring 40% renewable generation by 2025. In 2019, the Puerto Rico legislature passed the Puerto Rico Policy and Energy Act (“Act 17”), mandating 40% renewable generation by 2025, 60% by 2040, and 100% by 2050. Yet, an outdated grid and challenging political environment continue to hinder efforts to transition, and access to reliable service across the island is worsening. Given that Puerto Rico is far away from reaching its first Act 17 target, this report provides recommendations for officials in both the Government of Puerto Rico and the U.S. Federal Government aimed at facilitating a smoother, faster, and more equitable transition to renewable energy on the island.

Puerto Rico exited bankruptcy in early 2022, and is now at a turning point. Its economy cannot grow without a functioning energy sector, and in many ways, Puerto Rico is primed to make a more rapid transition to renewable energy. Furthermore, there is substantial federal funding available to modernize Puerto Rico’s grid following Hurricane Maria in 2017, and recent regulatory reforms broke up the public electric utility monopoly on the island and created an independent regulatory body, the Puerto Rico Energy Bureau (PREB).

Our report focuses on four areas where improvements may have catalytic effects. First, all government agencies must anchor energy justice at the center of their transition strategy and implementation, as current transition efforts are leaving last mile communities behind. Both utility and small-scale solar installations are needed to support these communities, and must be financed and implemented in an equitable manner. There is a lack of financing options available for micro-level projects in these communities, and for renters, targeted energy efficiency programs could help lower burdensome rates.

Second, Puerto Rico Energy Power Authority (PREPA) and LUMA Energy (LUMA), the power company in charge of energy distribution, continue to deal with legacy issues from previous mismanagement of the grid and generation assets. They struggle to manage an outdated and damaged grid while providing new infrastructure. PREB should take on a stronger leadership role in the transition. As an independent and apolitical regulator, PREB can chart a path to regulatory and financial stability in the energy sector while communicating openly and transparently with the public to build trust. There are opportunities to restructure the power sector by bringing in new apolitical actors, such as Independent System Operators (ISOs).

Third, given the amount of government actors involved, strengthening public trust will be important throughout the renewable energy transition. Enhanced communication between government agencies and Puerto Rico’s public would increase trust, accountability and take a critical step towards better engaging communities and identifying avenues for public participation in the green energy transition.

Lastly, the federal government has committed approximately $12 billion to rebuild Puerto Rico’s energy sector, but disbursement has been significantly delayed. Administrative red tape, extensive application requirements, matching requirements, and changing federal administrations have all contributed to the delays. The failure to rebuild and provide adequate energy infrastructure puts the health and well-being of all Puerto Ricans at risk. The federal government should streamline funding approvals, center vulnerable communities, and waive the Jones Act for materials to rebuild and modernize the grid. While federal funds will play a critical role in Puerto Rico’s transition, Puerto Rico’s Green Energy Trust should also be strengthened to attract private investment capital.

These recommendations have a broader significance. Around the world, the number of countries committing to net-zero by 2050 is growing quickly, and as of May 2021, these commitments covered 70% of global emissions of CO2.1 At the end of 2021, 31 states and the District of Columbia had renewable portfolio standards or clean energy standards, and 20 states had committed to 100% clean electricity by 2050.2 According to the International Energy Agency’s Net Zero by 2050: A Roadmap for the Global Energy Sector, reaching net zero by 2050 requires rapid deployment of available technologies through 2030.3 The 2020’s must be a decade of massive clean energy expansion to reach these targets. Each country and state face different conditions and challenges in their transitions but all must grapple with how to ensure vulnerable communities are not left behind, develop unified plans across agencies, and obtain the necessary financing.

Recent reforms and the renewable energy targets in Act 17 are a significant step towards Puerto Rico’s renewable energy transition, but much remains to be done to achieve these goals. Still, plenty of time remains for officials to amplify the renewable energy transition in hopes of actualizing this vision. In alignment with the island’s commitment to 100% renewable energy, the policy recommendations provided in Part II serve as concrete steps that policymakers and government officials can consider, before and after the publication of the United State's Department of Energy's completed PR100 study. This report’s section recommendations coupled with the energy justice framework discussed in Part I also demonstrate the existing policy tools and mechanisms that Puerto Rico can leverage to attain its renewable energy objectives.

Known as the Island of Enchantment, Puerto Rico’s leadership in its renewable energy transition will help lead the way in charting a brighter clean energy future for its residents, for other islands and for the world.

Summary of Recommendations

Alleviating Barriers to Renewable Energy for Low and Middle Income Communities

In approaching the renewable energy transition, and in anticipation of the PR100 study, we recommend that government actors, including the local and federal government stakeholders:

1) Identify energy insecure regions and target efforts to those regions. Specifically we recommend they:

· Establish a Social Vulnerability Index specifically for Puerto Rico.

· Invest in enhanced data collection and reporting.

· Employ cost of living measurements across Puerto Rico.

· Engage directly with communities and community leaders.

· Identify active non-profit, community-led projects and projects led at the municipal level, focused on renewable energy installations and microgrids.

2) Engage with solar leases and power purchase agreements. Specifically we recommend they:

· Provide direct financial assistance and cash payments for homeowners who enter a lease or new power purchase agreement (PPA) for rooftop solar.

· Require third parties to include a production guarantee.

· Promote the installation of batteries.

· Work with companies to lower the credit score required to enter into a lease or PPA agreement.

· Retain and extend the net metering program while balancing customer equity and financial restraints.

3) Employ targeted energy efficiency programs. Specifically we recommend they:

· Update building codes to include both weatherization and appliance requirements.

· Provide funding or cost saving opportunities for qualified landlords.

· Phase in requirements, and require and enforce timely weatherization updates.

Institutional Reform

Leading to the renewable energy transition, we recommend Puerto Rican government actors:

1) Restructure the electrical power sector. Specifically we recommend:

· LUMA should only be responsible for maintenance of the transmission and distribution system.

· An Independent Service Operator (ISO) should operate the system in real time and plan future grid investments.

· Policymakers should learn from the experience of other jurisdictions that established ISOs to ensure Puerto Rico’s reforms are successful.

· The Puerto Rico Energy Bureau (PREB) should commission a comprehensive study on the viability of a wholesale electricity market for Puerto Rico.

2) Ensure PREB maintains independence. Specifically, we recommend the Puerto Rican government keep PREB apolitical and deter any political influence.

3) Work to enhance public trust of energy system actors, and enhance communication. Specifically, we recommend:

· LUMA increase staffing on its customer support lines.

· LUMA improve personal solar systems interconnection and provide clear timelines for interconnection.

· LUMA improve access to green energy information.

· PREB introduce a Public Value framework to increase public trust.

· PREB enhance its website to improve online presence and communication.

· PREB increase engagement on social media platforms.

Eliminating Financial Hurdles to the Renewable Energy Transition

In preparation for the transition, we recommend federal and local actors increase access to public infrastructure funding and finance. This includes:

1) Ensuring FEMA funds for permanent work reach communities in Puerto Rico. Specifically, we recommend the Department of Energy work with the relevant Puerto Rican and federal agencies, and employ federal funding, to:

· Fund a workforce program focused on rebuilding the electrical grid, that is protected from bankruptcy-related intervention.

· Incentivize Puerto Rican engineers’ involvement in rebuilding the energy grid, by establishing a federallyfunded program which provides salaries that are competitive with mainland salaries.

· Fund and invest in training and certification programs for green energy jobs.

· Create and train a workforce of administrative staff, to make available to municipalities for grant processing.

· Work with local leaders and governments to streamline funding to high-need areas.

2) Alleviating barriers to FEMA funds, and reduce infrastructure cost. Specifically, we recommend FEMA:

· Review the Alternative Procedures Program and identify and eliminate unnecessarily burdensome processes.

· Waive reimbursement requirements for permanent work in LMI and vulnerable communities.

· Work with DOE to identify all materials that will be used to rebuild the grid, establish microgrids, and meet the renewable energy mandate and, where possible, request that the White House waive the Jones Act for Puerto Rico’s imports of these materials.

3) Enhancing Puerto Rico’s access to investment in green energy development. As such, we recommend the Government of Puerto Rico bolster its Green Energy Trust Fund by:

· Launching residential and commercial term loan products as a top priority for the Green Energy Trust.

· Engaging with credit enhancement products, which can help incentivize private investors to lend to vulnerable communities.

· Engaging with long-term product options, which include on-bill and commercial property assessed clean energy financing.

· Increasing staff capacity and leadership, which are crucial to the Green Energy Trust’s success.

· Employing IRA funding, which represents a significant opportunity for the Green Energy Trust to secure capitalization funds.

· Pursuing other complementary sources of funding to the IRA’s Greenhouse Gas Reduction Fund.

Renewable Energy Options

Finally, we discuss possible renewable energy pathways to consider when moving forward with the transition. We recommend energy transition actors at the local and federal level work to:

1) Increase resiliency through hardening of existing grid infrastructure and grid decentralization.

2) Invest in both utility-scale and distributed generation to meet the needs of different communities.

3) Pursue a portfolio approach to renewable energy generation rather than relying solely on solar and storage.

The Puerto Rico Public Policy and Energy Act (“Act 17”) of 2019 created a Renewable Portfolio Standard of 40% renewable generation by 2025, 60% by 2040, and 100% by 2050.4 Despite local communities calling for change and local and federal government efforts, Puerto Rico is not on track to meet its 2025 target. In 2021, more than 95% of the island’s energy still came from imported fossil fuels.5

This challenge is compounded by the bleak reality that many households within Puerto Rico continue to live with a weak, inefficient and disrupted electrical grid. Major damage caused by Hurricane Maria has only worsened the overall quality of the energy system and there are long-term structural issues that require evaluation and repair to make the energy system optimal. In addition, the unreliability of the electrical grid has amplified public health concerns, policy challenges, and has also contributed to loss of life on the island. This report aims to provide critical institutional

sections of this report offer concrete policy recommendations to alleviate renewable energy barriers to low and middle income (LMI) communities, while also eliminating financial hurdles that may be impeding the island’s broader renewable energy transition.

Despite the many challenges facing the island, the tools necessary to facilitate change are already present. By many metrics, Puerto Rico is poised to make a rapid transition to renewable energy. In addition to Act 17’s (clear policy objectives, substantial funding has been committed for modernizing and improving Puerto Rico’s energy infrastructure. Specifically, the Federal Emergency Management Agency (FEMA) and other federal agencies have committed approximately $12 billion to rebuild and modernize the island’s energy system.7 Moreover, recent reforms have created a more balanced regulatory environment for the development of the energy system. In 2014, the Puerto Rico Energy Bureau (PREB) was

and policy context detailing why these challenges are pervasive in the Commonwealth, and present recommendations for how to alleviate them in order to better serve the people of Puerto Rico, while realigning with Act 17 targets.

Antiquated energy generation, dependence on imported fossil fuels, and disruption to the grid have increased spatial inequities to energy access. This has also resulted in hampered economic mobility, increased barriers towards debt crisis recovery, and has stifled the emergence of clean energy industries that would have contributed to economic growth. With a poverty rate of approximately 43 percent based on 2020 data6, the economic growth required for Puerto Rico to combat financial and economic distress cannot be achieved under the current energy system structure. As a starting point, the following

established by Act 57 as an independent and specialized body, with regulatory authority to monitor and enforce the energy public policy of the Government of Puerto Rico.8 Subsequently, the transmission and distribution (T&D) functions were separated from generation, breaking up the vertical monopoly previously held by the island’s public electric utility, the Puerto Rico Electric Power Authority (PREPA).

To assist Puerto Rico in reaching its renewable energy goals as established by Act 17, the U.S. Department of Energy (DOE) and five of its national laboratories are performing a comprehensive analysis of technical pathways to 100% renewable energy. The study, entitled Puerto Rico Grid Resilience and Transition to 100% Renewable Energy (PR100), will produce high-resolution datasets and open-

source models that inform policymakers’ decisions about the future of Puerto Rico’s energy system, but it will not include specific policy recommendations or a detailed implementation plan. Instead, the authors will convey potential pathways to fulfill the 100% renewable energy goal and examine their impacts, in addition to performing analysis that will help stakeholders make informed investment decisions. Finally, recommendations will be focused on short- and long-term actions for the transition. The full report is expected to be complete by the end of 2023.9

In our conversations with Puerto Rican stakeholders, many expressed their enthusiasm for the island’s renewable energy future and the potential outcomes of the PR100 study. However, given that the study will only include analysis of technical pathways to 100% renewable energy, the strategic application and policy guidance needed to realize these technical pathways will be out of scope. Accordingly, the PR100 study will heighten the responsibility of government officials and policymakers in Puerto Rico to identify, define, and implement the next steps to actualize the technical pathways analysis and move the island’s renewable energy transition forward.

Yet, existing diffusion of responsibility among Puerto Rican energy policymakers paired with a lack of clear leadership for implementing the PR100 findings, increase the likelihood of inaction. It also risks a lack of agency coordination, and a failure to capitalize on PR100 to achieve Puerto Rico’s renewable energy goals. Decisive action in response to the PR100 findings remains unlikely if policymakers do not proactively address the current fragmented state of Puerto Rico’s energy policy landscape.

Puerto Rico’s energy oversight structure, comprising PREPA, LUMA and the PREB, also hold competing visions regarding the future state of the grid. Although PREPA and LUMA are charged with implementing the island’s renewable energy mandates under the supervision of the PREB, this relationship is often complex and even antagonistic at times, resulting in a misalignment of priorities, circular decision-making and potentially gridlock across the energy system. In the aftermath of Hurricane Fiona, President Biden tasked the U.S. Secretary of Energy with leading the Puerto Rico Grid Modernization and Recovery Team, but DOE lacks policymaking jurisdiction over many of the relevant leverage points in Puerto Rico’s energy sector. To ensure the PR100 findings bring about an effective transition, policymakers and stakeholders must work together to establish an inclusive implementation plan that targets current challenges and identifies specific organizational objectives within the energy system.

Furthermore, wealthier Puerto Rican residents are more likely to install distributed energy resources (e.g., rooftop solar and battery storage) than their LMI counterparts, for whom the upfront cost of residential systems remains a barrier. Since ratepayers have historically borne the burden of PREPA’s debt repayments, failure to address this disparity could result in LMI households being unfairly impacted by future debt restructuring plans that require rate increases.10

In anticipation of the PR100 publication, our report provides policy recommendations to ensure an equitable and rapid transition to renewable energy and prepare the grid for the integration of distributed energy resources.

The cornerstone to this report includes the following seven design principles that, based on our engagement with stakeholders, we believe should guide policymakers throughout Puerto Rico’s renewable energy transition. These design principles should also serve as a platform for policymakers’ evaluation of the technical pathways presented in the PR100 study.

1. Reliability: the grid loses power less often and power quality is high.

2. Resiliency: the grid can withstand and recover from weather events quickly.

3. Affordability: infrastructure investments should prioritize reducing the cost of electricity for consumers.

4. Carbon-free: the grid should reach zero carbon emissions from generation by 2050 in accordance with Act 17.

5. Operational and financial integrity: the entities that manage and regulate the energy system must have the technical capacity and resources to do their job effectively.

6. Accountability to the public: customers should have visibility into and a say in how decisions about the energy system are made.

7. Equity of access and quality of service: regardless location, background, or financial circumstances, residents should be able to access electricity from an energy system with the aforementioned characteristics.

The subsequent sections of our report will be presented as follows: This report first reviews the current policy context related to the Puerto Rican energy system (Part I). Specifically, it evaluates the state of the Puerto Rican energy system and its impact on Puerto Ricans (Section A). Through the lens of our tailored energy justice framework, the report then examines Puerto Rico’s economic development and challenges to an equitable renewable energy transition (Section B). Next, the report outlines private and public seed funding available for future development, and current institutional challenges and barriers to that funding (Section C).

Given this context, we then provide our recommendations (Part II). We conclude with a brief review of the top-line items discussed in our report.

Part I: Policy Context

Part I presents important policy context regarding the current state of Puerto Rico’s energy system and details the challenges arising for the island as a result. Our policy discussion provides critical context into Puerto Rico’s energy system and its current institutional oversight (Section A), the economic barriers that are preventing energy justice for low-and-middle-income (LMI) communities (Section B), and challenges to accessing seed funding sources for future development of the energy system (Section C). The conclusions derived from each of these sections will then be leveraged in Part II where we identify concrete policy recommendations to support the elimination of these barriers, institutional challenges and financial hurdles to Puerto Rico’s renewable energy future.

Section A. Puerto Rico’s Energy System

In the current Anthropocene, rapid climate change caused by increased greenhouse gas emissions affects the entire international community. Many local, state, territorial and national governments are taking significant strides to transition to a clean energy future. As an island, Puerto Rico is particularly vulnerable to climate change and natural disasters, as witnessed by the most recent devastating natural disaster brought by Hurricane Maria. Additionally, the challenge of having sequential disasters on the island has left the energy system severely damaged. The combined impact of Hurricanes Irma and Maria left the island in need of critical infrastructure repairs and disaster relief. In 2017, Maria downed about 80% of the island’s power lines, after which it took 11 months to fully restore power.11 The series of earthquakes in 2020 also damaged energy infrastructure. Two major power plants, EcoEléctrica and Costa Sur, were both in disrepair. In particular, Costa Sur previously provided about a fifth of power generation for the island as a six decade old facility.12

Thus, the need for developing a scaled and renewable energy system that can sufficiently provide households with equal access to energy and have the capacity to proactively protect the people of Puerto Rico from these climatic vulnerabilities has never been greater.

While the passage of Act 17 solidified Puerto Rico’s commitment to a 100% renewable energy transition, the progress of its transition and overall Act 17 compliance has been slow and piecemeal at best. This is made manifest by the fact that Puerto Rico’s energy system is still heavily dependent on fossil fuels. In FY 2021, 44% of the island’s electricity was generated by natural gas-fired power plants. Petroleum fueled 37% of generation, coal 17%, and renewables 3%.13 Residents in Puerto Rico typically consume about a third of the average per capita energy consumption as the typical U.S. mainland resident and pay roughly twice as much per kilowatt-hour (kWh) as a result.14 Since Puerto Rico is heavily reliant on imported fossil fuels, the cost of electricity generation is dependent on international fuel prices and their market rates.

Within the Commonwealth, there are three primary local actors responsible for the energy system and the recovery of the grid. First,

the public utility Puerto Rico Electric Power Authority (PREPA, and in Spanish “la Autoridad de Energía Eléctrica”) is responsible for the majority of energy generation on the island. Second, as of the summer of 2021, PREPA contracts out operation of the T&D system to the private entity, LUMA Energy, LLC (LUMA). Canadian company ATCO, Ltd., and U.S. company Quanta Services formed LUMA exclusively for their work in Puerto Rico.15 Finally, PREB, (in Spanish “el Negociado de Energía de Puerto Rico”) has a principal role in shifting momentum towards the transition to renewable energy since its formation in 2014, as an independent regulator and specialized body. Together, these three actors are charged with bringing oversight centricity and mutual cooperation within their respective lines of responsibility to the energy system.

PREPA remains a key player in the island’s electric grid. In the face of intense bankruptcy proceedings and the gradual phase-out of its role as both the owner and operator of grid assets, PREPA still owns about 86% of installed generation capacity on the island, much of which is outdated.16 Compared to an industry average of about 18 years, PREPA’s generation assets have a median age of over 40 years.17 The largest of these power plants are in the south, while the island’s population is concentrated in the north. This makes the grid highly reliant on long-distance transmission lines. Across the island, there are about 2,400 miles of transmission lines as well as 30,000 miles of distribution lines.18

Brief Overview of Puerto Rico’s Electric Utility

Despite the intentions of the Government of Puerto Rico, the current ecosystem under which PREPA, PREB and LUMA operate, does not always align with the priorities of the clean energy transition outlined in Act 17.

As a state-owned monopoly responsible for electricity generation, transmission, and distribution on the island, PREPA developed a variety of operational and fiscal problems that undermined its ability to serve customers and prevented it from actively pursuing Puerto Rico’s target of 100% renewable energy by 2050.19 According to news outlet UtilityDive, the utility suffers from a “lack of effective processes and procedures, inadequate generation management, damaging customer service and collections, politicization of leadership personnel, power theft, poor inventory control, poor procurement practices, an obsolete vehicle fleet, and safety concerns.”20 Further, stakeholders have highlighted concerns with PREPA’s performance in congressional testimony. These concerns cited PREPA’s overpayments for substandard fuel, their high spending on contractors who did not deliver on their contracted work, cuts to workers’ benefits, as well as the workforce, and overall delays to the energy transition.21 22

In 2014, Puerto Rico’s Legislative Assembly passed Act 57, which established PREB as a regulatory body tasked with monitoring PREPA’s performance, reviewing electricity rate proposals by the electric utility, and enforcing the energy policy of the government of Puerto Rico.23 Act 57 also laid the groundwork for the decoupling of electricity generation and distribution in Puerto Rico. Through Act 120 in 2018, the Legislative Assembly established a mechanism for

the sale or transfer of PREPA’s generation assets and the concession of its T&D functions – but not ownership – to a private entity. Variations of this approach were first pushed by the Federal Energy Regulatory Commission (FERC) in the 1990s as part of its efforts to increase competition between power producers and drive down prices, with the success of individual reforms often depending on the strength of oversight by state-level regulators.24

However, Act 120 stopped short of creating a wholesale electricity market to complement the current system of procuring generation capacity and ancillary grid services, via long-term contracts known as power purchase agreements (PPAs). Under the current system, existing power producers have little incentive to invest in lower-cost generation technologies, which has resulted in higher electricity prices for consumers. Act 120 also allowed for the concession of PREPA’s T&D assets and responsibility for their operation and management to just one private entity.25 In other words, although LUMA was required to compete for the right to operate and maintain the T&D system initially, it no longer faces competition from other companies.26 As a result, customers have no alternative if they are unsatisfied with LUMA’s service.

PREPA’s recent actions have not demonstrated a commitment to the vision set forth by Puerto Rico’s Legislative Assembly in Act 17, as its undiversified generation portfolio demonstrates. Earlier this year, PREB stripped PREPA of its authority to conduct requests for proposals (RFPs) for renewable energy projects as required by Act 17 due to the utility’s extreme delays in carrying out the first tranche. The regulator hired an independent coordinator to run the process instead.27 In its most recent integrated resource plan (IRP), PREPA also announced its intentions to continue building fossil fuel infrastructure despite opposition from stakeholders.28

Bankruptcy and the Introduction of the FOMB

On top of the added stress that oversight and implementation inefficiencies place on the energy system, Puerto Rico’s debt crisis has directly impacted grid management, investment and rates charged to all households. For reasons further explored in later sections of this report, PREPA began accumulating a substantial amount of debt beginning in the 1970s. The amount then surged after 1996. By early 2014, the public utility’s operations and finances were clearly struggling.29 That summer, PREPA could no longer afford fuel. By 2016, PREPA’s debt amounted to $9 billion.30 Notably, the rates that Puerto Rican customers pay for their electricity are the primary funding source for bond repayments. 31

In 2016, the U.S. Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). Since the bankruptcy protections provided to U.S. states were denied to Puerto Rico due to an amendment to federal code in the 1980s, this law provided a debt restructuring process. Additionally, it established the Financial Oversight and Management Board (FOMB) and tasked it with restructuring Puerto Rico’s debt. Officially, FOMB is an entity of Puerto Rico’s government; however, the President of the United States appoints seven members to the Board and the Governor of Puerto Rico designates only one ex-officio member. The Puerto Rico Governor and Legislative Assembly have no control, supervision,

oversight, nor review over FOMB or its activities, and FOMB has the authority to prescribe or halt government decisions.32

This insight presents an important and distinguishing feature of the complexity of institutional oversight involved within Puerto Rico’s energy system, relative to islands with designated statehood such as Hawaii. As this report will discuss in future sections, FOMB’s involvement has profound implications on the level of institutional cooperation and policy alignment needed within the U.S. Federal Government, the Commonwealth and municipal governments in Puerto Rico, as well as between these entities, in order to press forward with Puerto Rico’s renewable energy transition.

Delays to Recovery

The need for quicker recovery from natural disasters, resolution to PREPA’s debt crisis and mismanagement, and improvement of Puerto Rico’s economic environment have played an important role in recent decisions about the island’s energy system. 33, 34 In particular, FOMB’s role in PREPA’s bankruptcy has influenced how federal funding for grid reconstruction has been allocated, and shaped the concession of PREPA’s T&D functions to LUMA.

Federal Funding

Under the Trump administration, federal agencies have pointed to the debt crisis as the primary reason to implement additional constraints on critical funding to Puerto Rico’s grid recovery. On September 9 and September 20, 2017, the Federal Emergency Management Agency (FEMA) published notices for two separate presidential disaster declarations under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“Stafford Act”), one for Hurricane Irma and Maria respectively. Both declarations authorized FEMA to provide “such amounts as [found] necessary for federal disaster assistance and administrative expenses.” 35, 36 Following the initial authorization of funds and the presidential declarations in 2017, FEMA applied a revised program for funding disbursement in a manner that was specific to Puerto Rico.

The “Public Assistance Alternative Procedures” model is one that was initially created to impose additional control over spending on permanent work in response to Hurricane Sandy, but was only used for a small fraction of that work. 37 FEMA would use the funding model for all permanent work for the first time, in Puerto Rico. 38 Based on a letter written to the Government Accountability Office (GAO), FEMA instituted this model “due to Puerto Rico’s financial situation, weakness in internal controls, and the large scope of recovery funds, among other things.” 39 Local government and nonprofit leaders have cited this model as a source of delay in funding distribution. 40, 41

According to Pueto Rico’s Central Office for Recovery, Reconstruction and Resiliency’s (COR3) Disaster Recovery Transparency Portal, despite a commitment of $9.4 billion towards the energy grid in 2020, only one project related to grid recovery has been completed using FEMA permanent work funding.42 As of November 17, 2022, when the U.S. House of Representatives Natural Resources Committee held a hearing on rebuilding the Puerto Rican energy grid and recovery efforts after the hurricane, only $184 million of the total $9.4 billion obligated towards permanent work for the energy grid had been

disbursed.43 Notably, the funding may be used to update the system to support transmission of electricity generated from renewable energy sources, and to build microgrids. 44, 45

Privatization

The aforementioned factors also helped catalyze the conditions for PREPA’s contract with LUMA. Act 120 allowed for the formation of public-private partnerships to replace parts of PREPA’s monopoly functions, which resulted in the concession of its T&D responsibilities to LUMA.46 The FOMB also played a role in the privatization deal, in that it has been publicly supportive of LUMA and privatization of the grid’s operation. For example, the FOMB advocated for a supplemental contract amending LUMA and PREPA’s original Operation and Maintenance (O&M) agreement. According to the supplemental contract, the primary contract would not commence until after the assigned federal judge approved PREPA’s debt restructuring plan, and LUMA found that restructuring plan to be “reasonably acceptable.” The supplemental contract also increased the fee that LUMA would charge PREPA for O&M during the Interim Period, from the $70 million agreed to in the primary contract’s first year to $115 million during this new period, termed the “Interim Period.” 47, 48

In addition to attracting investors and helping the island emerge from debt, LUMA was also tasked with constructing a more reliable and resilient grid. In the privatization deal, LUMA assumed the authority to determine how to spend PREPA’s revenue and funding from FEMA for rebuilding post-Maria. LUMA set a goal to invest more than $500 million of federal funding for powerline and substation improvements in its first year but has spent less than $35 million so far.49 In response to concerns in the delay, LUMA Chief Executive Officer Wayne Stensby has said that the company did not know the full extent of problems with the grid until it began the rebuilding process. 50

In our conversations with stakeholders, some voiced their support for the privatization of PREPA’s T&D functions based on the assumption that doing so would allow regulators to impose financial penalties, without harming Puerto Ricans. Fining a public entity, meanwhile, would constitute an implicit tax on ratepayers. However, although PREB was granted the authority to impose financial penalties on LUMA for violating certain provisions of its performance-based contract, the Chair of the U.S. House of Representatives Committee on Natural Resources, Raúl Grijalva, has highlighted that the contract under which LUMA is currently operating, as amended by the supplemental contract, does not appear to include such penalties. In that same hearing, the Governor of Puerto Rico emphasized that the permanent contract with LUMA, which would impose fees, will not begin until PREPA’s debt restructuring is approved. 51

To date, the general public, notable celebrities, non-profits, local legislators, and legislators in the U.S. House of Representatives and U.S. Senate, have all raised concerns about LUMA’s operations to date. 52, 53, 54, 55 Commonwealth residents, about 43 percent of whom live in poverty, lengthened blackouts since LUMA took over operation of the T&D system in the summer of 2021. 56 In addition, as of December 2022, Puerto Rico’s citizens had experienced at least seven rate hikes amid increasing blackouts over the course of the year. 57 Further, LUMA also failed to recognize a collective bargaining

agreement with PREPA’s labor union and subsequently displaced many of PREPA’s employees with a new workforce. 58 After Hurricane Fiona, the Huffington Post reported that some municipalities hired former PREPA line workers or depended on other private actors to restore power. 59

In response to criticism, LUMA and their supporters stress the company’s progress in maintaining the grid, as well as the difficulties they face locally. For example, LUMA points to the fact that the company has already installed over 36,500 rooftop solar systems for customers in Puerto Rico. 60 LUMA has also faced challenges in carrying out permanent work on the Puerto Rican grid due to difficulty of staffing and contracting out its work. 61 As of November 30, 2022, PREB approved an extension of LUMA’s current contract. The permanent contract, granting LUMA the right to manage T&D for 15 years, will begin upon the federal court’s approval of the debt restructuring plan for PREPA. 62

Continued Challenges Due to PREPA’s Bankruptcy

PREPA’s debt restructuring remains unresolved as of publishing. Progress towards a settlement still remains stymied by an exclusive mediation process. FOMB, the Puerto Rico Fiscal Agency and Financial Advisory Authority, and PREPA have the primary negotiation roles with PREPA’s bond parties. 63 Still, Puerto Rico’s legislature must approve any Plan of Adjustment (POA) and has already rejected the terms of three mediation agreements notably due to proposed rate increases. PREB, which is also excluded from negotiations, is responsible for reviewing PREPA’s proposed rates and ensuring they are consistent with PREPA’s debt repayments and Puerto Rico’s service needs.64

In September 2022, bondholders sought control over PREPA and requested that the U.S. District Court of Puerto Rico dismiss the case or install a receiver who would raise rates.65 Later, on December 16, 2022 the FOMB filed their proposed POA for PREPA’s debt restructuring. According to their website, the POA “proposes to cut PREPA’s unsustainable debt by 48%, to approximately $5.4 billion, and should provide the financial stability necessary to invest in a modern, resilient, and reliable energy system for Puerto Rico.”66

Former Acting New York State Comptroller and now director of the Institute for Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo, evaluated the most recent POA plan and published an official Letter on Puerto Rico Debt Restructuring through IEEFA. In this letter, Sanzillo writes that the POA will severely raise the price of electricity in the next 35 to 40 years.67 However, he further states that the plan “exempts low-income residents from having to pay the majority of the rate increase”. 68 Most importantly, he emphasizes that, “to raise the price of electricity further when it is already among the highest in the nation, and the people are among the poorest in the nation, is not a solution”.69 Thus, Sanzillo notes that raising the price of energy on the remaining 60 percent of Puerto Ricans not in poverty is still increasing energy prices for U.S. citizens that have the least amount of resources to meet those rate hikes. Residents would be forced to cover the cost of past mistakes that were not their own, including local government entities’ mismanagement of finances, and arguably irresponsible lending on the part of bondholders.70 Since energy costs bear the heaviest burden on those that are most

financially vulnerable, we need to think critically and long-term about how officials can make that burden lighter.

Given this energy system context, the following section provides a more substantive discussion of our framework for energy justice, and how it underpins the need to alleviate the current economic barriers that exist for LMI communities, and to transition from an economy that has a centralized grid and is heavily dependent on imported fossil fuels.

Section B. The Economic Barriers to Energy Justice

At its core, energy justice ensures that any energy system equitably provides access to energy to all communities, especially the most vulnerable ones. The concept itself also has a restorative property to right the wrongs towards marginalized communities that have been harmed and left behind by the negative externalities of the current energy system.

In Puerto Rico, energy justice is particularly salient as a result of the delayed transition to renewable energy to date, the island’s high susceptibility to rapid climate change, and the natural disasters that have left families and communities across the island devastated, and energy insecure.

A broad range of economic factors contribute to energy insecurity on

the island. For example, the median household in Puerto Rico earns approximately $22,000 annually - less than half the annual income of the poorest state in the continental United States. Further, as stated above, the cost of energy per kWh for residential customers on the island is nearly twice as high as that of states on the mainland. 71 Thus, a larger share of a smaller household budget is typically needed to consume the same amount of energy as most other Americans.

Our energy justice framework for Puerto Rico was developed with the people of Puerto Rico at the center. The framework establishes six factors as integral to substantive energy justice in Puerto Rico for all Puerto Ricans; these factors include: Renewable Solutions, Financial Affordability, People & Community, Energy Resilience, Spatial Equity, and Progressive Oversight. As depicted in the internal body of the circle, these six factors serve as critical drivers to the centricity of energy justice for all Puerto Ricans, and each of its six factors have been strategically mapped in alignment with the seven design principles outlined in the introduction of this report. The first outer ring of the energy justice framework showcases the critical importance of effective climate adaptation strategies, climate mitigation solutions, and transparency policymaking in facilitating effective energy justice. Lastly, the second outer ring demonstrates the imperative need for climate finance, effective governance and the seven design principles outlined in this report, to facilitate structural and systemic change and bring about a 100% renewable energy transition as stated in Act 17.

Energy justice is a journey and not a destination. As such, it is paramount that all stakeholders foster a culture of transparency and accountability in the monitoring and oversight of this endeavor. Further, it is also critical for federal and local government leaders to work in tandem to provide effective governance on this renewable

energy transition while being mindful of climate finance, adaptation, and mitigation strategies that can be leveraged in conjunction with grid design principles. Many of the concepts and solutions described here will continue to be discussed in more detail in the succeeding sections of this report.

Above all, this energy justice framework is both designed for and tailored specifically to Puerto Rico. It amplifies a call to action for activists, community members, non-profits, policymakers, and government leaders on to ensure that these factors and principles are being adequately leveraged in the pursuit and achievement of Puerto Rico’s broader renewable energy objectives. The below energy justice framework displays critical factors for a successful energy justice plan that can be used throughout the lifecycle of the island’s renewable energy goals in accordance with Act 17.

With this framework in mind, the subsections following this discussion will describe the challenges to achieving the renewable energy transition, and thus barriers to energy justice Puerto Rico currently faces as a result. The first subsection focuses on the challenges that LMI Puerto Ricans currently face as the island moves towards a renewable energy transition. The second subsection then provides a big picture perspective of the interplay between macrolevel regulatory, economic, and energy factors that have influenced economic development in Puerto Rico, and influence the transition accordingly.

Energy Insecurity Among LMI Communities

In academic literature, “energy insecurity” describes the inability of a household to meet its basic energy needs. Common drivers of energy insecurity are wide-ranging but typically are economic, physical, or behavioral in nature. In the Puerto Rican context, our research

team observed obstacles to sufficient energy access across all three of these areas. Stakeholders should account for these issues in order to keep the most vulnerable Puerto Ricans at the center of the energy transition, actualize energy justice and ensure no one is left behind in the process.

Economic Drivers

While an estimated 3,000 households in Puerto Rico currently transition to rooftop photovoltaic (PV) systems each month, 72 LMI households are the least likely to be part of that number. These households often lack the cash needed to purchase systems outright or the creditworthiness to lease them. The distributional implications for the future are significant, as wealthier households are holistically better equipped to reduce their reliance on PREPA’s generation. By contrast, LMI households that remain fully dependent on the grid will be the ones most exposed to any debt-recovery rates that may be applied as a result of PREPA’s bankruptcy.

Several federal programs aimed at increasing energy affordability are potentially inaccessible to low-income Puerto Ricans. Most incentives for installing PV systems are in the form of federal tax credits. However, residents of Puerto Rico do not pay federal taxes and therefore have no way of making use of these credits. Further, rural and suburban LMI households often struggle with issues related to land titling. This can make it difficult to access assistance through the Low-Income Home Energy Assistance Program (LIHEAP), which requires that applicants provide proof of address, described as either an active lease or mortgage. To make matters worse, while some U.S. jurisdictions offer shut-off protection for specific customers for whom a loss of electricity poses an immediate threat to life, Puerto Rico is not currently one of them. This leaves many households, especially those that have health ailments, in Puerto Rico highly susceptible to lower quality of well-being and economic mobility overall.

Behavioral Drivers

Even so, various behavioral dimensions of energy insecurity intersect with the economic dimensions. The most natural case is self-regulation where LMI households, aware of their budgetary constraints, consume less energy than they need in order to keep their monthly bill within an affordable range. With air-conditioning being a large energy consumer for many households, this self-regulation can mean exposure to summer temperatures of up to 110 degrees with only limited usage of one’s cooling system. Self-regulation can also be detrimental at an individual and household level when at least one person has a health condition that is reliant on machine technology to support their health care, treatment regimen and/or survival. While heat-related injuries and fatalities are often difficult to identify, research does suggest that a warming climate has had a role to play in these occurrences, particularly in San Juan. 73

Communities that are struggling with the price of energy may also resort to illegal connections to the grid in order to avoid costs. This contributes to a state of energy insecurity as these households are subject to disconnection and law enforcement action at any time and may face criminal fines and penalties when the irregularity is detected. This compounds their household costs and adds to their existing financial constraints as a result of energy desperation. The Center for a New Economy estimates that as much as 15% of the power PREPA generates cannot be accounted for, mostly due to illegal connections.74 The costs of PREPA’s energy losses are largely recovered from paying customers through surcharges - spurring a cycle that continues to negatively impact those ratepayers with the least ability to pay.

Physical Drivers

Physical factors also play a major role in energy insecurity for many Puerto Ricans. Spatial inequality in particular is deeply rooted and present across Puerto Rico’s many municipalities, which further hinders the effectiveness of the current energy system. Through their platform ArcGIS Storymaps, the company Esri publishes geospatial maps and findings based on spatial data leveraged in their GIS tool. In an ArcGIS Storymap authored by Amelia Ward on Poverty in Puerto Rico, she uses public U.S. data on household income in Puerto Rico, Water Environment Federation (WEF) reporting on climate vulnerability, and Center of American Progress findings, to construct a comprehensive report on the poverty picture in Puerto Rico after Hurricane Maria. In this report, Ward writes:

“The presence of spatial inequality clearly revealed itself post-hurricane, considering the degree of impacts on populations with different income levels, due to the unequal distribution of wealth and the lack of access to necessary public goods in certain spaces. The hurricane demolished the majority of Puerto Rican infrastructure, including a large number of public and assisted housing projects. The inevitable destruction of these projects left thousands and thousands of residents without shelter or resources”. 75

With regards to energy, it took 11 months for power to be restored to all customers across the island after Hurricane Maria. When Hurricane Fiona struck the island in September 2022, the entire energy grid was disabled once again, and it took several weeks for

power to be substantially restored across the island. 76 Stakeholders noted particularly long outages for those residing in the island’s mountainous interior. Outages were further compounded for communities like Utuado that already struggle with road accessibility. 77 In the absence of power for long periods of time, remote communities often rely on alternatives such as kerosene oil, candlelight, or wood fires to meet their energy needs - all of which carry either risks of carcinogen exposure 78 or represent potential fire hazards. 79

Coastal communities are also particularly energy insecure because of their heightened vulnerability during extreme weather events. While communities in each of the island’s major metropolitan areas – San Juan, Ponce, and Mayaguez – fall into this category, there is also typically greater local capacity to access aid in these cities in the aftermath of the event. On the other hand, smaller coastal towns like Salinas 80 and Loiza 81 are largely dependent on the government of Puerto Rico or the federal government for relief when disasters strike. While emergency personnel are usually able to respond more quickly to these low-lying areas than those in the interior, even short power outages can turn into fatal events for the elderly or the disabled, who may depend on powered medical devices to live.

According to the Initiative for Energy Justice (IEJ), a potential policy solution is to promote affordable access to renewable energy to every single person through decentralized structures. The IEJ considers three utility structure options that could support making energy affordable including: community choice aggregation, mechanisms to financial credit individuals’ bills (net metering), municipal utilities, integrating other innovative players and approaches into the market. While such policy interventions are important, they alone cannot accomplish the goal of long-term energy sustainability and affordability.82 Other mechanisms are needed.

As stated previously, the threat that climate change imposes on the island further compounds physical concerns. Puerto Rico faces significant challenges from climate change and natural disasters in the coming decades that will affect its energy system. Climate projections indicate that Puerto Rico will experience increased temperatures, decreased precipitation, and rising sea levels over the next 25 years.83 These changing climate patterns will impact consumer demand for electricity (e.g., air conditioning use), the island’s renewable energy resource potential (e.g., hydroelectric generation may be influenced by changing rainfall and drought patterns), and existing generation assets (e.g., some power plants are located less than six feet above sea level and less than 160 feet from the shoreline).84

Energy and Economic Development in Puerto Rico

The problems of economic development and energy security in Puerto Rico are not mutually exclusive. Many of the obstacles facing the energy system in Puerto Rico involve issues of redistribution, access to energy, a lack of renewable energy, exposure to the impacts of climate change, financial costs, and the utility’s operational and financial challenges. These factors have each contributed to and are a cyclical result of Puerto Rico’s nonlinear economic development path. The existing reinforcement mechanism between Puerto Rico’s economic development trajectory and current energy crisis must

be synthesized and evaluated in order to execute an energy justice strategy capable of supporting it.

Theory of Economic Development

The late-economist and Nobel prize awardee, Simon Kuznets, hypothesized that as an economy develops, market forces first increase and then decrease the overall economic inequality of the society, which is illustrated by the inverted U-shape of the Kuznets curve in Figure 1.85 Put differently, greater economic development overtime leads to greater economic equality overtime. The curve in Figure 1 implies that as a society industrializes, the center of the economy shifts from rural areas to cities and rural laborers, such as farmers, begin to migrate and seek out better-paying jobs. This migration, however, results in decreasing rural populations in favor of increasing urban and suburban populations. 86 From a development standpoint, this would move traditionally agrarian economies to becoming more industrial in nature, and thus creating economies of scale. Figure 1 demonstrates this transition to a developed economy and thus lowered income inequality at a certain turning point threshold. 87 According to the theory, this is why many Western European countries do in fact have high per capita incomes and lower levels of inequality. Equally, the theory states that this inverse relationship between income inequality and per capita income will be consistent across developed economies.

Conversely, this is not the reality of Puerto Rico and is also not the reality facing the United States. As the theory goes, with higher average income per capita, economic inequality is expected to decrease when a certain level of average income is reached and the processes associated with industrialization, such as democratization and the development of a welfare state, will take hold. 88 However, while per capita income has increased over time, Puerto Rico’s economy has also been plagued by increasing levels of inequality. 89 In fact, as cited by Harvard University, Puerto Rico has higher income inequality levels than some of the poorest states in the United States. 90

The fact that the end-state of Kuznets’ theory does not hold and increased economic development is leading to increased inequality insinuates that there are additional mechanisms driving this inequality outside of income. More importantly, this trend defines a greater need for pure redistribution focused social justice. In his book, The Economics of Inequality, Thomas Piketty states that the “Kuznets curve is the product of a specific and reversible historical process. The inversion of the Kuznets curve spelled an end to the notion that there was a grand historical law governing the evolution of inequality at least for a time. In pure redistribution, redistribution is justified by considerations of pure social justice rather than by any supposed market failure”. 91

Piketty’s finding is especially applicable when examining Kuznets related environmental curve. The environmental application of the Kuznets Curve, shown in Figure 2, implies with similar logic that as an economy develops pollution emissions decrease overtime, bettering environmental quality and supporting economic growth. This also implies that in the early stages of development pollution emissions increase and environmental quality declines. Notably, this trend reverses beyond the turning point threshold of per capita income (which will vary for different indicators) so that economic

growth leads to environmental improvement at high income levels.92 Contrary to this model, worldwide and particularly in Puerto Rico we are witnessing increasing income per capita with high levels of inequality on top of higher levels of pollution emissions. 93

Puerto Rico’s deviation from both the traditional and environmental Kuznets model is significant because the model portrays the ideal state of what should be taking place in the absence of market or government failures. This insinuates that similar to Piketty’s view, both redistribution to promote equitable access to energy, and energy justice will be critical to correcting the inequalities witnessed from both an energy and economic perspective. Since energy and the economy are intertwined in Puerto Rico, energy justice would suggest that despite the presence of a renewable energy mandate, the factors necessary to remove the economic and access barriers that exist within the energy system are likely the same ones that are poorly understood causally and are left out in policy. A lack of understanding of and action to alleviate these economic barriers to energy justice will likely come at the expense of the overall effectiveness and completion of the renewable energy mandate.

The Economic Impact of the Jones Act on The Energy Sector

As referenced earlier in this section, a critical component to energy justice is establishing energy resilience through grid design and infrastructure, as well as the development of renewable energy solutions. Often fostering energy resilience and harnessing renewable energy requires a large supply of resources. Any barriers to accessing these energy resources, would impede renewable energy goal attainment. As discussed in Section A, the current energy system in Puerto Rico relies heavily on fossil fuels to power many of Puerto Rico’s homes. According to the U.S. Energy Information Administration’s (EIA):

Puerto Rico has no proved reserves or production of fossil fuels. The Commonwealth has some renewable resources in the form of solar, wind, hydropower, and biomass, but relies primarily on imported fossil fuels to meet its energy needs. Puerto Rico consumes about 27 times more energy than it produces. Petroleum accounts for about two-thirds of the Commonwealth's total energy use, while natural gas accounts for one-fifth, coal for about one-tenth, and renewables account for the rest. 94

While Puerto Rico imports the vast majority of its energy resources, a federal law referred to as “the Jones Act” restricts the market supply available to Puerto Rico. 95, 96 In 1920, Congress passed this law, initially titled “the Merchant Marines Act,” which has since been called the Jones Act after its primary author. Among other things, the law established labor protections for workers on U.S. cargo ships, and required all goods shipped between two ports within the territorial U.S. to move only on U.S.-built ships, with a U.S.-citizen crew.97, 98 A key consequence of this law is that foreign ships cannot unload part of their shipment at one U.S. port, and then unload once again at another port. Thus, the law makes it less profitable for foreign ships to dock at smaller markets like Puerto Rico, as well as Hawaii, Alaska, and select U.S. territories for which the law has not been waived.

Instead, foreign ships will unload their cargo at destinations with

larger markets in the mainland. The goods destined for the by-passed areas will then be placed on U.S. ships, and the ships will deliver the goods to those destinations. The indirect movement of goods, in combination with the higher cost of shipping within the U.S., makes imports more costly and difficult for these areas to access in general and in a timely manner. 99

As a direct effect on energy insecurity in Puerto Rico, the Jones Act creates conditions where the island has more limited access to the international market for energy resources, while facing increased costs for oil imports in the domestic market than other islands in the region.100 Based on EIA’s energy profile on the island, only Alaska and Hawaii had higher energy prices than Puerto Rico, when compared to all U.S. states. 101

The Jones Act also cultivates more severe conditions for energy insecurity, by indirectly hampering the Puerto Rican economy. As

discovered in a 2016 report written by the Federal Reserve Bank of New York, “while causality from the Jones Act has not been established,” due to a lack of comprehensive analyses on its impact, “it stands to reason that the Act is an important contributor insofar as it reduces competition (shipments between the island and the U.S. mainland are handled by just four carriers)”. 102 The authors conclude that while the magnitude is unclear, the Jones Act’s impact on the Puerto Rican economy is negative.103

There are multiple territories that have either full or partial exemptions for goods imports under the Jones Act. Those with full exemption include the U.S. Virgin islands, American Samoa, and Northern Mariana islands. Guam and the town of Hyder, Alaska have partial exemptions. As the New York Bar writes “Puerto Rico is the only non-contiguous territory not wholly or partially exempt.”104

For that reason, the high cost of energy is not simply a consequence

Figure 1. Original Kuznets Curve

Figure 2. Environmental Kuznets Curve

of Puerto Rico being an island, nor is its struggle with energy exclusively due to mismanagement in the energy sector. The fact that Puerto Rico imports the majority of its energy, and does so under a federal law that imposes restrictions on imports to Puerto Rico, are key contributors to the island’s struggle in energy and economic development.

Puerto Rico's Historical Focus on LMI Communities & Prior Renewable Energy Transition

Even if Puerto Rico were granted a full or partial exemption from the Jones Act, continued dependence on imports of fossil fuels would still contribute to energy insecurity on the island. A transition to renewable energy – energy sources that are domestically produced – would help to alleviate this burden. Yet, as referenced in the prior section regarding the disparity in rooftop solar adoption rates between income classes, the current market structure will not provide a guaranteed path for LMI Puerto Ricans in the transition.

Additionally, the Commonwealth’s history provides critical insight that this isn’t the island’s first attempt to leverage renewable energy solutions nor has it always been this complex. In the early 20th century, Puerto Rico also faced conditions of economic distress, disrepair in infrastructure, and heavy reliance on fossil fuels. Through a combination of local and federal efforts, the island was able to transition to increased reliance on renewable energy, with its most energy-insecure communities at the center of that transition. The work, led and carried out primarily by Puerto Rican engineers and scientists, could inform future federal and local action in the current transition.

According to PREPA’s review of Puerto Rico’s energy history, in the early 1900s, Puerto Rico primarily derived its energy from “thermal power stations and imported oil.”105 Three private companies held the majority of market power of the water and electrical system. One was Puerto Rican-owned, another Canadian-owned, and the last mainland-U.S.-owned.106 Notably, in this period it was not profitable for the private sector to connect remote areas of the island to the electrical grid.107, 108 As an apparent consequence of this, while rural residents in Puerto Rico made up more than 70 percent of the island’s population, the majority of the rural population had no access to electricity up into the 1930s.109

Additionally, before this energy transition, Puerto Rico endured a series of economic and natural disasters. In 1928 and 1932, the island faced two devastating hurricanes: San Felipe and San Ciprián.110, 111 Between those years, the economic consequences of the Great Depression hit the island hard. Multiple Puerto Rican businesses fell into bankruptcy, and by 1932, the Puerto Rican government was nearing its legally-established limit on its ability to borrow.112

In response to these challenges, the Roosevelt administration initially established a relief program in 1933, and in 1935, replaced it with a more robust New Deal entity called the Puerto Rico Reconstruction Administration (PRRA). Created under Executive Order #7075, the PRRA’s mission was to comprehensively alleviate negative pressures of the economy through public works, with a primary focus on increasing employment.113, 114 The administration moved the PRRA

headquarters to Puerto Rico, and hired well-known scientist and Chancellor of the University of Puerto Rico, Carlos Chardón as Regional Administrator.115, 116 Using funding from a series of Emergency Appropriations Acts signed into law from 1935 to 1938, the program spent a total of $1.36 billion in current dollars on labor and public works projects between 1935 and 1955. About half of the funding went to labor, and the other half to public works projects. The PRRA’s Rural Electrification Program is seen as a particular success among its public works programs. 117

The Rural Electrification Program, heavily staffed by Puerto Rican engineers, and led by Puerto Rican engineer Antonio S. Lucchetti Otero, constructed seven hydroelectric systems within Puerto Rico’s central mountainous region.118 Notably, cement produced on the island, from a PRRA-constructed cement plant, helped to create these major works.119 Thus a domestically-produced, lowercost input, facilitated this form of energy infrastructure. Puerto Rican laws passed prior to this period also facilitated hydroelectric infrastructure development. As PREPA writes, laws were passed in 1924 and 1925, “providing funding for the research, construction and operation of hydroelectric projects.”120 The laws also provided a path to data collection and hydrographic studies for the island. 121

As one scholar writes, by 1946, over 40 percent of the island’s energy was derived from hydroelectric plants.122 In the first half of the 20th century, Puerto Rico had alleviated energy insecurity in underserved regions of the island and also managed to surpass the 2025 goal proscribed by Act 17 in 21st century terms. As history proves, a consistent and gradual transition to renewable energy is not impossible in Puerto Rico. However, it is important to ensure that regardless of which renewable energy solutions or mechanisms are pursued, that the transition itself is sustainable in the long-term in Puerto Rico.

Energy, Rapid Industrial Growth, and Ensuing Instability

Puerto Rico’s history also teaches important lessons learned in the energy space as it conveys how economic forces, both within and outside of Puerto Rico's control, impacted the island's energy trajectory. Unfortunately, in the course of Puerto Rico’s development, many hydroelectric plants fell out of use, due to the island’s transition back to a fossil-fuel based economy. Under the precursor to PREPA – which had purchased all the three companies holding an oligopoly over the energy system by the early 1940s – construction, ownership of and reliance on fossil-fuel-based facilities began to grow once again in the mid-20th century. PREPA writes that the low price of oil at the time was a prime contributor to increased fossil fuel use for generation. A drought in the mid-1940s, and the need to ration energy use as a result, also caused concern regarding heavy reliance on hydroelectric plants. 123, 124

Moreover, Governor Luis Muñoz Marín’s economic development plan for Puerto Rico, “Operation Bootstrap,” pushed to shift the island from an agrarian-based economy to one based in manufacturing.125 Thus, there was a need for cheap, scalable energy to support the island’s rapid industrialization.

The cost of oil did not remain low for long, and the consequences were felt in Puerto Rico. As a U.S. DOE report from 1982 noted,

“since 1973, the economic impact of rapidly rising world oil prices has been particularly severe on the U.S. territories, the Trust Territory of the Pacific islands and the Commonwealth of Puerto Rico.” At the time of that report, 97 percent of Puerto Rican energy came from petroleum.126 Yet the continued industrialization on the island, to which protective tax laws and international trade conditions contributed up until the 1990s, appears to have provided sufficient energy demand to partially offset the increased costs.

Starkly contrasting its more recent financial struggles, Puerto Rico’s economic growth bested its neighbors and most Latin American countries in the early 1990s.127 Puerto Rican and U.S. corporate tax exemptions, active in the late 1940s, 1950s and 1960s, are seen as spurring the Puerto Rican industrial base.128 Still, 1976 amendments to the U.S. Internal Revenue Code are further credited with growth in manufacturing. This latter federal law, referred to as Section 936, exempted corporations from paying federal taxes on revenues repatriated from Puerto Rico and attracted scores of big pharmaceutical, petrochemical, and tech manufacturers. Though the long-term sustainability of the tax break was seen as questionable, its impact is believed to have led to an increase in GDP by approximately 38%, the likes of which would’ve taken an estimated 10-year growth trajectory to produce. Further, local government leaders were able to use corporate revenue held in local banks as capital for development projects.129

By 1996, the federal corporate credit began to phase out as leaders started to associate the provision with high costs and low job creation.130 Furthermore, many Puerto Rican government officials in favor of statehood wanted to eradicate the provision because of the uniformity clause of the US Constitution, which disallows any one state from having tax benefits that other states lack. In their estimation, so long as Puerto Rico allowed for this provision, the

island would be held as a territory and could never petition for statehood. Coupled with passage of the North American Free Trade Agreement (NAFTA), as well as increased labor, location and market supply competition for key Puerto Rican sectors following the U.S. entrance into the World Trade Organization, the loss of tax benefits led companies to flee the island and caused a major contraction in Puerto Rico’s industrial sector.131 The island’s higher levels of energy and import costs also likely contributed to industry relocation, in the new international trade and domestic tax environment.

With a smaller industrial base, and increasing costs of crude oil, the economic environment imposed a strain to the energy sector. To make up for the enormous loss in revenue, government leaders started issuing bonds at astronomical rates. Public corporation debt in particular had begun to climb sharply in the early 1970s, then steadily through the 1980s. However, the initial increase in the rate of public corporation debt accumulation was low in that period, when compared to the rate of accumulation post-1996.132

In the meantime, employment began to decline, first in the manufacturing sector starting in 1996, then followed by the public sector in 2010, after the Great Recession. In particular, the government of Puerto Rico embarked upon a period of unprecedented austerity, closing over 300 public schools, reducing the University of Puerto Rico system of education by 50%, and laying off thousands of public sector workers.133

The rapid deindustrialization by the private sector and the prolonged period of austerity still informs many Puerto Ricans’ sentiments about how private companies are utilized in the public domain. Many Puerto Ricans harbor suspicion of private firms’ involvement in the facilitation of public goods, especially energy, as a result of a lack of transparency and the past results left by private organizations on

the island. Additionally, public distrust tends to form for government institutions without sufficient information, understanding or public statements for interventions being taken. As government leaders work to transition the energy sector, their approach should initially prioritize building trust, fostering a culture of transparency towards the people of Puerto Rico to demonstrate accountability, which aligns with the energy justice framework. Community stakeholders should be involved at all levels of government decision-making to be inclusive of municipalities and mindful of the spatial diversity critical to the energy system’s success. The ideas and suggestions of local leaders could also generate a platform for government officials to collect critical data on implementation concerns.

As discussed previously, the economy of Puerto Rico and its energy system are highly integrated. Changes that are made to bolster economic growth irrespective of their implications on energy, will ultimately impact the energy system and vice versa. Although this historical example amounted to a negative consequence for both domains, the relationship between the economy and the energy system can also be a force for positive reinforcement through renewable energy and clean energy industry and job creation. More importantly, as Puerto Rico considers its renewable energy transition in the 21st century, this relationship must be taken into account.

Creating Competition in Renewable Energy Provision

As referenced above, a single public utility has held control over the majority of Puerto Rico’s energy system for decades. Likewise, in our meetings with non-profit, government, and private sector stakeholders, there was a common thread of agreement where the various parties called for distributed energy generation on the island.

Members of our team spoke with Lord Nicholas Stern, IG Patel Professor of Economics and Government at the London School of Economics, regarding critical components of long-term renewable energy affordability. Specifically, he emphasized policymakers must ensure there is competition within the domestic and international renewable energy market. According to Professor Stern, the introduction of private company competition does not have to be immediate, but it could be gradual within Puerto Rico if a renewable energy strategy is pursued over the next 30 years.

Domestically, this could mean allowing multiple renewable energy companies to compete in a wholesale electricity market. This form of market requires a strong regulator to ensure market stability and efficiency, as well as a mission-driven grid operator rather than one driven by profit. Incentivizing renewable energy developers to participate in such a market may require the continued existence of long-term contracts, as PREB is currently pursuing. The competitiveness of renewable energy infrastructure would also increase if developers were able to purchase the relevant construction inputs at international market price, which is not currently possible due to the Jones Act.

Even with a substantive analysis of the economic challenges faced by LMI communities, historical precedent and competitive dynamics of renewable energy provision, as energy justice demonstrates, climate finance and effective governance are key to any successful renewable energy transition. In the next section, we will dive deeper

into funding obstacles and opportunities for future development of renewable energy and their implications for energy development.

Section C. Challenges to Accessing Seed

Funding

Sources for Future Development Available FEMA Funding for Grid Development

In 2018, the Harvard T.H. Chan School of Public Health published a study in which they found that 4,645 people had died as a result of prolonged disaster-level conditions on the island following Hurricane Maria, from September 2017 through the end of the year. These deaths, which were heavily related to interruptions in medical care, could have been prevented if residents had been able to access basic utilities, primarily electricity. 134

Funds to rebuild the grid and help prevent future death tolls of this magnitude could have been available as early as 2017. The Department of Housing and Urban Development (HUD) and FEMA were directed to allocate funding towards disaster relief from Hurricane Irma and Maria, via federal legislation and executive disaster declarations. On the contrary, from 2018 through 2020, the allocation of funds to the Puerto Rican government was heavily delayed at the agency level, especially for permanent work projects, for reasons that will be discussed in further detail later in this section. Under the Biden administration, these funds have begun to flow to government entities in Puerto Rico, but delays persist in FEMA funding allocation. As a result, this following subsection will discuss the key barriers to accessing this funding, as described by the Government Accountability Office, as well as Puerto Rican stakeholders.

The New Public Assistance Delivery Model

As referenced above, the public assistance delivery model that FEMA implemented for Puerto Rico was the first time such a model was used for 100 percent of public works in a jurisdiction. The Stafford Act explicitly states that the federal government cannot condition provision of funds on a jurisdiction’s election of this model. According to a November 2, 2017 amendment to the presidential declaration on Hurricane Maria (FEMA-4339-DR), Puerto Rico had elected to use the Alternative Procedures Program to fund all largescale projects. Under this newly amended declaration, FEMA was to provide 90 percent of the project cost while Puerto Rican recipients and/or subrecipients were to provide 10 percent.135

However, in his testimony the COR3's director Manuel Laboy stated that “there were concerns that the model had never before been used on a disaster where…alternative procedures governed nearly all of the disaster grant funding. Additionally, because it was different from the

delivery model Puerto Rico had been using since September 2017, it inserted another change in procedures, which raised concerns over impacts to the already glacial pace of recovery on the island.”136

According to CNE, the process “has turned out to be unduly bureaucratic, drawn-out, and, in our view, has failed to meet its programmatic objectives,” in part due to FEMA and Puerto Rico’s limited experience in carrying out public works under the new program.137 Additionally, and what CNE highlights as potentially most important, the process may be made longer due FEMA's requirement that an applicant wait for a FEMA-licensed professional to complete an assessment.138

Reimbursement Requirements

GAO and Director Laboy’s same testimony each state that a key concern in distribution of obligated funds is the Public Assistance Program’s reimbursement requirement, where the subrecipients have to pay the initial construction costs for the project and later seek reimbursement for those costs. While projects have been approved, and funding has been obligated towards those projects, the projects still have not started because the subrecipients are struggling to cover that initial funding.139,140

Availability of Local Workers

GAO also writes that Puerto Rico-based FEMA officials and Puerto Rican officials have cited another key concern that subrecipients do not have the expertise to develop projects in order to receive the obligation. As a result, these subrecipients require further engagement from FEMA officials or the support of hired contractors. The latter not only delays the process but also increases costs. GAO has insisted that Puerto Rico will likely struggle with executing projects due to the high number of projects outstanding and the low number of workers available in municipalities to carry them out.141

High Cost of Material Resources due to Inflation, Puerto Rico’s Geography, and the Jones Act

According to GAO’s interviews, there is also concern within FEMA regarding the ability of Puerto Rican municipalities to secure sufficient equipment and materials to begin construction. Both the low availability and price of these resources block municipalities from allocating funds towards large-scale construction projects and beginning the projects.142

Multi-Step Process of Securing Funds

Director Laboy has noted that FEMA’s Accelerated Award Strategy (FAASt) initiative, a new strategy that FEMA implemented for streamlining the federal process for projects, allows for consolidated agreement on the budget for all permanent work projects. However, local entities in Puerto Rico still have to move through an multistep approval process. He outlines the process in the following way:

• "The process begins with PREPA/LUMA submitting a scope of work to PREB.

• Once approved by Puerto Rico Energy Bureau ("PREB") the project is submitted to COR3 for any possible alternate or improved project evaluation and subsequent approval by PREPA/LUMA.

• The agreed upon project is then submitted to FEMA, where it would go through their regular approval process by its Consolidated Resource Center (“CRC”) for Environmental and Historic Preservation (“EHP”), cost and Section 406 review.

• After approval from COR3, the project is re-sent to the CRC for additional review.

• Subsequently, the project is resubmitted to PREPA/LUMA for approval.

• After final approval by COR3, the project is sent for review to the US Office of Legislative Affairs for review and obligation.”143

Hence, multiple barriers stand in the way of allowing Puerto Rican municipalities to access federal funding for grid resiliency. Without a new approach to providing this funding, the $9 billion needed to repair Puerto Rico's energy grid will be further delayed. To ensure the solutions to PR100 will be carried out expeditiously, Puerto Rico must have equal access to available federal funding, on level with other jurisdictions within the United States.

Funding Energy Development through

Green Banks

The sheer quantity of federal relief funds that have been allocated to Puerto Rico suggest that they can play a critical role in Puerto Rico’s energy transition. At the same time, our conversations with stakeholders made it clear that these funds will not be sufficient on their own to allow the island to achieve its renewable energy objectives both in terms of (1) how much total capital is needed, and (2) the constraints associated with accessing and deploying funds that must adhere to the conditions outlined by federal agencies. In the face of these concerns, the lacking institutional capacity that has limited Puerto Rico’s ability to make progress on Act 17’s renewable energy targets to date, and the importance of facilitating an equitable transition that prioritizes the island’s most vulnerable residents, the nascent Green Energy Trust represents an important opportunity to attract private investment capital towards solutions that complement available federal relief funds. This section analyzes possible sources of capitalization and product offerings for the Green Energy Trust, a financing entity created by Act 17 that resembles many of the existing green banks in the United States.

Background on Green Banks and Puerto Rico’s Green Energy Trust

Green banks are mission-driven finance entities that seek to drive greater capital into clean energy projects to reduce greenhouse gas emissions and combat climate change.144 The recent Inflation Reduction Act (IRA), which President Biden signed into law in November 2022, included a provision for a national green bank (referred to in the bill as the “Greenhouse Gas Reduction Fund”).145 Prior to the passage of the IRA, green bank activity has exclusively occurred on the state and local levels in the United States. Currently, the American Green Bank Consortium, a membership organization for green banks, has 22 active members.146 Connecticut Green Bank, which the Connecticut state legislature established in 2011, has operated longer than any other green bank in the U.S. and has demonstrated the impact that these types of finance entities can have in accelerating the adoption of clean energy.147 Since its inception, Connecticut Green Bank has deployed over $2.26 billion in funds –a figure that is made possible by the organization’s leverage ratio of approximately $7.00 for every public dollar invested.148,149

The inclusion of the Green Energy Trust in Act 17 is an obvious signal that the bill’s supporters recognized the role that a green bank could play in accomplishing its renewable energy goals. Specifically, Act 17 calls for the Trust to be “created with separate legal personality, private character, perpetual existence, irrevocable and nonprofit,” and includes the following as its objectives:

1. To encourage energy consumers in Puerto Rico to become prosumers, as such term is defined in Section 1.2 of the Puerto Rico Energy Public Policy Act;

2. To establish program or financially support projects that provide residents of LMI communities with access to green energy;

3. To support municipal energy, community solar, microgrid businesses in isolated and LMIcommunities;

4. To facilitate the financing of green energy projectsin small- and medium-sized businesses (SMBs), or microbusinesses.150

Notably, language used to describe the Green Energy Trust and action by Governor Pierluisi to date have positioned it to be a quasipublic entity – an entity that is overseen by a Board of Trustees with government representation, but is otherwise meant to operate independently from the Government of Puerto Rico and without financial reliance on the Puerto Rico General Fund.151 This structure resembles that of Connecticut Green Bank, which was similarly created by legislation and governed by a Board of Directors appointed by the Governor of Connecticut.152

The quasi-public structure is not the only one used by existing green banks. For instance, NY Green Bank is a public state-level green bank that operates as a division of the New York State Energy Research and Development Authority, the state’s energy agency.153 Other green banks, such as Maryland’ Climate Access Fund, are independent 501(c)3 nonprofit organizations and do not have any government officials on their boards of directors.154

Though the particular structure of each entity may have important implications for its administrative procedures, funding sources, and target audiences for its products and programs, helpful insights that can be used to inform the Green Energy Trust’s strategy can be gleaned from all different types of green banks. An essential common attribute among all green banks is that they are mission-driven – and not profit-maximizing – institutions.155

This ability to be primarily concerned with addressing the causes and impacts of climate change allows green banks to offer financing that can be less burdensome and more flexible for consumers. It can also mitigate some of the perceived financial risk that private capital providers might have toward particular clean energy projects.156 Furthermore, the mission-driven nature of green banks also offers them the latitude to prioritize investment in specific communities and business types, which is observable in Act 17’s mandate that the Green Energy Trust have a concerted focus on LMI communities, SMBs, and microbusinesses.157

Despite its inclusion in Act 17, the Green Energy Trust has yet to launch any programs or products. In October 2021, Governor Pierluisi formally appointed members to the entity’s Board of Trustees and indicated that $400 million in federal Community Development Block Grant-Mitigation Program funds had been allocated to its capitalization.158 The announced board included professionals from the private and nonprofit sectors, as well as Puerto Rico Department of Economic Development and Commerce Secretary Manuel Cidre Miranda.159 Since the announcement, however, the Green Energy Trust has not received any of this funding. The Governor’s Deputy Chief of Staff for Energy Affairs, Francisco Berríos Portela, indicated to our research team that the Trust is now pursuing a much smaller allocation from the Governor’s Office of around $1 million for seed funding and initial staffing. In general, there currently appears to be much uncertainty regarding the exact activities that the GreenEnergy Trust will take pursuant to the objectives listed in Act 17 and how it will obtain funding for capitalization.

Part I Summary

The cumulative contributions of Sections A through C support an understanding and evaluation of Puerto Rico’s energy system, establish the Puerto Rico energy justice framework and analyze the economic barriers existing for LMI communities and inhibiting energy justice; as well as identify the historical precedent of renewable energy in Puerto Rico, challenges to financing the renewable transition, and accessing seed funding and the Green Energy Trust for the renewable energy transition. The implications presented from the robust discussion in these three sections have enabled our team to identify a list of policy recommendations pertaining to the issues captured in each section and subsection. These recommendations will provide both a high and granular level approach that will support policymakers, public officials and government leaders in combating the obstacles and barriers identified for the renewable energy transition and encourage greater compliance with Act 17.

Part II: Recommendations

This section provides an outline of actions we recommend local and federal government entities take, in order to better prepare the policy environment to carry out, select and move forward with the chosen PR100 technical pathways, centering our design principles, and energy justice framework.

Section A. Alleviating Barriers to Renewable Energy for LMI Communities

Given our research, and the context laid out above, it is imperative that governments ensure the implementation of long-term affordability of renewable energy, as well as heightened access. This includes developing inclusive solutions based on socioeconomic demographics on the island, as well as improving the current electric grid, which will help renewable energy remain cost effective. In addition, it's important to be mindful of the fact that for LMI communities energy costs often take up a greater portion of their total incomes relative to wealthier consumers. Since LMI consumers bear the heaviest burden, we need to think critically and long-term about how officials can make that burden lighter with progressive financial structures. This would entail a cost determination inclusive of the fraction of income being spent on energy across households. This would actually allow LMI households to afford energy without it taking up a larger portion of their incomes, making them worse off, relative to higher income households. With this in mind, we provide the following recommendations.

Identifying Energy Insecure Regions, and Targeting Efforts to those Areas Recommendations:

Establish a Social Vulnerability Index. In order to ensure that the island’s most vulnerable citizens are not left behind in its renewable energy transition, it is essential that the government of Puerto Rico adopts a conceptual framework for identifying which communities are most at risk. The Center for Disease Control currently produces the Social Vulnerability Index (SVI), which weights census tracts according to their performance along 16 measures, including rates of unemployment and health insurance coverage. The SVI is tracked for all U.S. states and territories and currently helps to guide the federal governments’ disaster preparation and response activities. A similar tool exists at the national scale, called the Climate and Economic Justice Screening Tool (CEJST), which the government of Puerto Rico could use as a model. Notably, when using this tool to examine Puerto Rico, nearly all of the island is highlighted as disadvantaged

census tracts, based on economic, energy, and environmental factors.160

Invest in enhanced data collection and reporting. There is limited data on rural, suburban, coastal, off-shore islands and mountain communities in Puerto Rico. Population demographics are key to understanding the levels of risk regionally and energy vulnerability if natural disasters were to occur. Additionally, updated data on community numbers, local leaders and economic indicators would support an understanding of how funding could potentially be dispersed as well as other resources to reduce spatial inequalities and augment access to renewable energy.

Employ cost of living measurements. Today, best practices for measuring cost of living, across jurisdictions with varying costs of living, typically rely on cost burden ratios. The threshold typically cited for deeming a household energy cost-burdened is monthly costs exceeding 10% of the household’s income. This measure is not currently tracked by any federal or local government entity, and it would serve as a useful indicator of economic distress in this area.

Engage directly with communities. Successful community engagement is two-fold - municipalities should be able to communicate their needs from the bottom up, and all community members should be able to participate and benefit from the green energy transition. Working with and allowing communities to lead the transition can help ensure a more equitable transition and energy security for all. Thus, the government of Puerto Rico should regularly engage and solicit feedback at the community level, particularly focusing on last-mile customers, throughout the transition process. Last-mile community leaders should be in a position to help lead the transition, and ensure the inequities present in the current energy system do not persist as the island shifts to renewable energy. The government of Puerto Rico, regulators, and utilities should work to regularly meet with communities from around the island to learn about what actions should be taken to meet each community’s unique needs.

Upon PR100’s release, key policy-making entities - including PREB, PREPA, and LUMA, as well as representatives from Puerto Rico’s government and consumer advocacy groups - should be convened by DOE to encourage discussion about the best path forward and clarify existing statutory mandates. If additional legislative authority is needed to thoroughly pursue the desired pathway, the Puerto Rican Legislature should undertake such steps. DOE representatives are well-positioned to serve as convenors given their experience working with stakeholders throughout the PR100 process.

Identify active non-profit, community-led projects and projects led at the municipal level, focused on renewable energy installations and microgrids. DOE should work with COR3 to identify non-profit and municipal government-led projects currently being carried out within energy-insecure communities, especially those that have difficulty in accessing the grid. Examples of current projects include solar installations and microgrid establishment being carried out by Casa Pueblo in Adjuntas;161 microgrid and solar installation projects being carried out jointly and/or simultaneously by the Puerto Rico

Community Foundation and the Environmental Defense Fund in Culebra;162 163 Cooperativa Hidroeléctrica de la Montaña in Utuado, Adjuntas, Lares and Jayuya.164

DOE should then create a publicly-accessible map that identifies each of the existing projects. The agency should work with COR3 to publish their map of these identified projects, on both the DOE PR100 website, and the COR3 website. In alignment with the recommendations listed above, the agency and COR3 should also include in this map areas that they have identified as energy insecure, and which are not currently being served by non-profit or municipal government-led entities.

Solar Leases and Power Purchase Agreements

To promote an equitable renewable energy transition, the initial hurdle of upfront costs needs to be addressed. Given over 43% of island residents live at or below the poverty level and the median annual income is under $22,000165, it is not within most residents' financial reach to invest the approximately $27,000 needed to install and purchase rooftop solar equipment.166 167 In addition to the loan financing options mentioned in the section below that discusses the Green Energy Trust, funds should also be leveraged to expand solar leasing, PPAs, and the adoption of energy-efficient technologies.

Both solar leases and PPAs reduce or eliminate the high initial fixed costs associated with installing rooftop solar. Typically, a solar lease agreement is between a third-party operator and homeowner and requires little to no money upfront by the homeowner to install the equipment. The lessee pays a fixed monthly rent for use of the system, which in turn provides their home with renewable energy. A PPA is similar in that it is an agreement between a third-party operator and a homeowner and requires no installation costs by the homeowner. Instead of paying a rent to access the system, a PPA customer pays a fixed monthly fee per kWh to access energy generated from the rooftop solar PV system. Under these programs, the maintenance and repair costs of panels are also covered, which provides financial security to the customer. On average, leases and PPAs last from 10 to 25 years depending on the contract. Using funds to expand access to these agreements not only helps more homeowners leverage cheaper energy but also aligns with the island’s goal of 100% renewable energy. Puerto Rican government actors could do the following to equitably expand the uptake of rooftop solar.

Recommendations:

Provide direct financial assistance and cash payments for homeowners who enter a new PPA or lease agreement for rooftop solar. This incentive could be targeted at homeowners under a certain income level who pledge to provide a set amount of kWh to the grid.

Requirethirdpartiestoincludeaproductionguarantee.Aproduction guarantee formally attests that a home solar system will produce a certain amount of energy in a given time period. If a system underperforms, and therefore customers have to take unplanned energy off the grid, the production guarantee would require the third party installer to pay for the difference in expected energy and

energy produced.

Promote the installation of batteries. Batteries increase the total amount of energy that can be drawn from a system daily, providing a source of backup power when the sun has set or in times of inclement weather. This increases resiliency for households while also reducing strain on the island’s transmission lines during peak sunlight hours.

Work with companies to lower the credit score required to enter into a lease or PPA agreement. Most third parties require a certain credit score in order to sign a lease or PPA, which creates a barrier for households with lower credit scores.

Retain and extend the net metering program while balancing customer equity and financial restraints. Under Act 17, PREB has the authority to alter the net metering rate in 2024. Because rooftop solar PV penetration remains low, PREB should maintain the current rate of net metering payment, which is equal to the retail price of energy, until the net metering study results are reviewed and analyzed. Moving forward, PREB should balance keeping some form of net metering to incentivize continued adoption of rooftop solar PV while also ensuring that energy prices for those without net metering remain affordable. The details of this arrangement should be explored in the study that PREB is required to complete under Act 17 prior to renewal of the net metering policy.

Targeted Energy Efficiency Programs

One-third of Puerto Ricans do not own the home they live in, meaning renters are categorically left out of incentive and rate-saving programs like solar leasing and PPAs. One opportunity available to lower costs for non-homeowners on the island is to expand energy efficiency programs in tandem with the Act 17-planned uptake of renewable energy, including at the utility scale, on the island. Weatherization and energy-efficient appliances reduce the overall energy demand of a household, which in turn results in cost savings on electricity bills. For example, the DOE estimates that new, efficient appliances could save households over $500 annually.168

Puerto Rico’s current building codes do not include energy efficiency standards for rentals169, but expanding them to include weatherization and appliance standards would help deliver savings to Puerto Ricans and reduce energy demand. Energy efficiency programs in Vermont, such as the city of Burlington’s recently instituted weatherization ordinance170, help renters participate in the cost savings of the energy transition and can be a useful model for Puerto Rico to follow. In addition, energy efficiency provides governments with lower levels of needed fuel imports and emissions.171 A successful update to local codes should incorporate the following principles to ensure that changes benefit tenants and do not result in increased costs.

Recommendations:

Update building codes to include both weatherization and appliance requirements. Weatherization standards like improving insulation, air sealing, and physical repairs can help keep energy costs down. For example, a weatherized home will be able to cool more effectively and keep cool air in the building longer than a non-weatherized home.172 Moreover, updating appliances can reduce energy use by up to 70% when compared to energy required to power an older model.

These updates should come in tandem with financial assistance to LMI homeowners given the up-front costs of weatherization.

Provide funding or cost saving opportunities for qualified landlords. Federal funds could be used to create local grant programs to assist low- and middle-income landlords and homeowners with funds to complete required updates to rental properties.

Phase in requirements, require and enforce timely weatherization updates. Updated regulations should require weatherization and appliance standard updates within a short timeframe (i.e., 2 to 5 years) of the new regulation enactments. This will ensure that all units are updated in the near future and residents can receive the cost-saving benefits immediately.

Section B. Institutional Reform

Restructuring the Electric Power Sector

Although the creation of an independent regulator is a good first step towards ensuring proper utility oversight and consumer protection, additional reforms to the institutional framework of the island’s electric power sector are necessary to align the incentives of actors like PREPA and LUMA with those of the Puerto Rican people. Under the current agreement, LUMA serves as both the system operator and the island’s sole retail electricity provider, an arrangement could result in rent extraction at the expense of ratepayers.173 PREPA still owns most of the island’s generation assets and has little incentive to invest in lower-cost generation technologies in the near term, since demand for electricity routinely outstrips supply and new generation assets have yet to come online. Notably, there is no independent system operator (ISO) responsible for ensuring competitive prices, maintaining a reliable supply of electricity, and conducting longterm grid planning.

During the United States’ deregulation of its electric power sector in the 1990s, FERC encouraged states to split up vertically-integrated electric utilities and establish wholesale electricity markets managed by ISOs. The intention was to drive down electricity prices for consumers while ensuring more reliable power supply and nondiscriminatory service.174 The success of individual reforms varied between jurisdictions, but those paired with strong regulatory oversight generated more desirable outcomes than those without. Although ISOs now operate around two-thirds of the electric grid in the contiguous United States, Puerto Rico was never required to adopt similar reforms because the island does not engage in the interstate commerce of electricity and, as a result, is not subject to FERC’s authority under the Federal Power Act.175

Further restructuring of the island’s electric power sector may not

solve Puerto Rico’s problems immediately, but it could create the conditions for a more equitable and efficient grid based on renewable energy moving forward. Decoupling system operation from T&D maintenance through the establishment of an ISO will help focus decisions about the island’s grid on cost effectiveness and system reliability rather than profit motive or political influence. The gradual introduction of a wholesale electricity market managed by the ISO and overseen by PREB could also accelerate the island’s transition to 100% renewable energy, as it would provide incentives for independent power producers to invest in low-marginal cost renewable energy generation technologies, which would be dispatched before PREPA’s existing high-marginal cost fossil fuel power plants.

Critics of establishing a wholesale market or retail choice argue that such policies will not result in lower electricity prices or improved reliability, due to a lack of market participants and the potential for predatory pricing by retail electricity providers.176 While these concerns are valid, the solution is not to avoid pursuing reforms altogether, but rather to implement changes in a gradual manner and with strong oversight by the independent regulator. The creation of a new entity responsible for long-term system planning, competitive procurement of renewable energy, and optimal dispatch of generation assets would help improve system reliability and reduce costs for customers while ensuring Puerto Rico can reach its goals in a timely manner.

Recommendations:

LUMA should only be responsible for maintenance of the T&D system. The Legislative Assembly should remove the responsibilities of system operator from LUMA and any of its successors to mitigate the risk of rent seeking at the expense of ratepayers.177 Under the proposed arrangement, the ISO would take over the task of dispatching, scheduling, and coordinating the electricity supply. LUMA would only be responsible for maintaining the T&D system, assuming a more traditional role of a retail electricity provider, although it need not be the only such option available to consumers. PREPA, meanwhile, would continue with the sale of its generation

assets, although it would retain ownership of T&D assets to ensure it remains eligible to receive federal funds for disaster recovery under the Stafford Act. PREB should continue exercising its authority to conduct RFPs for renewable energy.

The ISO should operate the system in real time and plan future grid investments. The newly created ISO would be responsible for overseeing real-time operation of the grid, ensuring a reliable power supply, and conducting long-term planning. Unlike PREPA and LUMA, the ISO would not be involved in the generation or sale of electricity to consumers and, therefore, would make decisions based on their ability to reduce electricity prices and increase system reliability. Although ISOs are typically responsible for overseeing a wholesale market, this does not yet exist in Puerto Rico. If Puerto Rico eventually decides to establish such a market, as discussed below, the ISO would also be tasked with running it and ensuring competitive prices. The ISO should also be tasked with creating a plan for reconstruction of the grid in a way that helps the island achieve 100% renewable energy. This strategy should be informed by the ISO’s evaluation of the current state of affairs, DOE’s PR100 study findings, and ongoing stakeholder engagement. PREB would be responsible for overseeing the ISO’s performance in addition to that of PREPA and LUMA, with authority to conduct regulatory enforcement as necessary.

Policymakers should learn from the experience of other jurisdictions that established ISOs to ensure Puerto Rico’s reforms are successful. A key feature of ISOs is their apolitical nature, which will be essential to the success of any entity tasked with overseeing Puerto Rico’s energy system. There are several operational models on which Puerto Rico’s ISO could be based to achieve this goal. Traditionally, ISOs are non-governmental, non-profit organizations approved by FERC that have no financial interest in either the generation of electricity or its sale to consumers. Since electricity sales on the island do not fall under FERC’s jurisdiction, Puerto Rico could model its ISO on the Electricity Reliability Council of Texas (ERCOT) instead, which exists solely within the state of Texas and is therefore regulated by the Texas Public Utilities Commission. Hawaii has also considered creating its own ISO and its proposal could serve as a model for Puerto Rico, although the changes were never fully implemented.178 Alternatively, Puerto Rico could pursue the creation of a federal government corporation with similar responsibilities as an ISO. According to a 2017 Congressional Research Service report, potential models include the Western Area Power Administration,, which is a power marketing administration that operates as part of the DOE, or a power generation and marketing authority that would serve at least Puerto Rico and the U.S. Virgin islands, and potentially the wider Caribbean region via undersea cables.179

PREB should commission a comprehensive study on the viability of a wholesale electricity market for Puerto Rico. PREB should expedite completion of the study on the “viability and convenience of establishing an electricity market governed by free competition in Puerto Rico,” as required by Act 17 of 2019.180 PREB is required to submit a report on the results of this study to the Legislative Assembly and the Governor on or before June 30, 2025, but this should ideally happen sooner and with support from DOE’s national laboratories. The study should offer recommendations tailored to Puerto Rico’s unique situation and explicitly consider how the creation of a wholesale market would impact adoption rates of

renewable energy. Puerto Rico may find it desirable to pursue a mix of long-term contracts (i.e., PPAs) and short-term markets to reduce risks for renewable energy developers while simultaneously achieving an efficient dispatch based on real-time grid conditions.181

If Puerto Rico decides to pursue further deregulation, strong regulatory oversight will be essential to the success of its reforms. This is discussed in the following section.

Ensuring the Independence of PREB

Strong oversight of electric utilities by politically independent regulators can advance the public interest by promoting efficient delivery of essential services. At its most basic level, regulation of electric utilities can prevent firms from unduly exploiting monopoly power at the expense of service reliability, efficiency, and affordability. Additionally, a competent regulator can serve as a trusted institutional vehicle for the implementation of more advanced policy directives from elected governments, such as energy conservation initiatives or renewable portfolio standards.

The relationship between PREPA and PREB is unique in that PREPA is a publicly owned utility that maintains a concession agreement with a private grid operator – LUMA. Nevertheless, the creation of PREB and its attendant oversight powers will hopefully prove to be a turning point in Puerto Rico’s energy transition, after which operation of the Puerto Rican energy sector was brought more closely in line with internationally recognized best practices of utility oversight. These best practices are crucial to increasing the effectiveness of energy governance in Puerto Rico as it charts a path toward 100% renewable energy.

Recommendations:

Having an independent regulator is key to an efficient and wellfinanced energy system. As has been argued elsewhere, “[regulator] independence is a tool towards more effective outcomes – and not an end in itself."182 Therefore, strengthening PREB’s regulatory independence should be viewed a remedy for two specific market failures that have harmed Puerto Ricans in the past: 1) short-term political incentives preventing the generation of sufficient revenues for PREPA’s day-to-day operations and capital asset depreciation, and 2) lack of competitive neutrality with respect to public firms.183

In the former context, PREB should serve as an independent regulator that is sufficiently insulated from political pressure to resist calls for unsustainably low rates. Many of PREPA’s financially deleterious actions, such as the issuance of several billion dollars of bond debt to cover basic operating costs, are the sort of inefficient behaviors against which PREB’s rate-setting oversight now guards.

In the latter context, the presence of an independent regulator gives potential investors and market participants confidence that they can compete on an even playing field without unfavorable interference, thus encouraging investment. PREB exemplified this role when it took over administration of the second tranche of renewable energy generation projects under PREPA’s Integrated Resource Plan in early 2022, following PREPA’s repeated failures to conduct the process in a timely manner.184 By forcing progress on this front, PREB has publicly

reaffirmed the government of Puerto Rico’s policy commitments to increasing renewable energy generation and its willingness to work with private bidders to do so.

Keep PREB apolitical and deter any political influence. In addition, Puerto Rico’s elected officials should work to bolster PREB’s reputation of independence and apoliticism. PREB’s actions at times run contrary to popular opinion and the short-term desires of elected officials—for example, periodic decisions to approve rate hikes requested by LUMA.185 Such decisions may tempt elected officials to propose various forms of political interference with routine grid management and rate-setting decisions. But so long as PREB continues to base decision-making on defensible, fact-based determinations of “just and reasonable” rates as required of it by Act 57, legislators should resist the appeal of undue interference with decisions that may be politically inconvenient in the short-term but necessary for long-term financial and operational sustainability of the grid. Over time, this will promote regulatory and financial stability, increase investor and stakeholder confidence in the Puerto Rican energy sector, and facilitate needed renewable energy investments from both public and private sectors.

The Puerto Rican government should maintain PREB’s broad statutory mandates to act as an empowered, independent, and apolitical regulator. A regulator vested with the power to align PREPA’s incentives with long-term goals of financial, physical, and environmental sustainability will promote long-term stability in grid performance and finances. This, in turn, will increase investor and stakeholder confidence in the Puerto Rican energy sector, and facilitate additional renewable energy investments to complement the ongoing grid transition.

Public trust in PREB’s independence and operations rests not just on fair and transparent regulatory decision-making, but also on its ability to effectively communicate with the public. Recommendations to this end can be found below.

Enhancing Public Trust of Energy Regulators

Engaging with a Framework for Public Trust

Though PREB’s creation is essential to ensuring that Puerto Rico’s energy sector operates efficiently, its existence alone is not enough to garner the widespread confidence and support vital to building and maintaining a successful electricity sector. Doubts about PREB’s oversight capabilities stem from its inability to articulate a clear, cogent plan for guaranteeing all Puerto Ricans access to reliable, affordable, and renewable electricity.

Recommendations:

IntroduceaPublicValueframeworktoincreasepublictrust.The Public Value framework defines the principal objective of a public agency as informing, engaging, and ultimately convincing stakeholders to actively collaborate to ensure optimal operationalization.186 To do this, Public Value proponents suggest a public agency first offer varying levels of governmental transparency, typically in the form of information sharing. According to Public Value best practices, the information shared should be:

• Complete: stakeholders should have access to both quantitative as well as qualitative information in either full detail or summation.

• Usable: the information should be easily accessible, easy to understand for the average person, or appropriately complex for experts.

• Timely: available so that stakeholders can use the information in planning and decision-making.

Moreover, a Public Value framework recommends that several dimensions of information are made available to stakeholders:

• Authorizing Environment Information: how decisions are made about a public agency, the democratic support in the agency, and the accountability mechanisms that define the stakeholder and public agency environment.

• Operational Capacity Information: how the public agency operates, including its administrative, technical, and financial capabilities and processes.

• Public Value Proposition Information: the vision, mission, values, and goals of the organization and what processes will be used to achieve said goals.

Research findings on utilities in three Caribbean countries found that no singular information type was a necessary condition for creating public value. However, it was noted that when at least two types were combined, the agency both garnered the highest ratepayer satisfaction responses and had the highest operational efficiency rates. Interestingly, the most significant information dimension for both stakeholder satisfaction and optimal operation was authorizing environment information, and the absence of this dimension proved detrimental for the agency’s ability to create public value. This suggests that most stakeholders are comfortable with leadership decisions so long as there is transparency about the process.

Improving Communication

The quasi-privatization of the electric sector, which follows Puerto Rico’s previous austerity measures resulting from a decline in private industry, leaves many uncertain about PREB’s ability to ensure that LUMA will deliver. To assuage sentiments of distrust and cultivate a network of supportive constituents, PREB should utilize a proven operational framework that restores trust with stakeholders. As such, PREB should develop a communications strategy espoused by the Public Value framework.

Another point of investment to improve the equity, resiliency, and sense of security felt by energy users on the island is to improve the availability of information and communication by LUMA, PREPA and PREB. In recent years, many Puerto Ricans have gone months without power because of intense natural disasters, and since June 1, 2021 the distributor of the grid, LUMA, has been customers’ main point of contact. The public’s general distrust of this private operator, continuation of blackouts,187 and negative customer service experiences continue to disempower Puerto Ricans’ efforts for energy sovereignty.

Moreover, PREB should develop a communications strategy that is informed by the Public Value framework. The strategy should include developing a preamble with varying levels of stakeholders and creating a modern, user-centered website that serves as a clearinghouse of information related to the technical and governance aspects of electricity generation. We therefore provide the following recommendations for key actors in the energy system.

Recommendations: LUMA

Increase staffing on LUMA’s customer support lines. In the instance of a blackout or other supply interruption, customer service lines are oftenfloodedwithcallsandemergencyresponseisslow.188 Increasing staffing, particularly during times of expected high call volume, can help ensure customers are quickly able to communicate their needs to the utility.

Improve personal solar systems interconnection and provide clear timelines for interconnection. While LUMA does not currently install or maintain solar systems with individual customers, rooftop Public Value solar customers still need to work with LUMA in order to connect their system to the grid. LUMA’s website includes an outline of the 9-step process to set up an interconnection,189 but it does not include a timeline regarding how long a customer may expect net metering setup to take.

Improve access to green energy information. LUMA’s website only contains a singular sentence on the company’s informational page for solar energy, stating “It is a renewable (or inexhaustible) source of energy that, through a system of photovoltaic solar panels and an inverter, is converted into electrical energy to be used by homes or other properties.” LUMA should work to incorporate more educational information on how to maintain solar systems and why one may want a solar system. Regulators should work to create a clear, reputable, and public list of solar providers, installers, and maintenance technicians that customers can contact to ask questions about solar installation or receive assistance on their systems.

PREB

Create a preamble that effectively conveys PREB's mission and efforts. The preamble serves to communicate the core tenants of a public agency to its stakeholders.190 For PREB, we suggest the following steps:

• Write a vision statement. This statement should reflect what PREB ultimately seeks to achieve in its work or what the conditions would be if PREB were to be successful. An example: “PREB imagines a world in which all Puerto Ricans have access to renewable, reliable, and reasonably affordable electricity.”

• Update the existing mission statement. The current mission statement reads more like a vision statement because it does not articulate what specific actionable steps PREB is taking to achieve success. For example: “By leveraging the most up-to-date technological reports from industry leaders and governmental organizations and collaborating with various community stakeholders, PREB’s oversight of the electricity sector in

Puerto Rico will render the highest standards in generation, transmission, and distribution.”

• Co-creating values with interested stakeholders. Working with various stakeholders to establish guidelines for how the public agency will achieve its goals builds further trust, which in turn will help create more public value and ultimately commitment to ensure that the public agency succeeds.

Enhance PREB's website to improve online presence and communication. A strong, central public website is essential in creating public value for PREB. Websites are typically a more permanent fixture than utilizing social media sites to communicate with stakeholders, though the important role of social media and consumer education will be addressed later. Because research finds that stakeholders deem transparency to be a virtue of integrity, having a user-centered and comprehensive website can be the deciding factor in creating public value.191 For consistency of information access and continuity of messaging, PREB should also hire a full-time communications lead to oversee all the broader communications efforts and - if funding allows - a small team of part-time or consultant communications professionals to assist the lead. In addition to the Preamble, PREB should consider including the following on their website:

• Technical Information. To ensure that all stakeholders have access to the same, verified information on the technical aspects of electricity and the electricity market in Puerto Rico, PREB should earmark a specific section of its website to general information. This section could include: easy to understand infographics on electricity generation, transmission, and distribution; current statutes and regulations on electricity; technical reports detailing progress on electric grid upgrades; and trends in the electricity market.

• Operational Information. So that all stakeholders can understand how PREB is regulating the electricity market in Puerto Rico, there should be a library of governance documents housed on the website, including but not limited to:

- Reliability Standards set forth by Act 17

- Terms and Services of Utility

- Consumer Bill of Rights

- Utility’s Rate of Return Approach

- Performance and Usage Reports

- Processes for Pricing Structuring

- Financial Audits

- PREB Directory of Employees

- Calendar of Public Meetings

- Public Meeting Minutes

The California Public Utilities Commissions has developed an exemplary website, specifically in terms of what they offer in their Regulatory Section.192 The website features the aforementioned information with a focus on engaging stakeholders, including easyto-understand consumer education pieces on the electricity sector as well as behavioral economic models that empower ratepayers’ decisions on consumption. Below are examples of the information that’s made available to consumers along with brief descriptions of what they can expect to find:

• Consumer Energy Resources: Explore electrical energy financial assistance and other types of programs for residents and ratepayers.

• Demand Side Management: Learn more about programs that help you manage your energy use.

• EnergyStorage: Learn how we are working to reduce greenhouse gas emissions, meet air quality standards, and achieve a carbon free grid through energy storage procurement.

Increase engagement on social media platforms. Still, research suggests that an ever-increasing number of Americans are getting at least some of their news from social media.193 Though this may not completely reflect the information consumption trends in Puerto Rico, it’s still worth noting that public value experts suggest that social media is another platform public agencies can use to create transparency and thus increase public value. Smart social media strategy includes creating content that engages influencers to establish two-way communication.194 Influencers have established audiences that the public agency can use, thus saving time and money on cultivating engaged stakeholder audiences. It’s imperative that public agencies identify and address the needs of potential influencers, many of whom are looking for socially good causes to support. In exchange, public agencies should offer unbiased, factbased information for influencers to proliferate. Now more than ever, it is imperative that PREB leadership leverages a social media strategy that seeks to use influencers to counter misinformation so that stakeholders can make decisions with impartial and fact-based information.

When public agencies increase their transparency, outcomes can be improved for stakeholders. Specifically for utilities, research suggests that a more transparent agency translates into higher incomes, increased investment growth, and longer life expectancies for all stakeholders.195 If PREB adopts a Public Value framework, these outcomes can also be achieved in Puerto Rico.

Section C. Eliminating Financial Hurdles to the Renewable Energy Transition Federal Funding

As detailed in Part I, delays in federal funding provision have been tied up in bureaucratic requirements that ignore local needs and challenges, multi-step series of approvals, as well as protective measures for the funding implemented as a result of the PREPA bankruptcy. In addition, federal laws imposed on Puerto Rico reduce access to grid infrastructure inputs at international market supply levels and prices.

Additionally, given PREPA and LUMA’s reported shortage in workers, the energy transition that occurred in the early 20th century provides a model for investment in both labor and energy infrastructure, which reached communities left unserved by the previous energy system. It also increased employment in Puerto Rico, and allowed for a domestic workforce to stimulate the island's growth.

A similar model, if unimpeded by the current economic conditions or bankruptcy concerns, could allow funding to flow to the grid, and the municipalities the grid is meant to serve. We provide recommendations for federal funding to be directed towards such a model, below.

Recommendations:

Establishing a Federally-Funded, Puerto Rican-Led ElectrificationProgram

Fund a workforce program focused on rebuilding the electrical grid, that is protected from bankruptcy-related intervention. While PREPA remains in bankruptcy and LUMA’s contract does not provide more immediate financial penalties for lack of sufficient service, the current administration should consider working closely with the government of Puerto Rico, including the Governor’s Office, and COR3, to recruit a Puerto Rican workforce specifically focused on rebuilding the energy grid and implementing microgrid infrastructure. Meanwhile, absent an ISO, PREPA would continue to focus efforts on generation, LUMA would continue to operate the T&D system, and PREB would have the capacity to oversee both PREPA and LUMA in these efforts. This revised structure would also effectively separate funding for the electrical grid from delays associated with the bankruptcy and FOMB requirements, which may put bondholder interests ahead of Puerto Ricans' right to the health, livelihood, and economic opportunity that a reliable energy system generates.

Incentivize Puerto Rican engineers’ involvement in rebuilding the energy grid, by establishing a federally-funded program which provides salaries that are competitive with mainland salaries. While

Puerto Rican engineering education is of high quality due to the University of Puerto Rico’s program at Mayagüez, the salaries provided to engineers in the states is considerably higher than those available on the island. Using federal funds to provide engineers with competitive salaries will allow Puerto Rico to attract this talent towards areas of high-need on the island, to support analysis and submission of projects to FEMA.

Fund and invest in training and certification programs for green energy jobs. A recent survey by the Interstate Renewable Energy Council of Puerto Rican-owned solar firms found that a majority of firms identified retaining a workforce as a challenge for their company. Efforts by private organizations and states have put millions of dollars towards local business and workforce development, but more access to training and certification is needed to meet the needs of the industry. Funding should be used to provide free training for workers, particularly focusing programs on low-income and lastmile communities.

Create and train a workforce of administrative staff, to make available to municipalities for grant processing. Municipalities may not have the worker capacity and resources to submit the extent of documentation that FEMA requires, in order for the municipality to receive funds. Funding the salaries and training for a workforce of dedicated staff, from in and around the municipalities, will have the multi-faceted outcome of increasing employment as well as capacity. Federal agencies should also work with local government, and the workforce of engineers, to determine what additional resources are needed (such as technology), such that municipalities can efficiently submit documentation to FEMA.

Work with local leaders and govenments to streamline funding to high-need areas. Using the map recommended in the section "Alleviating Barriers to Renewable Energy for LMI Communities," DOE and COR3 should work with the project leads to determine the investment required to advance the project, and meet the target and surrounding communities' needs.

DOE should work with FEMA to allocate team members to assist in the related administrative work needed to streamline each project’s application for funds. DOE should also work with COR3, as well as the project leads, and agencies with relevant expertise, to identify whether there are shortages in workers with the applicable skill sets, or limited access to the resources needed to carry out the project. DOE should then work with COR3, the project leads, and the relevant agencies to formulate a plan for addressing labor shortages and resource access.

Additionally, DOE should work with FEMA to ensure federal funding can be streamlined towards the identified projects. The local labor force identified in the prior recommendations would ideally be focused on carrying out these types of projects where profitability may be low, but public benefit is high. DOE should also work with COR3, the project leads, and relevant agencies to determine a plan for operations and maintenance, including sources of future funding.

RegulatoryChangestoAlleviateCost,andAdministrative Barriers to Federal Funding Access

Review the Alternative Procedures Program and identify and eliminate unnecessarily burdensome processes. In this analysis, FEMA should place strong focus on how the PAAP blocks LMI communities,aswellascommunitiesinurgentneedofinfrastructure rehabilitation, from accessing funds.

Waive reimbursement requirements for permanent work in LMI and vulnerable communities.196 Given that these communities do not have the ability to access funding to cover upfront costs, FEMA's full waiver of the coverage requirement will allow these communities access to critical capital for infrastructure construction. Additional expertise from the Puerto Rican workforce of engineers, as well as support from FEMA, DOE, U.S. Army Corps of Engineers can help ensure that funding is allocated effectively, without the reimbursement requirements.

FEMA and DOE should work together to identify all materials that will be used to rebuild the grid, establish microgrids, and meet the renewable energy mandate and, where possible, request that the White House waive the Jones Act for Puerto Rico’s imports of these materials. As a result of this policy change, the cost of the materials will become cheaper and more competitive with that of fossil fuels.

Green Energy Trust

The sheer quantity of federal relief funds that have been allocated to Puerto Rico suggest that they can play a critical role in Puerto Rico’s energy transition. At the same time, our conversations with stakeholders have made it clear that these funds will not be sufficient on their own to allow the island to achieve its renewable energy objectives both in terms of (1) how much total capital is needed, and (2) the constraints associated with accessing and deploying funds that must adhere to the conditions outlined by federal relief funding agencies.

In the face of these concerns, the lacking institutional capacity that has limited Puerto Rico’s ability to make progress on Act 17’s renewable energy targets to date, and the importance of facilitating an equitable transition that prioritizes the island’s most vulnerable residents, the nascent Puerto Rico Green Energy Trust represents an important opportunity to attract private investment capital towards solutions that complement available federal relief funds. This section analyzes possible sources of capitalization and product offerings for the Green Energy Trust, a financing entity created by Act 17 that resembles many of the existing green banks in the United States.

Recommendations:

SurveyingPossibleGreenEnergyTrustProductOfferings

Please see Table 1 (see appendix B) for a detailed breakdown of possible products that the Green Energy Trust can consider launching as it becomes operational. Recommended products to prioritize are highlighted in yellow and secondary product recommendations are highlighted in orange. When making decisions of what activities to engage in, there are several important variables that the Green

Energy Trust leadership must take into account.

One significant factor is the degree to which (and under what timeline) the Green Energy Trust expects to have access to capitalization funding. If initial funding for the Green Energy Trust is hard to come by, then the amount of direct lending it can do will be limited.

Based on our conversations with stakeholders and the lack of execution to date on Governor Pierluisi’s initial commitment of $400 million in October 2021, our analysis and recommendations assume that capitalization funds will be difficult to access immediately.

In the absence of its own short-term capacity to lend, the Green Energy Trust should explore programs and products that leverage private lending institutions that are willing to be the direct lenders for clean energy projects on the island.

Another notable consideration is what stakeholders need to be involved for the Green Energy Trust to launch a given product or program. Many existing green banks operate programs that require enabling legislation. The need for legislative action or other coordination between stakeholders such as PREPA or PREB makes some product offerings less likely to be high-impact options as part of the Green Energy Trust’s short-term strategy. Additionally, the ability of each product to be tailored to meet the specific needs of vulnerable communities may also vary, which has crucial implications for the Green Energy Trust’s program design and prioritization given the objectives assigned to it in Act 17.

Launchingresidentialandcommercialtermloanproducts should be a top priority for the Green Energy Trust.

With these concerns and constraints related to Puerto Rico’s political and financial circumstances in mind, product offerings that are especially well-suited for Green Energy Trust’s early stages are residential and commercial term loans. In developing and launching term loan products, the Green Energy Trust can simultaneously create offerings that initially rely on partnerships with private lenders to accelerate investment in clean energy projects in the short run and be positioned to directly underwrite and provide financing itself for them once it has available funds to do so.

Connecticut Green Bank’s Smart-E Loan Program can be a helpful example of how the Green Energy Trust can facilitate a successful term loan product without significant capitalization funds. The Smart-E Loan Program offers low-interest and long-term (5 to 12 years) financing with no money down for home energy upgrades.197

Examples of eligible Smart-E measures include solar photovoltaic systems and battery back-up, solar hot water heaters, and a multitude of energy efficiency improvements.198 Financing is available to residential consumers through a group of participating community lenders that includes Community Development Financial Institutions and credit unions that are willing to offer favorable terms to borrowers and collectively have client coverage throughout the entire state.199 The program also qualifies a group of approved contractors that residential consumers can choose from when seeking financing for eligible upgrades.200

Even without the scale of the Smart-E Loan Program, which had surpassed an aggregate investment amount of over $100 million as of the end of Connecticut Green Bank’s 2021 fiscal year, the Green Energy Trust can still greatly enhance the deployment of renewable energy on the island by designing a similar type of program that provides financing opportunities at specified rates and term lengths for a set of upgrades it decides are eligible.

Coordinating and establishing relationships with lenders and contractors will require the Green Energy Trust to play a significant administrative role but nonetheless gives it the potential to spur investment into projects quickly after partnerships with the first participating capital providers are developed. The Green Energy Trust should also consider a related offering that would aim to make low-interest term loan financing accessible for commercial businesses.

Creditenhancementproductscanhelpincentivizeprivate investors to lend to vulnerable communities.

Without its own capital, it will be challenging for the Green Energy Trust to directly target vulnerable communities such as LMI customers. Puerto Rico’s green bank entity should emphasize partnerships with community lenders to drive down interest rates and increase the likelihood that individuals that are not typically able to access financing can acquire the upfront capital required for energy upgrades, but ultimately participating lending institutions will likely

be less willing to extend financing to those with lower credit ratings without financial incentives.

Therefore, having its own pool of funding is critical for the Green Energy Trust to be able to ensure that products like term loans reach LMI customers and other communities that often struggle to obtain financing for clean energy projects. This would not only allow the Green Energy Trust more flexibility to adjust terms for vulnerable customers (e.g., offering opportunities for lower interest rates or loan forgiveness) and relend funds that are paid back from borrowers in a revolving fund structure, but it would also enable it to use credit enhancements to encourage private capital providers to lend to these communities.

One example of a credit enhancement that the Green Energy Trust can use as a guide is the Climate Access Fund’s Solar Bill Guaranty product. CAF – a statewide nonprofit green bank based in Baltimore, Maryland – launched the product to promote the development of community solar projects that are accessible to LMI residents by committing to cover any missed electricity bill payments from participating LMI subscribers.201 Similar types of loan guarantees, loan loss reserve funds, and other credit enhancements may be an effective facet of any product or program the Green Energy Trust chooses to offer given Act 17’s prescribed focus on LMI customers, including for term loan products to LMI residents and businesses that benefit vulnerable communities.

Long-term product options include on-bill and commercial property assessed clean energy financing.

Beyond term loans and credit enhancements, the Green Energy Trust should also contemplate products that may require more time to initiate but have the potential to be important mechanisms for helping Puerto Rico reach its 2040 and 2050 mandated targets. On-bill financing and commercial property assessed clean energy (C-PACE) financing are two approaches that are worth examining as long-term catalysts for catalyzing investment in renewable energy projects for residents and commercial building owners, respectively.

A challenge to implementing C-PACE programs, which are one of the most common offerings of green banks throughout the United States and often resemble one another, is that they typically require enabling legislation because they involve repayment for energy upgrades via special assessments on property tax bills.202

An on-bill financing program may not require legislation (though the Green Energy Money $aver Program, one of the most prominent U.S. examples of an on-bill utility financing program, began only after separate state laws instructed the Hawaii Public Utilities Commission to assess the viability of on-bill financing program in the state and provided capitalization funds for the program), but it would entail coordination between the Green Energy Trust, PREPA, and PREB to execute.203

Moreover, while the Green Energy Trust could choose to only administer a C-PACE program and not directly finance projects, an on-bill financing program would be more feasible if the Green Energy Trust had the capacity to provide the upfront capital for upgrades so that PREPA would not have to incur these costs. For example, Hawaii’s on-bill financing program uses a financing model where

the Hawaii Green Infrastructure Authority – a green bank entity –pays initially for clean energy projects for residential consumers and is repaid through monthly utility bills, a setup that only asks utility companies to place on-bill obligations on the meters of participating consumers.204

Staff capacity and leadership are crucial to the Green Energy Trust’s success.

Undergirding every product decision that the Green Energy Trust makes is the level of capacity and expertise that it can leverage from its employees and leadership. The ability to hire employees is related to how much funding the Green Energy Trust has available for dayto-day operations.

With more employees on staff, there is a greater likelihood that the Green Energy Trust will be able to administer multiple programs and underwrite projects on its own. Additionally, the ability to rely on financing expertise would allow the Green Energy Trust to pursue products and transactions that are more complex, such as aggregating and securitizing pools of small loans to increase private investment in renewable energy projects on the island and reduce their overall cost of capital.205

Examining Possible Sources of Capitalization Funds

Please see Table 2 for a detailed breakdown of possible funding sources that the Green Energy Trust can look to for capitalization funds. As was the case with Table 1, primary and secondary recommendations are highlighted in yellow and orange, respectively.

IRA funding represents a significant opportunity for the Green Energy Trust to secure capitalization funds.

A prospective funding source that the Green Energy Trust leadership should consider a top priority is the IRA’s Greenhouse Gas Reduction Fund.206 This federal-level entity is tasked with disbursing funds to state, local, and tribal governments, with $15 billion of its $27 billion in funding earmarked specifically for either deploying zero-emission technologies or investing in renewable energy projects in LMI and “disadvantaged” communities.207

Puerto Rico appears well-positioned to be able to receive funds from the Greenhouse Gas Reduction Fund, particularly because of its mandate to invest 60% of its allocated dollars in LMI and disadvantaged communities. In addition to having a poverty rate of greater than 40%, virtually every part of the island of Puerto Rico qualifies as a disadvantaged community according to the White House Council on Environmental Quality’s Climate and Economic Justice Screening Tool and the DOE’s Disadvantaged Communities Reporter.208,209 Since the IRA does not explicitly define the term “disadvantaged communities,” it seems likely that these tools, which have been referenced in President Biden’s Justice40 Initiative communications, will inform IRA fund eligibility.210, 211

Beyond the apparent eligibility that the Green Energy Trust would have for the Greenhouse Gas Reduction Fund’s capital, there are several reasons why the national green bank is an ideal source of funding. First, there is clear alignment between the Green Energy Trust’s goals and the LMI and disadvantaged community focus of

the Greenhouse Gas Reduction Fund, which is a clear indication that Puerto Rico’s green bank should not have an issue utilizing the funds for their intended purpose.

Moreover, this source of funding is uniquely available for the sole purpose of promoting green bank activity, meaning the Green Energy Trust would not have to depend on competing for other internal sources of capital on the island, such as appropriations from the Legislature of Puerto Rico or federal relief funds. The recent passage of the IRA also suggests that fund disbursement through the Greenhouse Gas Reduction Fund will happen soon and match the nascent Green Energy Trust’s pressing need for capitalization funds.

Importantly, there are potential concerns of focusing on IRA funding at the expense of other funding sources. These include the need for the Green Energy Trust to have the staffing capacity to apply and get approved for Greenhouse Gas Reduction Funds on a short and uncertain timeline and any unique challenges that a Puerto Rico green bank entity might have in accessing funds (e.g., if funding ends up focusing on mainland states or if application reviewers express hesitancy over distributing funds to Puerto Rico because of its unfolding bankruptcy situation or the amount of federal dollars that have already been allocated to its energy infrastructure through other agencies).

Other complementary sources of funding to the IRA’s Greenhouse Gas Reduction Fund may also be worth pursuing.

Other recommended capitalization sources to explore as possible complements to IRA funds are federal agency grants or philanthropic contributions. Outside of available IRA funding, some federal agencies like DOE and the Department of Treasury occasionally offer grant programs where green bank entities may be eligible. For example, California’s Pollution Control Financing Authority received $590.5 million in U.S. Department of Treasury funds in 2022 to implement programs approved by the agency’s State Small Business Credit Initiative (“SSBCI 2.0”).212

It is worth noting, however, that federal agency funding awards can be episodic and grant sizes may vary significantly. For instance, the launch of the SSBCI 2.0 program was directly related to the federal government’s COVID-19 response, which allocated $10 billion to SSBCI through the American Rescue Plan Act.213

Philanthropic contributions can similarly vary in timing and amount and require Green Energy Trust leadership to develop relationships with private donors but nonetheless are another option to consider as a bridge source of capital while waiting on government opportunities, especially if a Trustee already has an established relationship with an interested prospective supporter. When considering philanthropic funding opportunities, it is crucial that any foundation that expresses interest in providing capital to the Green Energy Trust is vetted to ensure that its mission and priorities are aligned with the Green Energy Trust’s objectives.

Unfortunately, many of the possible sources of capitalization funds that do not rely on external parties like foundations or the federal government appear to be impractical alternatives in the short term. Any method for obtaining funds that may raise utility bills, such as

surcharges or utility fees (which may be passed onto consumers), are likely politically unfeasible and would only exacerbate the existing issue that Puerto Ricans spend a much larger share of their incomes on electricity bills (8%) than the average U.S. resident (2.4%).214 Excise sales taxes like those outlined for motor vehicles and motorcycles for the purpose of providing financial incentives for renewable energy projects in Act 83-2010 require legislative action and should only be implemented after careful analysis determines that they will not be regressive.215,216 Finally, the island’s recent financial challenges also likely make raising capital through bonds an unviable (or at least costly) endeavor.

Part III - Guiding Principles for Puerto Rico’s Energy System

Part II’s primary objective was to outline concrete policy recommendations based on the policy discussion and evaluation depicted in Part I. We hope that these recommendations can serve as a menu of options for Commonwealth and Federal Government policymakers as they consider the key findings and insights reviewed in this report.

Our team also encountered several debates about the future of Puerto Rico’s energy system during our visit to the island, such as whether to invest in distributed energy resources or utility-scale renewables. What follows is a discussion of several key issues related to the design of Puerto Rico’s energy system that seeks to balance stakeholder interests. We suggest policymakers consider the tradeoffs of each technical pathway using the principles described above.

Increase resiliency through hardening of existing grid infrastructure and grid decentralization. Puerto Rico should simultaneously harden existing grid infrastructure and encourage the development of regional microgrids and distributed system operators (DSOs) in remote areas that experience frequent and persistent outages. While this approach may be more costly than relying on the current network of long-distance transmission lines and centralized generators at the outset, strategically building distributed generation and storage capacity will ensure all residents retain access to critical services in the event of an emergency. In urban areas, where siting of distributed energy resources may present a challenge and distribution lines are easily accessible, hardening the existing infrastructure is likely a more cost effective solution.

Instead of a single T&D operator responsible for the entire island, policymakers should facilitate the creation of DSOs that can tailor microgrid assets to the needs of customers in their region and operate autonomously if necessary. PREPA’s most recent IRP calls for the creation of eight regional “mini-grids,” which is a good first step that should be extended further to allow for more targeted solutions.217 For example, one might expect microgrids to develop in the mountainous interior of Puerto Rico, where T&D lines are harder to maintain and repair. These communities need more distributed generation and storage given their local geography and would benefit from a system capable of operating autonomously.218

Invest in both utility-scale and distributed generation to meet the needs of different communities. Although utility-scale renewable generation can help Puerto Rico meet its ambitious target of 100% renewable energy by 2050 more quickly and cost effectively, distributed generation may be required to ensure the desired level of reliability and resilience. According to the 2022 Annual Technology Baseline conducted by the National Renewable Energy Laboratory (NREL), utility-scale photovoltaic and land-based wind projects feature the lowest levelized cost of energy (LCOE) in the United States.219 However, LCOE does not factor in land use concerns or the T&D system’s ability to serve customers reliably, both of which are particularly relevant to the case of Puerto Rico. While distributed solar and storage afford reliability and resilience in remote regions, installing a system large enough to meet 100% of a household’s demand remains expensive compared to the cost of procuring electricity via a PPA with a utility-scale project.220 Furthermore, those who do not own their home, whether because they rent or live in multifamily housing, may face additional barriers to installing a rooftop system. The optimal policy likely involves subsidization of distributed generation and storage for those who would benefit most from the associated reliability and resilience benefits as well as a buildout of utility-scale projects to meet the rest of the island’s demand at the lowest possible cost.

Pursue a portfolio approach to renewable energy generation rather than relying solely on solar and storage. Failure to diversify the types of renewable energy used to generate electricity will drive up costs and decrease grid reliance. Pursuing offshore wind as another component of Puerto Rico’s energy supply would reduce the need for energy storage, address concerns about land use for utility-scale solar, and generate economic opportunities for Puerto Ricans while helping the island reach 100% renewable energy. As directed by the IRA, the U.S. Department of the Interior’s Bureau of Ocean Energy Management should work with the Governor of Puerto Rico to facilitate lease sales for offshore wind near the island.221

Despite the benefits of solar and wind, neither is a dispatchable source of electricity. Hydropower could serve as a source of firm power necessary to stabilize regional microgrid operations and contribute to the island’s overall resource mix, but it may prove expensive to bring decommissioned hydroelectric facilities back to life due to the cost of dredging reservoirs and upgrading the infrastructure. Natural gas power plants with carbon capture and storage are a form of carbon-free power that could serve as baseload generation during the transition to 100% renewable energy, but come with concerns of reliance on imported fossil fuels and exposure to volatile liquified natural gas prices. Continued use of natural gas also perpetuates the perception of some that the utility only wants to build new fossil fuel generators so that they can retain control over the energy system and their customers.

Conclusion

Overall, this report provides a comprehensive understanding of the mechanisms underpinning Puerto Rico’s renewable energy transition and the policy recommendations that can support its equitable progression. In Part I, this included a considerable examination of the obstacles faced within the infrastructure of the energy system, institutional overlap and gridlock, economic and developmental hurdles and funding issues. However, it also provided potential policy options to alleviate these barriers and evaluated the challenges of implementation, incentives and financing based on historical, regulatory, political and policy context. Part I established an energy justice framework aligned with seven design principles to support government officials and policymakers in keeping the people of Puerto Rico at the center of the transition and listed key considerations for energy justice that should be in alignment with any future strategic plans. Part I also helped dispel myths of renewable energy infeasibility arguments given Puerto Rico’s own history of implementing renewable energy in the past, and discussed the drivers for high energy costs on the island.

Our primary objective for Part I was to provide a policy synthesis of the economic, institutional, regulatory, behavioral and energy contexts impacting the renewable energy transition. Part II, offers a list of solidified policy recommendations that can support policy implementation in the renewable energy transition. Together, Part I and Part II provide the necessary policy centricity to optimize the tools that decision makers can wield to support Act 17 compliance in the future, as well as, a well-informed, and equitable renewable energy transition.

Appendix A: Glossary

AAFAF - Puerto Rico Fiscal Agency, Financial Advisory Authority

C-Pace - Commercial Property Assessed Clean Energy

CEJST - Climate and Economic Justice Screening Tool

COR3 - Central Office for Recovery, Reconstruction and Resiliency

GAO - Government Accountability Office

FEMA - Federal Emergency Management Agency

FOMB - Financial Oversight and Management Board

kWh - kilowatt hour

IEJ - Institute for Energy Justice

ISO - Independent service operator

IRA- Inflation Reduction Act

IRP - Integrated Resource Plan

LMI - Low- and middle- income

O&M - Operations and maintenance

POA - Plan of adjustment

PPA - Purchase Power Agreement

PREB - Puerto Rico Energy Bureau

PROMESA -Puerto Rico Oversight, Management, and Economic Stability Act

PV - Photovoltaic

RFP - Request for proposals

T&D - Transmission and distribution

Appendix B: Green Energy Trust Tables

Table 1

Product Description Example Implementation Concerns

Aggregation / Securitization Bundling pools of small loans for clean energy projects and selling them to investors as securities; involves direct underwriting by green finance entity and warehousing loans until they can be sold in a secondary market

Commercial Term Loans Low-interest loans offered to businesses at particular rates and term lengths for clean energy improvements; green bank entity may offer financing directly to businesses or partner (including co-lending) with private lending institutions

Connecticut Green Bank’s C-PACE Securitization

Financial transactions can be complex; can require significant loan volume and direct underwriting from Green Energy Trust; dependent on investor interest in secondary market

Ability to Target Vulnerable Communities

Indirectly; can allow Green Energy Trust to diversify risk for investors by packaging together smaller loans and/or loans to individuals that are traditionally credit constrained

Recomendation

Should not be a priority in the shortterm; would only be worth pursuing in long-term if Green Energy Trust is directly financing a large volume of small loans, wants to access capital through a secondary market, and has relevant staff capacity and expertise

Energize Delaware’s Commercial Loan Program

Need to create fair evaluation and/or eligibility criteria for assessing applicants; necessitates Green Energy Trust establishing relationships with private lending institutions if it is only playing administrative role; may also require relationship building with a network of contractors;

Yes (more so if directly lending); can score applicants differently and offer unique lending terms (e.g., loan forgiveness, lower rates, capitalized interest) for applicants from vulnerable communities and projects benefiting vulnerable communities

Can be a complementary offering to residential term loans (which should be a top priority) if same lending institution partners are willing to consider investment in businesses; possibility for colending in long-term but short-term focus should be on playing more of an administrative role

Incentive Programs Rebates or upfront capital provided to consumers or project developers to reduce the cost of clean energy projects and improvements

Connecticut Green Bank’s Residential Solar Investment Program (RSIP)

Incentive programs typically require legislative action; Green Energy Trust would need capitalization funds to offer incentives; Legislature of Puerto Rico already established Green Energy Fund for renewable energy project incentives through Act 83-2010

Yes: Connecticut Green Bank’s RSIP included an opportunity for a higher incentive for LMI households

Worth pursuing only if Green Energy Trust can absorb the activities, funding, and capacity of the Green Energy Fund; any decision should be informed by analysis of how successful the Green Energy Fund has been to date

Loan Guarantees / Loan Loss Reserve Promise from green bank entities to private capital providers to assume the debt or certain amount of losses of a borrower that defaults or misses payments; credit enhancements are intended to bolster the likelihood that private capital providers will lend to certain clean energy projects they perceive as being risky investments

On-Bill Financing

Allows LMI householders, renters, small businesses, nonprofits and other eligible consumers to finance clean energy improvements through their utility bills without any upfront costs; clean energy improvements can result in reduced costs and long-run net savings for consumers

The Climate Access Fund’s Solar Bill Guaranty Program

Requires capital on hand to pay investors back in case of default or missed payments; investors may not trust that they will be paid back even with credit enhancements; Green Energy Trust will likely only be able to absorb a certain level of risk based on available funds

Yes; Climate Access Fund’s Solar Bill

Guaranty product guarantees electricity bill payments of LMI customers to make solar developers more likely to pursue projects that benefit disadvantaged communities

Worth pursuing to bolster investor interest in projects that benefit vulnerable communities if Green Energy Trust is able to raise its own capital; may only make sense for larger-scale projects depending on Green Energy Trust’s capacity constraints

Hawaii Infrastructure Authority’s Green Energy Money $aver (GEM$) On-Bill Program

Would require significant coordination between PREPA, PREB, and Green Energy Trust to implement; Green Energy Trust would need capitalization funds if acting as upfront capital provider; handling non-payment of utility bills after project completion could be a challenge

Yes; Hawaii Infrastructure Authority’s GEM$ Program exclusively offers this financing option to LMI households, renters, nonprofits, and small businesses

Should be a top long-run priority if Green Energy Trust secures capitalization funds and determines it can successfully coordinate such a program with PREPA and PREB

Property Assessed Clean Energy (PACE) Financing

Allows property owners to access upfront capital with long-term financing (usually up to 25-30 years) for clean energy improvements; PACE investments are paid back through property tax bills and are generally viewed by investors as less risky than typical loans

Rhode Island Infrastructure Bank’s C-PACE Program

Not as viable as a residential product; typically requires a PACE-enabling statute; may have difficulty getting municipalities to “opt in” given fragmentation on island

Limited; most programs focus on commercial customers and only property owners are eligible

C-PACE legislation is worth pursuing if politically feasible and Green Energy Trust is positioned to administer program; should be a secondary priority given longer timeline and limited ability to target vulnerable communities; initial version of program would likely not involve direct lending by Green Energy Trust

Residential Term Loans Low-interest loans offered to residential consumers at particular rates and term lengths for clean energy improvements; may offer financing directly to residential consumers or partner (including co-lending) with private lending institutions

Connecticut Green Bank’s Smart-E Loan Program

Need to create fair evaluation and eligibility for assessing applicants; necessitates Green Energy Trust establishing relationships with private lending institutions if it is only playing administrative role; may also require relationship building with a network of contractors; limited clean energy contractors on island could be a challenge

Yes (more so if directly lending); can score applicants differently and offer unique lending terms (e.g., loan forgiveness, lower rates) for applicants from vulnerable communities; Smart-E model involves partnerships with community lenders (e.g., credit unions, CDFIs) to offer lower rates; can pair with other products (e.g., credit enhancements, on-bill financing) for LMI consumers and other vulnerable communities

Should be a top priority, even if Green Energy Trust is only initially playing administrative role; short-run focus should be on partnering with lending institutions that are willing to offer loans at specified rates and terms for a specified set of eligible improvements and have coverage on all parts of the island; long-run focus should be on direct lending or colending

Source Description

Appropriations from the Legislature of Puerto Rico

Legislation that allocates funding specifically for Green Energy Trust’s capitalization

Example Concerns/Challenges Recommendation

Puerto Rico Economic Development Bank (Act 22-1985) – Received initial capitalization of $15 million from Legislature of Puerto Rico

Political constraints; Puerto Rico’s financial difficulties

Does not appear to be a viable option in the short-term

Excise Sales Taxes Taxes levied on specific goods or services

Puerto Rico Green Fund (Act 83-2010) – Received collections from excise taxes on motor vehicles and motorcycles for Fiscal Years 20112020 for the purpose of providing financial incentives for renewable energy projects

Requires legislative action; additional burden on Puerto Rican residents; can be regressive

Should only be considered if Green Energy Trust absorbs activities of Green Fund and excise taxes on motor vehicles and motorcycles are determined not to be regressive

Federal Agency Grants Awarded grant program funds from federal agencies (e.g., Department of Energy, Department of Treasury)

California Pollution Control Financing Authority – Received $590.5 million in U.S. Department of Treasury funds in 2022 to implement programs approved by the agency’s State Small Business Credit Initiative (“SSBCI 2.0”)

Will need capacity to apply for funding; availability of opportunities and award sizes may vary; use of funds may be limited

Should not be primary source of funds but Board of Trustees and any Green Energy Trust staff should regularly check in on grant opportunities as possible supplementary sources of capital

Federal Relief Funds Hurricane recovery funds allocated to Puerto Rico through federal agencies (e.g., HUD, FEMA)

HUD Community Development Block Grants – Governor Pierluisi originally committed $400 million in HUD CDBG-MIT funds to Green Energy Trust in October 2021

Use of funds must conform to each agency’s requirements; difficulty accessing federal funding to date; Governor Pierluisi has backed off original $400 million commitment to Green Energy Trust

Likely not a dependable source of capitalization funds; can complement other funding sources if funds are not fully allocated to other purposes and Green Energy Trust is deemed an eligible recipient

Source Description

Green Bonds

Fixed-income instrument designed to raise capital for climate-related projects

Example

Connecticut Green Bank

– Raised capital for the purpose of increasing solar deployment in the state by issuing Green Liberty Bonds, which are backed by revenues generated from utilities purchasing Solar Home Renewable Energy Credits (“SHRECs”) to comply with the state’s renewable portfolio standard

Inflation Reduction Act

Bill signed into law in August 2022 with significant climate investment provisions

Greenhouse Gas Reduction Fund – $27 billion national green bank with mandated investment targets for local green banks and low-income / disadvantaged communities

Concerns/Challenges

Would necessitate a dedicated revenue stream for paying back bonds; Government of Puerto Rico’s existing financial issues with bondholders; political constraints of issuing more debt through bonds; lack of investor trust

Recommendation

Does not appear to be a viable option given existing circumstances

Will need capacity to apply for funds on a relatively short timeline; current uncertainty on how to apply for funds; federal government might be hesitant to provide Puerto Rico with more federal funds given financial difficulties and large available pool of recovery funds

Philanthropic/Impact

Investing Funds

Surcharges on Utility Bills

Grants or programrelated investments from foundations

Climate Access Fund

– Several funders are foundations, including the Baltimore Community Foundation

Should be a top priority given amount of funds available and eligibility of most Puerto Rican communities under Justice40’s “disadvantaged community” definition

Additional charge levied on electricity bills for a specific purpose

NY Green Bank –~$22 million of initial capitalization came from a “System Benefit Charge” tacked onto utility bills

Smaller scale funding amounts may only be available; requires developing relationships with foundations and having capacity to apply for funding; need to ensure that foundation’s priorities and mission are aligned with Green Energy Trust’s objectives

Political constraints of raising electricity bills; high electricity costs already faced by consumers because of island context; high poverty rates in Puerto Rico; PREPA’s historical difficulty recovering costs through electricity bills

Should not be primary source of funds but worth exploring as a supplementary capital source, particularly if any trustees have connections with aligned foundations

Does not appear to be a viable option given existing circumstances

Source Description Example Concerns/Challenges Recommendation

Utility Fee Payments Fees paid by utilities for not complying with a renewable portfolio standard, energy efficiency portfolio standard, or other clean energy policy

DC Green Bank – Initial source of funding ($7 million for 5 years) came from city’s renewable development fund, a pool of alternative compliance payments made by utilities and energy suppliers that do not meet DC’s carbon emission targets

Does not appear to be a viable option given existing circumstances

The Authors

Hannah Ceja

Hannah Ceja is a second-year MPA student, focusing on economics and development. Prior to her time at SPIA, she worked as a paralegal in eviction prevention in the Bronx, New York, studied in Mexico as a Fulbright Scholar, as well as worked on campaigns, and as a senior staffer for U.S. Representative Juan Vargas. She is grateful to have had the opportunity to learn from Puerto Rican advocates and officials, through this project.

James Duffy

James comes from a background in water resource management, arriving at SPIA from roles with the New Jersey state environmental agency, The Nature Conservancy, and grassroots watershed associations. A New Jersey native, James graduated from Rutgers University in 2018 with a degree in Ecology, Evolution, and Natural Resources. His studies at Princeton focus on energy policy and the green energy transition.

Cherrita Guy

Cherrita is a graduate student at Princeton University studying public finance and economic inequality. She has over 7 years of experience working with public sector agencies to craft solutions that scale mission impact, enhance public financial management, and improve service delivery.

Caroline Hays

Caroline came to Princeton from Washington, D.C., where she worked with city governments to improve their use of evidence and data through the What Works Cities Initiative. Prior to that, she worked at the Pew Charitable Trusts, researching and designing environmental policy initiatives. Caroline has a degree in public policy and biology from Claremont McKenna College and grew up on the Chesapeake Bay in Annapolis, MD.

Ryan Klaus

Ryan previously worked at YWCA Metropolitan Chicago, where he assessed the financial viability and potential impact of the organization’s new strategic initiatives. He holds a BBA in Finance from the University of Notre Dame and has focused on the intersection of climate finance, economic development, and environmental justice as a student in Princeton’s MPA program.

Hilary Landfried

Hilary Landfried is an MPA candidate at Princeton University, focusing on climate change and food security policy. She is an experienced strategic advisor and facilitator with experience working for USAID, USDA, and nonprofits.

Shua-Kym McLean

Shua attended Swarthmore College, where he earned a B.A in economics with a minor in history. Upon graduation, his interest in the challenges of governance and public policy led him to a career with Public Financial Management Group Consulting and subsequently KPMG, in their State and Local Government advisory practices. At Princeton, Shua has focused on the economic policy challenges facing developing states, with a particular eye to the development possibilities facing the Caribbean.

Kacie Rettig

Kacie was born and raised in New Jersey. She moved to Williamsburg, VA to attend the College of William & Mary where she graduated in 2016 with degrees in Economics and History. Prior to coming to Princeton, she worked in the United States Senate on conservation, natural resources, and climate issues.

Bryson Rose

Bryson Rose (he/him) is a native of Columbus, Ohio and a former NYC-based non-profit administrator. Upon graduation, Bryson plans to work in energy policy with a special focus on energy efficiency programs for electricity consumers.

Parker Wild

Parker previously worked for the National Renewable Energy Laboratory and the White House Office of Science and Technology Policy during the Biden Administration. He holds a B.S.E. in computer science from Princeton University and is currently studying energy policy at SPIA.

Endnotes

1. International Energy Agency. (2021, May). Net Zero by 2050 – Analysis. IEA. https://www.iea.org/reports/net-zero-by-2050

2. Five states updated or adopted new clean energy standards in 2021. (n.d.). www.eia.gov. https://www.eia.gov/todayinenergy/detail. php?id=51118

3. International Energy Agency. (2021, May). Net Zero by 2050 – Analysis. IEA. https://www.iea.org/reports/net-zero-by-2050

4. Puerto Rico Energy Public Policy Act, Act No. 17. (2019, April 11) https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2ingles/17-2019.pdf

5. U.S. Energy Information Administration. (2021, December 16) Puerto Rico Territory Energy Profile. U.S. Department of Energy. https:// www.eia.gov/state/print.php?sid=RQ

6. Puerto Rico | Data USA. (n.d.). Datausa.io. https://datausa.io/profile/geo/puerto-rico/

7. The White House. (2022, January 20). FACT SHEET: The Biden-Harris Administration Supports Puerto Rico’s Recovery and Renewal in its First Year in Office | The White House. https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/20/fact-sheet-the-bidenharris-administration-supports-puerto-ricos-recovery-and-renewal-in-its-first-year-in-office/

8. About the Puerto Rico Energy Bureau – PREB. (n.d.). Retrieved January 22, 2023, from https://energia.pr.gov/en/about-the-commission/

9. PR100 Six-Month Progress Update (Text Version). (n.d.). Www.nrel.gov. Retrieved January 23, 2023, from https://www.nrel.gov/news/ video/pr100-six-month-progress-update-text.html

10. Austin, A. (2022, May 2). Puerto Rico’s Public Debts: Accumulation and Restructuring (No. R46788). Congressional Research Service. 12. https://sgp.fas.org/crs/row/R46788.pdf.

11. Alexia Fernández Campbell. (2018, August 15). Puerto Rico power restored 11 months after Hurricane Maria. Vox; https://www.vox. com/identities/2018/8/15/17692414/puerto-rico-power-electricity-restored-hurricane-maria; It took 11 months to restore power to Puerto Rico after Hurricane Maria. A similar crisis could happen again.

12. Mazzei, P., Penn, I., & Robles, F. (2020, January 11). With Earthquakes and Storms, Puerto Rico’s Power Grid Can’t Catch a Break. The New York Times. https://www.nytimes.com/2020/01/10/us/puerto-rico-electricity-power-earthquake.html

13. U.S. Energy Information Administration. (2021, December 16) Puerto Rico Territory Energy Profile. U.S. Department of Energy. https:// www.eia.gov/state/print.php?sid=RQ

14. Ibid.

15. About Luma. (n.d.) LUMA. Retrieved January 4, 2023, from https://lumapr.com/about-luma/?lang=en

16. U.S. Energy Information Administration. (2021, December 16) Puerto Rico Territory Energy Profile. U.S. Department of Energy. https:// www.eia.gov/state/print.php?sid=RQ

17. PREPA. (2017). Puerto Rico Electric Power Authority Fiscal Plan. Puerto Rico Electric Power Authority. https://www.aafaf.pr.gov/assets/ fiscal-plan---pr-electric-power-authority.pdf

18. Ibid.

19. Special Investigation Committee Independent Investigator's Final Investigative Report. (n.d.). (pp. 112–150) Retrieved January 23, 2023 from .https://www.porturetiro.com/committee-updates/independent-investigator-publishes-report

20. Trabish, H.K. (2016, Jan. 13). How a new business model could get the Puerto Rico public utility out of debt. Utility Dive. https://www. utilitydive.com/news/how-a-new-business-model-could-get-the-puerto-rico-public-utility-out-of-de/411826/

21. Written Testimony of Tom Sanzillo, Director of Finance Institute for Energy Economics and Financial Analysis Before the House of Representatives Natural Resource Committee Hearing on the “Rebuilding and Privatization of the Puerto Rico Electric Power Authority

(PREPA).” (2019). https://www.congress.gov/116/meeting/house/109265/witnesses/HHRG-116-II00-Wstate-SanzilloT-20190409.pdf

22. Figueroa-Jaramillo, A. R. (2019, March 16). Written Statement. 116th Cong. United States House Committee on Natural Resources. https://www.congress.gov/event/116th-congress/house-event/LC65621/text?s=1&r=3

23. Government of Puerto Rico. (2016, January 15). About the Puerto Rico Energy Bureau. PREB. Retrieved December 2, 2022, from About the Puerto Rico https://energia.pr.gov/en/about-the-commission/#:~:text=The%20Puerto%20Rico%20Energy%20Bureau%20 %28PREB%29%20is%20the

24. Electric Competition | Federal Energy Regulatory Commission. (2022, August 6). www.ferc.gov. https://www.ferc.gov/industries-data/ electric/power-sales-and-markets/electric-competition

25. “Puerto Rico Electric Power System Transformation Act.” (June 21, 2018). https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/ PDF/2-ingles/120-2018.pdf.

26. Kunkel C. and Sanzillo T. IEEFA Puerto Rico: PREPA privatization will not create competitive market, will lead to more dysfunction. (2019, April 18). ieefa.org. Retrieved January 23, 2023, from https://ieefa.org/resources/ieefa-puerto-rico-prepa-privatization-will-notcreate-competitive-market-will-lead-more

27. Star, T. S. J. D. (2022, January 13). RFP to be issued for PREPA green generation & storage projects. San Juan Daily Star. https://www. sanjuandailystar.com/post/rfp-to-be-issued-for-prepa-green-generation-storage-projects

28. “Puerto Rico Integrated Resource Plan: 2018-2019.” Siemens Industry. (2019, June 7): Pages 10-5. https://aeepr.com/es-pr/QuienesSomos/ Ley57/Plan%20Integrado%20de%20Recursos/IRP2019%20-%20Ex%201.00%20-%20Main%20Report%20%20REV2%2006072019.pdf.

29. Austin, A. (2022). Puerto Rico’s Public Debts: Accumulation and Restructuring (No. R46788). Congressional Research Service. Page 9. https://sgp.fas.org/crs/row/R46788.pdf.

30. Ibid. p.13

31. Ibid. p. 12

32. About Us. (n.d.). Financial Oversight and Management Board for Puerto Rico. Retrieved December 1, 2022, from https://oversightboard. pr.gov/about-us/

33. Ruiz, J. (2022, June 14). An Unfulfilled Promise: Colonialism, Austerity, and the Puerto Rican Debt Crisis. Harvard Political Review. https://harvardpolitics.com/unfulfilled-promise-2/

34. Government Accountability Office. (2019). 2017 Hurricane Season: Federal Support for Electricity Grid Restoration in the U.S. Virgin islands and Puerto Rico (GAO Publication No. 19-296). Washington, D.C.: U.S. Government Printing Office. https://www.gao.gov/assets/ gao-19-296.pdf

35. Federal Emergency Management Agency. (2017, September 9). Initial Notice. https://www.fema.gov/disaster-federal-register-notice/ initial-notice-1152.

36. Federal Emergency Management Agency. (2017, September 20). Initial Notice. https://www.fema.gov/disaster-federal-register-notice/ initial-notice-1159.

37. Marxuach, S. (2020). Taking Stock of Puerto Rico’s Reconstruction Process. Center for a New Economy. https://grupocne.org/2021/05/27/ taking-stock-of-puerto-ricos-reconstruction-process/

38. Marxuach, S. (2020). Taking Stock of Puerto Rico’s Reconstruction Process. Center for a New Economy. https://grupocne.org/2021/05/27/ taking-stock-of-puerto-ricos-reconstruction-process/

39. Government Accountability Office. (2019). Puerto Rico Hurricanes, Status of FEMA Funding, Oversight and Recovery Challenges. (GAO Publication No. 19-256). Washington, D.C.: U.S. Government Printing Office. https://www.gao.gov/assets/700/698051.pdf.

40. Laboy, M. (2022). Written Testimony for Hybrid Oversight Hearing on "Puerto Rico's Post-Disaster Reconstruction & Power Grid Development". U.S. House Committee on Natural Resources. 117th Congress. U.S. House of Representatives Committee Repository. Retrieved January 23, 2023 from, HHRG-117-II00-Wstate-LaboyM-20221117.pdf (house.gov)

41. Marxuach, S. (2020). Taking Stock of Puerto Rico’s Reconstruction Process. Center for a New Economy. https://grupocne.org/2021/05/27/ taking-stock-of-puerto-ricos-reconstruction-process/

42. “Road to Recovery Project Execution.” Central Office for Recovery, Reconstruction and Resilience. https://recovery.pr.gov/en/road-torecovery/pa-qpr/map?sector=2&category=6&qprPeriod=13.

43. Laboy, M. (2022). Written Testimony for Hybrid Oversight Hearing on "Puerto Rico's Post-Disaster Reconstruction & Power Grid Development". U.S. House Committee on Natural Resources. 117th Congress. U.S. House of Representatives Committee Repository. Retrieved January 23, 2023 from, HHRG-117-II00-Wstate-LaboyM-20221117.pdf (house.gov)

44. Bipartisan Budget Act of 2018. (n.d.). https://www.congress.gov/115/plaws/publ123/PLAW-115publ123.pdf; Sec. 20601, Bipartisan Budget Act of 2018. The Bipartisan Budget Act of 2018 (BBA) gave additional direction for how the funds authorized under the Maria and Irma disaster declarations should be used. Section 20601 of the BBA allows for assistance provided under the Alternative Procedures section of the Stafford Act (Section 428) to be allocated to “(1) replace or restore the function of a facility or system to industry standards without regard to pre-disaster condition of the facility or system; and (2) replace or restore components of the facility or system not damaged by the disaster where necessary to fully effectuate the replacement or restoration of disaster-damaged components to restore the function of the facility or system to industry standards.”

45. Office of Senator Chuck Schumer. (2021, February 19). Schumer, Velázquez announce $9.4 billion FEMA grant recently awarded to Puerto Rico Electric Power Authority (prepa) can be used to build micro-grids, underground transmission lines & power grid that supports clean, renewable electricity; clean & reliable energy can be part island’s ongoing recovery & reconstruction efforts [Press release]. https:// www.schumer.senate.gov/newsroom/press-releases/schumer-velzquez-announce-94-billion-fema-grant-recently-awarded-to-puerto-ricoelectric-power-authority-prepa-can-be-used-to-build-micro-grids-underground-transmission-lines-and-power-grid-that-supports-cleanrenewable-electricity-clean_reliable-energy-can-be-part-islands-ongoing-recovery--reconstruction-efforts

46. “Puerto Rico Electric Power System Transformation Act.” (2018, June 21). Retrieved January 23, 2023, from https://bvirtualogp.pr.gov/ ogp/Bvirtual/leyesreferencia/PDF/2-ingles/120-2018.pdf

47. Skeel, D., Rosa, B., Nixon, J., Peterson, J. Medina, A., Biggs, A., Gonzalez, A. (2021, May 12). Op-ed: Reality without LUMA. Financial Oversight and Management Board for Puerto Rico. https://oversightboard.pr.gov/op-ed-reality-without-luma/

48. Marxuach, S. M. (2022, September 13). Another Look at the PREPA-LUMA Agreement. CNE – Centro Para Una Nueva Economía –Center for a New Economy. https://grupocne.org/2022/09/13/another-look-at-the-prepa-luma-agreement/

49. Scurria, A. (2022, September 2019). MarketWatch. https://www.marketwatch.com/story/puerto-rico-bondholders-want-power-utilitystripped-of-bankruptcy-protections-271663604440

50. Blunt, K., & Scurria, A. (2022, November 27). Puerto Rico’s Power Failures Worsen After Private Takeover. Wall Street Journal. https:// www.wsj.com/articles/puerto-rico-power-grid-luma-prepa-11669415445

51. Puerto Rico’s Post-Disaster Reconstruction & Power Grid Development: Hearing before the U.S. House of Representatives Committee on Natural Resources, 117th Cong. (2022). Minute 1:53:02 https://www.congress.gov/committees/video/house-natural-resources/ hsii00/0AUK_jNycxI; Upon being asked by Chair Grijalva whether the contracts included penalties, LUMA did not directly address the existence of penalties, even in the supplemental contract, This exchange can be found in minute 06:03:28.

52. Puerto Rico’s post-disaster reconstruction & power grid development. (2022) Hearing before the U.S. House of Representatives Committee on Natural Resources, 117th Congress. https://naturalresources.house.gov/hearings/puerto-ricos-post-disaster-reconstructionand-power-grid-development1

53. Office of U.S. Senator Robert Menendez. (2022, November 15). Menendez, Gillibrand lead colleagues in requesting critical resources for disaster recovery and resilience in Puerto Rico [Press release]. https://www.menendez.senate.gov/newsroom/press/menendez-gillibrandlead-colleagues-in-requesting-critical-resources-for-disaster-recovery-and-resilience-in-puerto-rico

54. Acevedo, N. (2022, Oct.5). Lawmakers question Luma Energy's ability to improve Puerto Rico's fragile power grid. https://www.nbcnews. com/news/latino/lawmakers-question-luma-energys-ability-improve-puerto-ricos-fragile-p-rcna50896

55. Cambio PR, El Puente, Sierra Club of Puerto Rico, UTIER, Comité Diálogo Ambiental, Coalición de Organizaciones de Anti-Incineración, Amigos Rio Guaynabo. (2021, Nov 10). https://earthjustice.org/sites/default/files/files/grijalva_and_velazquez_letter_luma_11-10-21.pdf

56. Blunt, K., Scurria, A. (2022, November 27) Puerto Rico’s Power Failures Worsen After Private Takeover. The Wall Street Journal. https:// www.wsj.com/articles/puerto-rico-power-grid-luma-prepa-11669415445

57. Puerto Rico sets 7th electric rate increase in just a year. (2022, June 29). AP NEWS. https://apnews.com/article/caribbean-power-outagespuerto-rico-edf798f90ba5c7e0344b1ad6f379e687

58. Blunt, K., Scurria, A. (2022, November 27) Puerto Rico’s Power Failures Worsen After Private Takeover. The Wall Street Journal. https:// www.wsj.com/articles/puerto-rico-power-grid-luma-prepa-11669415445

59. Kaufman, A.C. (2022, October 21). As Puerto Rico’s Privatized Power Grid Collapses, Its Owner Eyes A Bigger Payday. HuffPost (formerly ‘The Huffington Post’). https://www.huffpost.com/entry/puerto-rico-power-grid-luma-energy-hurricane-damage_n_6349f7cee4b08e0e608 3b06c

60. (2022, Nov. 1). LUMA Reaffirms Commitment to Energy Transformation in Puerto Rico During SESA Summit [Press release]. https:// lumapr.com/news/luma-reaffirms-commitment-to-energy-transformation-in-puerto-rico-during-sesa-summit/?lang=en

61. Kaufman, A.C. (2022, October 21). As Puerto Rico’s Privatized Power Grid Collapses, Its Owner Eyes A Bigger Payday. HuffPost (formerly ‘The Huffington Post’). https://www.huffpost.com/entry/puerto-rico-power-grid-luma-energy-hurricane-damage_n_6349f7cee4b08e0e608 3b06c

62. Acevedo, Nicole. (2022, Nov. 30). Puerto Rico extends Luma Energy contract despite concerns over power outages. https://www.nbcnews. com/news/latino/puerto-rico-extends-luma-energy-contract-power-outage-concerns-rcna59465

63. Notice of Voluntary Filing: Summary of Materials Exchanged in Mediation. (2022). PREPA. https://drive.google.com/file/ d/1UkDGcHokW4w8kq02WmWgG4_NXY4A2LJR/view

64. Sanzillo, T. (2022, April 1). Puerto Rico Debt Letter. https://ieefa.org/wp-content/uploads/2022/04/Sanzillo-Puerto-Rico-Debt-Letter_ April-2022.pdf

65. Scurria, A. (2022, September 19). Puerto Rico Bondholders Want Power Utility Stripped of Bankruptcy Protections. MarketWatch. https://www.marketwatch.com/story/puerto-rico-bondholders-want-power-utility-stripped-of-bankruptcy-protections-271663604440

66. Puerto Rico’s Debt Restructuring Process. Financial Oversight and Management Board of Puerto Rico. Retrieved on January 23, 2023 from, https://oversightboard.pr.gov/debt/

67. Sanzillo, T. (2022, December 22). New Puerto Rico bond deal: Another unsustainable transaction that makes matters worse. Ieefa. org. Retrieved January 23, 2023, from https://ieefa.org/resources/new-puerto-rico-bond-deal-another-unsustainable-transaction-makesmatters-worse

68. Sanzillo, T. (2022, December 22). New Puerto Rico bond deal: Another unsustainable transaction that makes matters worse. Ieefa. org. Retrieved January 23, 2023, from https://ieefa.org/resources/new-puerto-rico-bond-deal-another-unsustainable-transaction-makesmatters-worse

69. Sanzillo, T. (2022, December 22). New Puerto Rico bond deal: Another unsustainable transaction that makes matters worse. Ieefa. org. Retrieved January 23, 2023, from https://ieefa.org/resources/new-puerto-rico-bond-deal-another-unsustainable-transaction-makesmatters-worse

70. Sanzillo, T. (2022, December 22). New Puerto Rico bond deal: Another unsustainable transaction that makes matters worse. Ieefa. org. Retrieved January 23, 2023, from https://ieefa.org/resources/new-puerto-rico-bond-deal-another-unsustainable-transaction-makesmatters-worse

71. Energy Information Administration. (2022). Puerto Rico Territory Energy Profile. Retrieved on January 23, 2023 from, https://www. eia.gov/state/print.php?sid=RQ

72. Riviera de la Cruz, A. (2022) In-class interview with Angel de la Cruz Riviera.

73. Méndez-Lázaro, P. A., Pérez-Cardona, C. M., Rodríguez, E., Martínez, O., Taboas, M., Bocanegra, A., & Méndez-Tejeda, R. (2018). Climate change, heat, and mortality in the tropical urban area of San Juan, Puerto Rico. International journal of biometeorology, 62(5), 699707.

74. Marxuach, S. (2019, April 9). Written Testimony. House Natural Resources Committee. Retrieved January 23, 2023, from http://grupocne. org/wp-content/uploads/2019/04/HNR-Hearing-Written-Testimony-April-9-2019.pdf

75. Ward, A. (2021, Dec. 11). Poverty in Puerto Rico. https://storymaps.arcgis.com/stories/a2683bfa7dae43749b28d0e863070f25

76. Lakhani, N. (2022) Thousands still without power weeks after Hurricane Fiona hit Puerto Rico. The Guardian. Retrieved on January 23, 2023 from, Thousands still without power weeks after Hurricane Fiona hit Puerto Rico | Hurricane Fiona | The Guardian

77. Sanchez, L. (2022) In Remote Parts of Puerto Rico, Hurricane Fiona Made Life Even Harder. The New York Times. Retrieved on January 23, 2023 from, In Remote Parts of Puerto Rico, Hurricane Fiona Made Life Even Harder - The New York Times (nytimes.com)

78. Ding, J., Zhong, J., Yang, Y., Li, B., Shen, G., Su, Y., ... & Tao, S. (2012). Occurrence and exposure to polycyclic aromatic hydrocarbons and their derivatives in a rural Chinese home through biomass fuelled cooking. Environmental Pollution, 169, 160-166.

79. National Fire Protection Association Research Division. (2022) Top Fire Causes. https://www.nfpa.org/Public-Education/Fire-causesand-risks/Top-fire-causes/Candles

80. Sanchez, R. (2022) Misery, yet again, for Puerto Ricans still recovering from Maria. ABC 17 News. Misery, yet again, for Puerto Ricans still recovering from Maria - ABC17NEWS

81. Allen, G. (2022, September 24). Fiona’s floods devastated their homes. These residents are ready to start over. (2022, September 24). New Hampshire Public Radio. https://www.nhpr.org/2022-09-24/fionas-floods-devastated-their-homes-these-residents-are-ready-to-start-over

82. What is Energy Justice? (n.d.). Initiative for Energy Justice. https://iejusa.org/

83. Gould, W. A., Diaz E. L., Alvaraez-Berrios N. L., et al. (2018) U.S. Caribbean. In Fourth National Climate Assessment. U.S. Global Change Research Program. https://nca2018.globalchange.gov/chapter/20/

84. World Bank. (2021) Puerto Rico. Climate Change Knowledge Portal. https://climateknowledgeportal.worldbank.org/country/puertorico/vulnerability

85. Understanding Kuznets Curve: The Basis for Trickle-Down Theory. (n.d.). ThoughtCo. Retrieved October 14, 2022, from Understanding Kuznets Curve (thoughtco.com)

86. Understanding Kuznets Curve: The Basis for Trickle-Down Theory. (n.d.). ThoughtCo. Retrieved October 14, 2022, from Understanding Kuznets Curve (thoughtco.com)

87. Understanding Kuznets Curve: The Basis for Trickle-Down Theory. (n.d.). ThoughtCo. Retrieved October 14, 2022, from Understanding Kuznets Curve (thoughtco.com)

88. Understanding Kuznets Curve: The Basis for Trickle-Down Theory. (n.d.). ThoughtCo. Retrieved October 14, 2022, from Understanding Kuznets Curve (thoughtco.com)

89. Inequality in Puerto Rico. (n.d.). Harvard Review of Latin America. In archive.revista.drclass.harvard.edu. Retrieved January 22, 2023, from Inequality in Puerto Rico | ReVista (harvard.edu)

90. Inequality in Puerto Rico. (n.d.). Harvard Review of Latin America. In archive.revista.drclas.harvard.edu. Retrieved January 22, 2023, from Inequality in Puerto Rico | ReVista (harvard.edu)

91. Piketty, T. (2015). The Economics of Inequality. Harvard University Press. [Full Book]

92. Stern, D. (2018). Environmental Kuznets Curve - an overview | ScienceDirect Topics. www.sciencedirect.com. https://www.sciencedirect. com/topics/earth-and-planetary-sciences/environmental-kuznets-curve

93. Stern, D. (2018). Environmental Kuznets Curve - an overview | ScienceDirect Topics. www.sciencedirect.com. https://www.sciencedirect. com/topics/earth-and-planetary-sciences/environmental-kuznets-curve

94. U.S. Energy Information Administration. (2021, Dec. 16). Puerto Rico Territory Energy Profile. EIA.gov. https://www.eia.gov/state/print. php?sid=RQ

95. Ibid.

96. Abel, J., Bram, J., Deitz, R., Klitgaard, T., & Orr, J. (2012). Report on the competitiveness of Puerto Rico's economy. New York City, NY: US Federal Reserve Bank of New York.https://www.newyorkfed.org/medialibrary/media/regional/puertorico/report.pdf

97. Jones Act. (2022, March). LII / Legal Information Institute. Cornell Law School. https://www.law.cornell.edu/wex/jones_act

98. Frittelli, J. (2019). Shipping Under the Jones Act: Legislative and Regulatory Background. Congressional Research Service, 45715. https:// www.everycrsreport.com/reports/R45725.html

99. Heavenrich, S. (2022). The neglected port preference Clause and the Jones Act. https://www.yalelawjournal.org/pdf/132.2_Heavenrich_ kh391k2m.pdf

100. Kohlman, M. (2022, Apr. 13). Feature: Faraway war slows Puerto Rico's refined oil product imports, especially from Russia, Baltics. S&P Global, Commodity Insights. https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/041322-feature-farawaywar-slows-puerto-ricos-refined-oil-product-imports-especially-from-russia-baltics

101. U.S. Energy Information Administration. (2021, Dec. 16). Puerto Rico Territory Energy Profile. EIA.gov. https://www.eia.gov/state/ print.php?sid=RQ

102. Abel, J., Bram, J., Deitz, R., Klitgaard, T., & Orr, J. (2012). Report on the competitiveness of Puerto Rico's economy. New York City, NY: US Federal Reserve Bank of New York.https://www.newyorkfed.org/medialibrary/media/regional/puertorico/report.pdf

103. Abel, J., Bram, J., Deitz, R., Klitgaard, T., & Orr, J. (2012). Report on the competitiveness of Puerto Rico's economy. New York City, NY: US Federal Reserve Bank of New York.https://www.newyorkfed.org/medialibrary/media/regional/puertorico/report.pdf

104. Support for Permanently Exempting Puerto Rico from the Jones Act. (2018, May 21). New York City Bar. https://www.nycbar.org/ member-and-career-services/committees/reports-listing/reports/detail/support-for-permanently-exempting-puerto-rico-from-the-jonesact

105. Génesis y Desarrollo de los Sistemas Hidroelectricos en Puerto Rico. (1992). Autoridad de Energía Eléctrica de Puerto Rico. Published on Oct 25, 2018. https://issuu.com/coleccionpuertorriquena/docs/g_nesis_y_desarrollo_de_los_sistema

106. Geoff Burrows. (2017). Rural Hydro-Electrification and the Colonial New Deal: Modernization, Experts, and Rural Life in Puerto Rico, 1935–1942. Agricultural History, 91(3), 303. https://doi.org/10.3098/ah.2017.091.3.293

107. Matthew Wills (2022). The New Deal Comes To Puerto Rico. https://daily.jstor.org/the-new-deal-comes-to-puerto-rico/

108. Génesis y Desarrollo de los Sistemas Hidroelectricos en Puerto Rico. (1992). Autoridad de Energía Eléctrica de Puerto Rico. Published on Oct 25, 2018. https://issuu.com/coleccionpuertorriquena/docs/g_nesis_y_desarrollo_de_los_sistema

109. Geoff Burrows. (2017). Rural Hydro-Electrification and the Colonial New Deal: Modernization, Experts, and Rural Life in Puerto Rico, 1935–1942. Agricultural History, 91(3), 301. https://doi.org/10.3098/ah.2017.091.3.293

110. Joseph Guzman (2022, Sep. 8). Here are 10 of the worst hurricanes to hit the US. The Hill. https://thehill.com/changing-america/ resilience/natural-disasters/3665433-here-are-10-of-the-worst-hurricanes-to-hit-the-us/

111. Angela Fritz (2017, Sep. 19). Puerto Rico has a long history with tropical storms. None of them were like Hurricane Maria. https://www. washingtonpost.com/news/capital-weather-gang/wp/2017/09/19/puerto-rico-has-a-long-history-with-tropical-storms-none-of-themwere-like-hurricane-maria/

112. Geoff Burrows. (2017). Rural Hydro-Electrification and the Colonial New Deal: Modernization, Experts, and Rural Life in Puerto Rico, 1935–1942. Agricultural History, 91(3), 293–319. https://doi.org/10.3098/ah.2017.091.3.293

113. Sánchez, C. R. (2021). Reconstrucción económica y social de Puerto Rico en el siglo XX: la PRERA y la PRRA. In Visiones transversales de Puerto Rico y el Caribe (pp. 165-182). Universidad Ana G. Méndez.

114. Sánchez, C. R. (2021). Reconstrucción económica y social de Puerto Rico en el siglo XX: la PRERA y la PRRA. In Visiones transversales de Puerto Rico y el Caribe (pp. 165-182). Universidad Ana G. Méndez.

115. Burrows, Geoff G., "The New Deal in Puerto Rico: Public Works, Public Health, and the Puerto Rico Reconstruction Administration, 1935-1955" (2014). CUNY Academic Works. 203. https://academicworks.cuny.edu/gc_etds/315/

116. Mathews, T. G. (1957). Puerto Rican Politics and the New Deal. Columbia University. [Book Available from ProQuest Dissertations & Theses Global. (301951745).] https://login.ezproxy.princeton.edu/login?url=https://www.proquest.com/dissertations-theses/puerto-ricanpolitics-new-deal/docview/301951745/se-2

117. Burrows, G. (2017). Rural Hydro-Electrification and the Colonial New Deal: Modernization, Experts, and Rural Life in Puerto Rico, 1935–1942. Agricultural History, 91(3), 298. https://doi.org/10.3098/ah.2017.091.3.293

118. Wills, M. (2022, July 10). The New Deal Comes To Puerto Rico. JSTOR Daily. https://daily.jstor.org/the-new-deal-comes-to-puerto-rico/

119. Burrows, G. (2017). Rural Hydro-Electrification and the Colonial New Deal: Modernization, Experts, and Rural Life in Puerto Rico, 1935–1942. Agricultural History, 91(3), 299. https://doi.org/10.3098/ah.2017.091.3.293

120. Génesis y Desarrollo de los Sistemas Hidroelectricos en Puerto Rico. (1992). Autoridad de Energía Eléctrica de Puerto Rico. Published on Oct 25, 2018. 4. https://issuu.com/coleccionpuertorriquena/docs/g_nesis_y_desarrollo_de_los_sistema

121. Génesis y Desarrollo de los Sistemas Hidroelectricos en Puerto Rico. (1992). Autoridad de Energía Eléctrica de Puerto Rico. Published on Oct 25, 2018. 4. https://issuu.com/coleccionpuertorriquena/docs/g_nesis_y_desarrollo_de_los_sistema

122. Fresneda, J. L. B. (2008). El Banco de Fomento de Puerto Rico y las primeras emisiones de bonos de la Autoridad de las Fuentes Fluviales 1941-1948. Revista de Ciencias Sociales, 19, 116. https://revistas.upr.edu/index.php/rcs/article/view/7419

123. Génesis y Desarrollo de los Sistemas Hidroelectricos en Puerto Rico. (1992). Autoridad de Energía Eléctrica de Puerto Rico. Published on Oct 25, 2018. 15. https://issuu.com/coleccionpuertorriquena/docs/g_nesis_y_desarrollo_de_los_sistema

124. Fresneda, J. L. B. (2008). El Banco de Fomento de Puerto Rico y las primeras emisiones de bonos de la Autoridad de las Fuentes Fluviales 1941-1948. Revista de Ciencias Sociales, 19, 113. https://revistas.upr.edu/index.php/rcs/article/view/7419

125. Juan, A. (2019). Puerto Rico’s Homeland Security Readiness: Redesigning the island’s Power Grid to Improve Its Resiliency. Homeland Security Affairs, https://login.ezproxy.princeton.edu/login?url=https://www.proquest.com/scholarly-journals/puerto-rico-shomeland-security-readiness/docview/2266265604/se-2

126. Department of Energy. (1982). Territorial Energy Assessment, Final Report. https://ntrl.ntis.gov/NTRL/dashboard/searchResults/ titleDetail/DE83005492.xhtml

127. Standen, A. (2020). Confronting colonial capitalism. New Labor Forum, 29(1), 104–108. https://doi.org/10.1177/1095796019892612

128. Rico, T. P. P. the Section 936 Tax Credit.(1993). Report to the Chairman, Committee on Finance, US Senate. https://www.gao.gov/assets/ ggd-93-109.pdf

129. Ruiz, J. (2022, June 14). An Unfulfilled Promise: Colonialism, Austerity, and the Puerto Rican Debt Crisis. Harvard Political Review. Retrieved on January 23, 2023 from, An Unfulfilled Promise: Colonialism, Austerity, and the Puerto Rican Debt Crisis - Harvard Political Review (harvardpolitics.com)

130. Ibid.

131. Ibid.

132. Austin, A. (2022). Puerto Rico’s Public Debts: Accumulation and Restructuring (No. R46788). Congressional Research Service. https:// sgp.fas.org/crs/row/R46788.pdf. Figure 1, p.4.

133. Ibid.

134. Harris, R. (2018, May 29). Study Puts Puerto Rico Death Toll From Hurricane Maria Near 5,000. National Public Radio. https://www. npr.org/sections/health-shots/2018/05/29/615120123/study-puts-puerto-rico-death-toll-at-5-000-from-hurricane-maria-in-2017

135. Federal Emergency Management Agency. (2017). Puerto Rico; Amendment No. 5 to Notice of a Major Disaster Declaration. https:// www.govinfo.gov/content/pkg/FR-2017-11-16/pdf/2017-24908.pdf

136. Laboy, M. (2022). Written Testimony for Hybrid Oversight Hearing on "Puerto Rico's Post-Disaster Reconstruction & Power Grid Development". U.S. House Committee on Natural Resources. 117th Congress. U.S. House of Representatives Committee Repository. Retrieved January 23, 2023 from, HHRG-117-II00-Wstate-LaboyM-20221117.pdf (house.gov)

137. Marxuach, S. (2020). Taking Stock of Puerto Rico’s Reconstruction Process. Center for a New Economy. https://grupocne.org/2021/05/27/ taking-stock-of-puerto-ricos-reconstruction-process/

138. Marxuach, S. (2020). Taking Stock of Puerto Rico’s Reconstruction Process. Center for a New Economy. https://grupocne.org/2021/05/27/ taking-stock-of-puerto-ricos-reconstruction-process/

139. Government Accountability Office. (2021). FEMA Made Progress in Approving Projects, But Should Identify and Assess Risks to the Recovery. (GAO Publication No. 21-264). Washington, D.C.: U.S. Government Printing Office. GAO-21-264, PUERTO RICO RECOVERY: FEMA Made Progress in Approving Projects, But Should Identify and Assess Risks to the Recovery

140. Laboy, M. (2022). Written Testimony for Hybrid Oversight Hearing on "Puerto Rico's Post-Disaster Reconstruction & Power Grid Development". U.S. House Committee on Natural Resources. 117th Congress. U.S. House of Representatives Committee Repository. Retrieved January 23, 2023 from, HHRG-117-II00-Wstate-LaboyM-20221117.pdf (house.gov)

141. Government Accountability Office. (2021). FEMA Made Progress in Approving Projects, But Should Identify and Assess Risks to the Recovery. (GAO Publication No. 21-264). Washington, D.C.: U.S. Government Printing Office. GAO-21-264, PUERTO RICO RECOVERY: FEMA Made Progress in Approving Projects, But Should Identify and Assess Risks to the Recovery

142. Ibid.

143. Laboy, M. (2022). Written Testimony for Hybrid Oversight Hearing on "Puerto Rico's Post-Disaster Reconstruction & Power Grid Development". U.S. House Committee on Natural Resources. 117th Congress. U.S. House of Representatives Committee Repository. Retrieved January 23, 2023 from, HHRG-117-II00-Wstate-LaboyM-20221117.pdf (house.gov)

144. What is a Green Bank? Coalition for Green Capital. (n.d.). Retrieved November 28, 2022, from https://coalitionforgreencapital.com/ what-is-a-green-bank/

145. Winters, J. (2022, August 16). Biden signs the Inflation Reduction Act into law. Grist. Retrieved November 28, 2022, from https://grist. org/politics/biden-signs-the-inflation-reduction-act-into-law/

146. American Green Bank Consortium. (n.d.). Retrieved November 28, 2022, from https://greenbankconsortium.org/

147. About Us – Making Green Energy Accessible: CT Green Bank. Connecticut Green Bank. (n.d.). Retrieved November 28, 2022, from https://www.ctgreenbank.com/about-us/ 148. Ibid.

149. Societal Impact Report. Connecticut Green Bank. (n.d.). Retrieved November 28, 2022, from https://www.ctgreenbank.com/wpcontent/uploads/2022/08/FY12-FY22-CGB-ImpactReport-8242022.pdf

150. “Puerto Rico Energy Public Policy Act” [17-2019]. (2019, April 11). Retrieved November 28, 2022, from https://bvirtualogp.pr.gov/ogp/ Bvirtual/leyesreferencia/PDF/2-ingles/17-2019.pdf

151. McPhaul, J. (2021, October 5). Green Energy Development gets $400 million federal injection. San Juan Daily Star. Retrieved November 28, 2022, from https://www.sanjuandailystar.com/post/green-energy-development-gets-400-million-federal-injection

152. Board of Directors. Connecticut Green Bank. (n.d.). Retrieved November 28, 2022, from https://www.ctgreenbank.com/about-%20us/ governance/board-of-directors/

153. NY Green Bank. Agent for Greater Private Sector Investment in Sustainable Infrastructure. NYSERDA. (n.d.). Retrieved November 28, 2022, from https://greenbank.ny.gov/About/About

154. Who We Are. The Climate Access Fund. (n.d.). Retrieved November 28, 2022, from https://www.climateaccessfund.org/who-we-are

155. What is a Green Bank. Coalition for Green Capital. (n.d.). Retrieved November 28, 2022, from https://coalitionforgreencapital.com/ what-is-a-green-bank/

156. Green Banks in the United States. American Green Bank Consortium. (2021, May). Retrieved November 28, 2022, from https://static1. squarespace.com/static/59bc05f0c534a543a9f96b0d/t/609a872db219bc4ce685a281/1620739886886/2021%20Annual%20Industry%20 Report%20Final.pdf

157. “Puerto Rico Energy Public Policy Act” [17-2019]. (2019, April 11). Retrieved November 28, 2022, from https://bvirtualogp.pr.gov/ogp/ Bvirtual/leyesreferencia/PDF/2-ingles/17-2019.pdf

158. McPhaul, J. (2021, October 5). Green Energy Development gets $400 million federal injection. San Juan Daily Star. Retrieved November 28, 2022, from https://www.sanjuandailystar.com/post/green-energy-development-gets-400-million-federal-injection

159. Ibid.

160. Explore the Map. (2022, Nov. 22). Climate and Economic Justice Screening Tool. https://screeningtool.geoplatform.gov/en/#3.39/25.3/90.65

161. 50% Con Sol. (n.d.) Casa Pueblo. Retrieved January 6, 2023, from https://casapueblo.org/que-significa-50consol/

162. Programmatic Focuses: Water, Energy, Housing, Economic Development and Education. (n.d.) Fundación Comunitaria de Puerto Rico. Retrieved Jan. 6, 2023, from https://www.fcpr.org/enfoque/

163. Menon, S. (2022, Sep. 22). Keeping the lights on: Puerto Rico, five years after Hurricane Maria. Environmental Defense Fund. https:// www.edf.org/article/keeping-lights-puerto-rico-five-years-after-hurricane-maria

164. Cooperativa Hidroeléctrica. (n.d.) Retrieved Jan. 6, 2023, from https://cooperativahidroelectrica.coop

165. “U.S. Census Bureau Quickfacts: Puerto Rico.” U.S. Census, https://www.census.gov/quickfacts/fact/table/PR/PST045221

166. Marcos, C. M., & Rodriguez, E. P. (2022, May 9). Solar Power Offers Puerto Ricans a Lifeline but Remains an Elusive Goal. The New York Times. https://www.nytimes.com/2022/05/09/business/energy-environment/puerto-rico-solar-power.html

167. “U.S. Census Bureau Quickfacts: Puerto Rico.” U.S. Census, https://www.census.gov/quickfacts/fact/table/PR/PST045221

168. Building Technologies Office. (2017, January). Saving Energy and Money with Appliance and Equipment Standards in the United States. United States Department of Energy. Retrieved on January 23, 2023 from, https://www.energy.gov/sites/prod/files/2017/01/f34/ Appliance%20and%20Equipment%20Standards%20Fact%20Sheet-011917_0.pdf

169. Reglamento Conjunto. (2018). Junta De Planificación. Retrieved January 23, 2023 from, https://jp.pr.gov/reglamento-conjunto/

170. Minimum Housing Code Weatherization Ordinance – Burlington Electric Department. (n.d.). www.burlingtonelectric.com. Retrieved January 23, 2023, from https://www.burlingtonelectric.com/weatherization-ordinance/

171. IEA. “Accelerating Energy Efficiency: What Governments Can Do Now to Deliver Energy Savings – Analysis.” IEA, https://www.iea.org/ commentaries/accelerating-energy-efficiency-what-governments-can-do-now-to-deliver-energy-savings.

172. “Weatherization Assistance Program - Energy.” Office of Energy Efficiency & Renewable Energy, U.S. Department of Energy, https:// www.energy.gov/sites/default/files/2021/01/f82/WAP-fact-sheet_2021_0.pdf.

173. Sergio M. Marxuach. “Analysis of a Long-Term Agreement for the Operation and Management of Puerto Rico’s Transmission and Distribution System.” CNE. (August 26, 2020). https://grupocne.org/2020/08/26/analysis-of-a-long-term-agreement-for-the-operation-andmanagement-of-puerto-ricos-transmission-and-distribution-system/#1617801744657-9034078c-efa0.

174. “Electric Competition.” Federal Energy Regulatory Commission. (August 6, 2022). https://www.ferc.gov/industries-data/electric/ power-sales-and-markets/electric-competition.

175. “Federal Power Act.” (June 10, 1920). https://www.energy.gov/sites/prod/files/2019/10/f67/Federal%20Power%20Act_2019_508_0.pdf.

176. Kunkel, C., & Sanzillo, T. IEEFA Puerto Rico: PREPA Privatization Will Not Create Competitive Market, Will Lead to More Disfunction. Institute for Energy Economics and Financial Analysis. (April 18, 2019). https://ieefa.org/resources/ieefa-puerto-rico-prepa-privatizationwill-not-create-competitive-market-will-lead-more.

177. Marxuach, S. M. (2020, August 27). Analysis of a Long-Term Agreement for the Operation and Management of Puerto Rico’s Transmission and Distribution System. CNE – Centro Para Una Nueva Economía – Center for a New Economy. https://grupocne.org/2020/08/26/analysisof-a-long-term-agreement-for-the-operation-and-management-of-puerto-ricos-transmission-and-distribution-system/#16178017446579034078c-efa0

178. County of Maui. (2015, December 23). Analysis of Alternative Forms of Ownership and Alternative Business Models for Maui County's Electric Utility Company.” Guernsey. Retrieved on January 23, 2023 from, https://media.mauinow.com/file/mauinow/2016/01/Analysis-of-

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179. Campbell, R. J., Clark, C.E., & Austin, D.A. (2017, November 16). Repair and Rebuild: Options for Electric Power in Puerto Rico. Congressional Research Service. https://sgp.fas.org/crs/row/R45023.pdf.

180. Puerto Rico Energy Public Policy Act. (2019, April 11). Retrieved January 23, 2023 from, https://bvirtualogp.pr.gov/ogp/Bvirtual/ leyesreferencia/PDF/2-ingles/0017-2019.pdf.

181. Pierpont, B. (2020, December). A Market Mechanism for Long-Term Energy Contracts to Support Electricity System Decarbonization. World Resources Institute. https://media.rff.org/documents/pierpont-long-term-electricity-markets-paper-dec-2020-final.pdf.

182. Organization for Economic Cooperation and Development. (2016). Being an Independent Regulator, The Governance of Regulators. OECD Publishing, Paris. https://doi.org/10.1787/9789264255401-en

183. Ibid.

184. PREB launches RFP for next round of Tranche 2 green energy projects. The San Juan Daily Star. Retrieved on 29 September, 2022 from, https://www.sanjuandailystar.com/post/preb-launches-rfp-for-next-round-of-tranche-2-green-energy-projects

185. Puerto Rico sets 7th electric rate increase in just a year. (2022, June 29). The Associated Press. Retrieved on January 23, 2023 from, Puerto Rico sets 7th electric rate increase in just a year | AP News

186. Douglas, S., & Meijer, A. (2016). Transparency and public value—Analyzing the transparency practices and value creation of public utilities. International Journal of Public Administration, 39(12), 940-951. https://www.tandfonline.com/doi/pdf/10.1080/01900692.2015.10 64133

187. Mazzei, P. (2021, October 19). Why Don't We Have Electricity? Outages Plague Puerto Rico. The New York Times. https://www.nytimes. com/2021/10/19/us/puerto-rico-electricity-protest.html

188. Ortiz, W. F. (2022, November 8). No Power, No Food, No Help: Puerto Rico's Energy Crisis Isn't Just a Customer Service Failure, It's a Public Safety and Health Emergency. CCW Digital. Retrieved on January 23, 2023 from, https://www.customercontactweekdigital.com/ customer-experience/articles/ruerto-rico-energy-crisis-prepa-luma-hurricane-maria-power-grid-el-apagon

189. Net Metering Steps. (n.d.). LUMA. https://lumapr.com/net-metering-steps/?lang=en; also available in spanish “Es una fuente de energía renovable (o inagotable) que, mediante un sistema de paneles solares fotovoltaicos y un inversor, se convierte en energía eléctrica para ser utilizada por hogares u otras propiedades.”

190. PowerDMS. (2020, December 29). Importance of Openness and Transparency in Local Government. Retrieved November 28, 2022, from https://www.powerdms.com/policy-learning-center/importance-of-openness-and-transparency-in-local-government

191. Ibid.

192. California Public Utilities Commission. (2021). Electrical Energy. Retrieved November 28, 2022, from https://www.cpuc.ca.gov/ industries-and-topics/electrical-energy

193. Shearer, E. (2021, January 12). More than eight-in-ten Americans get news from Digital Devices. Pew Research Center. Retrieved December 3, 2022, from https://www.pewresearch.org/fact-tank/2021/01/12/more-than-eight-in-ten-americans-get-news-from-digitaldevices/

194. Hisham Choueiki, PhD, P.E., H., Promoting Transparency and Public Participation in Energy Regulation: A Communications Primer for Utility

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196. Written Testimony, 117th Congress. (2022) (Charlotte M. Gossett Navarro). HHRG-117-II00-Wstate-GossettNavarroC-20221117.pdf (house.gov)

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