The numbers are clear. The average cost per kilowatt hour for residential electric service in Puerto Rico averages between 26 and 29 cents per hour. The average across the United States is 11.9 cents per hour. Only Hawaii (37 cents) and the US Virgin Islands have a higher rate, the latter at a staggering 47 cents.
Why the high cost for electricity?
Puerto Rico and the US Virgin Islands provide electricity based primarily on good old fashioned oil, as do the Hawaiian Islands. All three are looking at or actively developing alternatives, including solar, natural gas, and local collaboration — sharing electricity via a Caribbean electric grid. All three also have another thing in common: no nuclear power plants.
In Hawaii, the state constitution prohibits the use of nuclear power plants in article 11 section 8. Puerto Rico, on the other hand, did try to experiment with nuclear power at one point in the 1970’s, but the experiment was small and short lived.
The result of high electricity costs is higher water costs, since the production of potable water requires electricity. This in turn makes doing business harder at the small business level, just as it is a significant cost issue on the manufacturing and large corporation scale. Inevitably, that also drives up consumer prices.
Why would you move your company or open a major office in Puerto Rico if you have to pay more than double the cost for electricity and water, not to mention the slew of labor laws, rules, and regulations that burden all business on the island — but I digress.
With the recent unrest in Syria and Egypt and with Iraq, Iran, and terror groups threatening the Saudi ruling family, oil remains a volatile commodity. One major incident in the Gulf States could drive oil prices and thus electricity in these three jurisdictions even higher.
Many an environmentalist will testify that oil itself damages the environment. Burning oil also causes environmental harm, while dependence on oil twists foreign policy.
While there have been significant advances in natural gas, solar, wind, and fuel cell technology, none have achieved the ability to provide more constant, stable electricity than nuclear. So why is there the endless opposition to the use of nuclear power? Two answers seem to be constant: fear and nuclear fuel.
The industry had almost completely overcome the fear caused by the Three Mile Island incident and Chernobyl when Fukushima happened. What happened in Fukushima was a major earthquake followed by a catastrophic 10-meter tsunami. While one could argue that the plant should have been built better to resist this kind of incident, the fact remains that Fukushima was a natural disaster first.
Nuclear fuel, on the other hand, is a major problem. Once the fuel has been used, it must either be stored permanently or recycled. Both require transport of the fuel, which has met great opposition, given fears of terrorist attacks and accidents.
Nuclear power offers emission free electricity, unlike oil and coal — but it is also expensive at the beginning to establish. However, it is part of the original plan in A Puerto Rican Manifesto to develop the island’s economy. The question is how to establish it in a way that considers disasters like the Japanese earthquake and tsunami and deals with the issue of nuclear fuel storage, while considering initial costs.
It does not appear too difficult a task to overcome. Major corporations that design and build nuclear power plants have decades of experience and history to rely on in developing a power plant for Puerto Rico — one that would take into account the very real risk of major earthquakes and tsunamis. It may even be possible to negotiate a proposal that would privatize the electrical system based on nuclear power, with electricity rates established before construction would even begin.
Storage of fuel would have to be onsite or near site, as it is in most plants in the United States, with the ability to transport the waste containment units to the ocean for shipment. Otherwise, the fuel would necessitate the construction of a fuel recycling plant on the island, which would allow for additional sources of revenue. The site of the plant and its elevation above sea level would be chosen to minimize the risk of natural disasters.
One could mitigate the initial costs by guaranteeing collections on a portion of revenues in exchange for the development company assuming part or all of the initial cost of design and construction. The establishment of a grid for the Caribbean, based on this plant, would also be an additional source of revenue for the new country.
Despite the fear and loathing of nuclear power, it has provided a stable, low-cost electrical power system and — outside of Chernobyl and Fukushima — has done so safely. Nothing goes without risk, but we must balance the risk and reward when looking forward to a prosperous future.