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Another Way to Fix Puerto Rico’s Electricity Problems

By: Frank Worley-Lopez - Mar 27, 2014, 2:19 pm

EspañolPuerto Rico Senate President Eduardo Bhatia is calling for reform of the electricity system of Puerto Rico. Bhatia favors at least partial privatization of the power utility that has been plagued with outages, high costs, and billions in debt for years. While I applaud Senator Bhatia’s efforts, I think there may be another way to help improve things on the island.

In a previous article with the PanAm Post, I argued for nuclear power, and while I still support nuclear power on the island, there is another very direct way of improving service: make it cost the agency’s employees when they don’t get it right.

I propose a carrot and stick approach. For every month the power company keeps electricity on for the entire island, every employee, from the executive director to the lowliest custodial worker, gets a bonus. For every day that power is out, they lose money on their next paycheck. I assume unions will hate this idea, but it brings a free market concept — accountability — into a unionized public agency workshop.

If a small business owners don’t serve their customers on a given day, they don’t get paid. Period. It hurts them directly. On the other hand, when they do a good job, they get rewarded with extra sales.

Government agencies may not charge you for a day when you don’t have electricity, but for there is no consequence for the average employee who actually makes things work or not. With the island’s debt estimated over US$70 billion, what do a few dollars in a few hundred households mean to the line man out in the field?

Nothing.

But when the lineman realizes his paycheck is getting smaller every time the power goes out, suddenly he or she feels a great sense of urgency to get it back on quickly. It doesn’t even have to be that much of a cut. Five dollars for every hour power is out, would do enough to motivate employees to change. The bonus could be as little as one $100 per employee per month. While the idea could be regionalized, applying only to those employees in a given region of the island, I would prefer it be island-wide, so that employees encourage other employees to keep the utilities on and not be so lax in their response.

Bad government is all about rewarding bad behavior — ignoring personal responsibility and free choice — while chastising good behavior and independence. For example (from my own experience), if a government agency finds a way to save money on a project one year, that amount of money will be left out of its budget for the next year, when it may be needed again. So office managers will often seek higher amounts every year, in order to preempt cuts, and find any way to spend the money, even if it isn’t needed.

In the field of public utilities, if the power goes out on a weekend, the utility workers get paid overtime for showing up. I’ve always had a sneaking suspicion that this fact is why there always seems to be more power and water outages on the weekends in Puerto Rico than at any other time. This proposal would have to include a cap on overtime wages as well, preventing the payment of any overtime on any outage that lasts more than 24 hours or more than 100 hours in a month unless there is a natural disaster or similar situation.

Unions do not work for the people. They are a special group, motivated by self-interest. Their job is to maintain jobs and revenue and flex political power. Unions in the private sector at least hear about the concept of profit and loss, even though they do not always listen, as in the cases of the bakers union that made Wonder Bread and Twinkies.

Public sector unions, however, are completely detached form the concept of profit and loss and serving their customer. The union’s customer is the employee and, in a strange way, the unionized public employees seem to consider themselves to be the customer too, since their own concerns are often weighed with greater value than the needs of the public.

A small business owner’s concerns (and profits) are directly connected to how successfully they treat their clients. It’s as simple as that. By applying this one concept — making it profitable for public employees to keep the electricity on and painful for them to stand by and let power or water service go off — a paradigm shift in culture would occur in the public sector and vastly improve service and response times.