EspañolPuerto Rico is now fixated on a plan to save its troubled utility, the Electric Power Authority, known as PREPA. Outdated equipment, the burning of fuel oil, mismanagement, and public-sector unions have turned the utility into a geriatric dinosaur.
The solution? Raise rates. Again.
That may be a simplification, because the various plans being discussed include a public-private partnership and switching to natural gas as a fuel. Reorganizing PREPA’s management system, making unspecified reductions in size, and cutting the workforce (without actually cutting the workforce) are also under consideration.
Once again, Puerto Rico’s government and even its highly paid advisers are putting a band aid over a gaping wound and missing the fundamental causes of the problems at PREPA. In many ways, the electric utility is just another perfect example of what is going wrong on the island.
To solve the problem of high energy costs, you must address the way energy is created — then how it is distributed and maintained. I have long been an advocate for nuclear power in Puerto Rico as a long-term and stable solution to the energy-creation issue. While nuclear energy has its problems, it also has its positive side. And now there is a new alternative that can further reduce those negatives and leave no reasonable opposition to going nuclear.
Last year, India completed the design for a thorium reactor, and will move forward on construction. The plan is to have the 300-megawatt reactor in operation by 2016.
Thorium reactors differ from traditional fission reactors in a number of ways. First, they use thorium, which is more widely available on earth than uranium or its derivatives. Therefore, the fuel is cheaper, and less radioactive. The thorium reactor is passive in its operation, meaning fewer people will have to work at the plant to keep it operational, and the plant itself can operate for 100 years.
There is no risk of meltdown with a thorium reactor, which is the greatest fear among anti-nuclear power groups: no meltdown, no explosion, no risk of radioactive disasters. They also produce less nuclear waste than traditional reactors.
Bondholders in Puerto Rico are offering US$3.5 billion in additional financing to update the utility. I have another suggestion: why not use part of that money to build one of the Indian-designed thorium reactors on Mona Island and produce electricity that way, ending dependency on fuel completely.
The savings can then be passed on to the consumers and still leave plenty of room to pay off the bondholders. This would lower the cost of producing water and doing business on the island, and thus help to improve the economy.
Now, if we can only get rid of those public-sector unions; we’d be doing just fine.