Puerto Rico Power Authority’s Debt Is Rooted in Free Electricity

Source: NY Times

AGUADILLA, P.R. — To understand how Puerto Rico’s power authority has piled up $9 billon in debt, one need only visit this bustling city spread along a bay on the northwest coast.

Twenty years ago, it was just another town with dwindling finances and a less-than-promising future. Then, it went on a development spree, thanks to a generous — and some would say ill-considered — gift from the Puerto Rico Electric Power Authority.

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“Imagine how much it costs to have an ice-skating rink in the tropics,” said Sergio Marxuach, policy director at the Center for a New Economy, a nonpartisan research group in San Juan.

And that is the catch. What most likely would be the biggest recurring expense for these attractions — electricity — costs Aguadilla nothing. It has been provided free for years by the power authority, known as Prepa.



Read more: http://www.nytimes.com/2016/02/02/business/dealbook/puerto-rico-power-authoritys-debt-is-rooted-in-free-electricity.html?_r=0