clock menu more-arrow no yes mobile

Filed under:

All of Puerto Rico has lost power. It could take months to restore it.

The island's government is broke.

Joe Raedle/Getty Images

Hurricane Maria made landfall early Wednesday morning in Puerto Rico as a Category 4 Hurricane, packing 140 mph winds and dropping up to 25 inches of rain. The island's fragile electrical system was no match for it.

At 4 am, about half of the customers for the island's only utility company, known as PREPA, had no power, according to the island's emergency manager.

By noon, all 1.5 million customers were in the dark, Abner Gómez, Puerto Rico's director of emergency management, told El Nuevo Día newspaper. It's unclear how much of the island is relying on backup generators.

“The information we are getting is disheartening," Gómez told El Nuevo Día. "The storm has destroyed everything in it's path."

The news was especially alarming after the director of the utility company, Ricardo Ramos, told reporters last month that hurricane damage to the electrical system could leave the US territory without power for three to four months.

Of all the Caribbean islands in the path of Hurricane Maria, Puerto Rico's infrastructure seems the least equipped to handle the flooding and blackouts from category 4 winds.

It all comes down to money, and the government of Puerto Rico doesn't have it. The island, which is a US territory, filed for bankruptcy-like protection earlier this summer, and is in the process of restructuring its debt. Now the public utility company is in a severe state of financial distress, unable to modernize its system and facing a shortage of high-skilled workers. Even FEMA relief money that Congress will likely authorize will be of limited help in such an environment.

The Puerto Rican government can't borrow money

For decades, Puerto Rico's government was largely funded with borrowed money. Because of its special relationship with the United States, US investors got favorable tax treatment when buying Puerto Rican government bonds. American investors kept buying those bonds, and Puerto Rico kept issuing them when it couldn't pay its bills. The ballooning debt was unsustainable, especially when the economy began to tank.

Puerto Rico's economy relied heavily on the presence of US companies. To encourage investment on the island, Congress gave huge tax breaks to US businesses with operations in Puerto Rico starting in 1976. As a result, US banks, restaurants, hotels and department stores expanded to the island, creating jobs and boosting tax revenues. Pharmaceutical companies built factories there. But those tax breaks expired in 2006, and pushed Puerto Rico into a deep recession.

As the jobs began to dry up, so did the tax revenue and the workforce. Young Puerto Ricans, who struggled to find jobs, look for work on the US mainland (Puerto Ricans are US citizens). The electric company, PREPA, relied on selling bonds to pay for the imported oil it burned at its power plants. By 2014, it could no longer pay its creditors, and couldn't borrow more money to buy fuel. The utility company ended up making a deal with its creditors to restructure $5.7 billion of its total $9 billion debt. As part of the agreement, PREPA was supposed to modernize its ancient electric system, which had fallen into disrepair.

But the utility company kept delaying repairs because it didn't have the money, and the utility company struggled to pay down its remaining debt.

In July, PREPA defaulted on a $170 million interest payment to bondholders. Not only does PREPA not have money to invest in renewable, modern energy systems, it can barely repair and maintain its current system, which is why islanders constantly have to deal with power outages. This brings us to the second reason the electrical system is so messed up.

PREPA doesn’t have enough workers for maintenance — let alone hurricanes

When trees and debris knock down power lines, or when a power plant malfunctions, Puerto Rico's utility company doesn't have enough workers to fix the problem right away. The utility company is seriously understaffed. In the past decade, PREPA has lost thousands of workers.

There are a few reasons: Puerto Rico's aging workforce has been retiring, and there aren't enough young islanders to fill their jobs. Puerto Rican high school and college graduates have been leaving the island at high rates since the recession began, looking for better paying jobs in the United States. Electrical engineers, for example, make about 27 percent more money on the mainland.

The problem was made worse in April, when 600 workers (about 10 percent of PREPA's workforce) retired early. They feared that upcoming bankruptcy proceedings would eliminate the pension program for future retirees.

In May, a union representative for electrical workers in Puerto Rico warned about the dire consequences for the island. His comments to a reporter of El Nuevo Día newspaper seem more ominous now than ever:

"In the United States, power plants are highly automatized and require little human intervention," José Rivera told El Nuevo Día. "But here, we have old, modified power plants that only our people are familiar with. It's an urgent situation, and we are facing an imminent catastrophe for the electrical system."

Sign up for the newsletter Sign up for Vox Recommends

Get curated picks of the best Vox journalism to read, watch, and listen to every week, from our editors.