How will the GOP tax bill affect Puerto Rico? [Radio]

But the GOP tax bill could be devastating for some Americans: those living in Puerto Rico.

“The tax bill ... could be as damaging to Puerto Rico’s economy as Hurricane Maria was,” wrote Armando Valdés Prieto, a lawyer and political consultant in San Juan, in an op-ed for the Washington Post.

“One of the stated aims of the GOP tax bill is to bring jobs and investment back from foreign jurisdictions. And therein lies the problem,” Prieto said.

The “problem” is that the US tax code treats Puerto Rico as a foreign jurisdiction on tax issues.

Prieto says he’s worried that could push Puerto Rico’s pharmaceuticals and medical devices industries overseas, devastating the island’s already-struggling economy.

For more on why Puerto Rico is considered a foreign jurisdiction on tax issues and what that means for the island listen to an interview with Prieto by listening to the audio, above. 

One more thing…

PRI takes a global approach to the news of the day. We help you understand how what happens around the world matters in Washington and in your neighborhood. Today more than ever, we need conversations, perspectives and diverse voices.

A "big, beautiful Christmas present." That's how President Donald Trump described the tax overhaul that's sitting on his desk, awaiting his signature.


US President Donald Trump celebrates with Congressional Republicans after the US Congress passed sweeping tax overhaul legislation on the South Lawn of the White House in Washington, Dec. 20, 2017.
How will the GOP tax bill affect Puerto Rico?

Puerto Rico governor vows to make Florida Republicans pay for supporting tax bill

From our friend Alex Daugherty at the Miami Herald: 

WASHINGTON — For weeks, Puerto Rican Gov. Ricardo Rosselló and his associates tried to play the Washington game, meeting with politicians and lobbyists across Capitol Hill to argue against provisions in the tax overhaul bill that treat the U.S. territory like a foreign country.

But having failed to force a change, Rosselló is changing tactics now that the Republican tax overhaul bill is headed toward a final vote. Rosselló said Florida Republicans will pay at the ballot box in 2018 due to their support of a bill that he says hurts Puerto Rico in its time of need.

"Everything is on the table," Rosselló said. "We will analyze those who turned their back on Puerto Rico, who passed a bill that goes against the spirit of the law."

Thousands of Puerto Ricans have moved to Florida since Hurricane Maria knocked out power to the entire territory in September, and Rosselló said that the new tax bill will cause thousands more to relocate when jobs dry up on the island.

That means Puerto Ricans, who as citizens are able to vote once they become residents of a U.S. state, will be an angry political force to be reckoned with, according to Rosselló.

"To me, it's crystal clear that because we don't have that direct representation we're going to have surrogate voices, whether its Puerto Ricans who moved to the U.S., or the Latino community in general," Rosselló said. "I think there is plenty of audience to garner support for our cause."

Rosselló is particularly irked over portions of the law that impose a 12.5 percent tax on "intangible assets" of U.S. companies abroad and a minimum of a 10 percent tax on companies' profits abroad, meaning businesses with operations in Puerto Rico will pay higher taxes than their counterparts on the U.S. mainland. The measure in the GOP tax bill is designed to stop American companies from avoiding taxes by shifting profits overseas. But it would also apply to Puerto Rico because the island is treated as both a foreign and domestic entity under the U.S. tax code.

"Many senators and congressman came to Puerto Rico and they pledged their support. But when the time came to support Puerto Rico, they essentially bailed," Rosselló said. "I am very disappointed with the fact the Senator (Marco) Rubio is going to be voting for this tax bill particularly when we had the opportunity to address the potentially devastating effects on Puerto Rico."

Rubio's office did not respond to a request for comment.

Democratic Rep. Darren Soto, the lone Puerto Rican in Congress from Florida, said the GOP tax bill will embolden Puerto Ricans in Florida to vote in 2018.

"If nothing changes (in the tax bill) it's going to explode, there's even more Puerto Ricans arriving in Florida," Soto said. "They already have a bad taste in their mouth because of Trump, and this is going to add more salt to the wounds. With a million of us already here and 250,000 more arriving in the last two months, I would imagine that would be enough political pressure."

Puerto Rico already was struggling through a deep recession before hurricanes Irma and Maria hit in September. The island was $72 billion in debt and the unemployment rate hovered around 10 percent. Since the storms, thousands of Puerto Ricans have lost their jobs as businesses remain without power and unable to reopen.

Puerto Ricans could make a difference in statewide elections in Florida, where races are often decided by a few percentage points. A slew of statewide offices are on the ballot in 2018, including the governorship and a U.S. Senate seat.

"This needs to be something that's beyond politics, it is a matter of treating U.S. citizens as second class citizens," Rosselló said.

Miami Herald staff writer Kyra Gurney contributed to this report.

By Kirby Wilson

Rosselló said Florida Republicans will pay at the ballot box in 2018 due to their support of a bill that he says hurts Puerto Rico in its time of need.
Puerto Rico governor vows to make Florida Republicans pay for supporting tax bill

Rubio, Puerto Rico governor spar over tax reform

Sen. Marco Rubio said he is “disappointed” in Puerto Rico Gov. Ricardo Rosselló for calling him out over the new Republican tax bill, suggesting the commonwealth’s leader is blame-shifting because of criticism of his job performance.

The disagreement between the two leaders centers on provisions of the new bill that could put companies in Puerto Rico at a competitive disadvantage because they would be treated as if they are offshore firms, subject to higher taxes than mainland-based corporations.

Rosselló threatened political retribution Monday when he told Rubio’s hometown newspaper, The Miami Herald, that he is “very disappointed with the fact the Senator Rubio is going to be voting for this tax bill particularly when we had the opportunity to address the potentially devastating effects on Puerto Rico.” Rosselló is a Democrat and a member of the island’s pro-statehood New Progressive Party.

Rubio told POLITICO he was surprised by the remarks because he helped Puerto Rico defeat a “truly devastating” measure in the bill: a tax on subsidiaries designed to prevent corporations from avoiding taxes by stashing money overseas. But a similar provision passed the Senate — albeit with lighter penalties — and Rubio said that Rosselló then shifted his attention to another issue concerning the taxation of intellectual property that negatively affects the island.

By that time, Rubio said, it was too late.

Under the old provisions of the tax code, Puerto Rico enjoyed being treated as a foreign destination because it enjoyed cheaper tax rates. Now that mainland rates are being lowered, however, Puerto Rico is “on the other side of the fence” and now wants to be treated like a mainland government, Rubio said.

“Sometimes people in politics, when they feel under duress or they feel they’re being criticized for their job performance, look for someone to blame it on,” Rubio said. “I find it disappointing. He knows better than anyone how much we have done before, during and after the storm.”

In an interview with POLITICO in Puerto Rico late on Tuesday, Rosselló said: "My message was not directed at Rubio. He has opened his doors for us in the past. My disappointment was at that vote. In the larger picture there’s going to be an aftermath," due to the penalty from tax reform.

Rosselló, who in addition to his comments to the Herald also tweeted at Rubio last week to vote no on the tax vote, didn't seem to back down much.

"We will evaluate those who gave the good fight for people of Puerto Rico and those that didn’t, who In our greatest time of need either didn’t do anything or actually took decisions that hurt Puerto Rico,” he said.

But multiple lobbyists tracking the issue — who requested anonymity so they could speak freely — said that Rosselló and others with an interest in Puerto Rico's well-being were not aligned, making it harder to make their case for better treatment in tax reform.

“I think the governor’s spent way more energy waging war with the oversight board,” that Congress put in place to oversee Puerto Rico’s economic recovery, said one, who added that Rosselló also focused more on disaster relief aid than the tax overhaul.

Rubio acknowledged that Republicans, who have been criticized by Puerto Rican leaders for doing too little to help rebuild the commonwealth after the storm, could pay a price.

Mitch McConnell is pictured. | Getty Images
TAXES

Senate passes tax bill, teeing up final House vote
By BRIAN FALER
“If you want to talk pure politics, of course, I don’t think it’s a good idea for the Republican Party — or for anyone for that matter — to be in a position where they cannot argue for or articulate things that we stand for because of a perception that the party writ large doesn’t care about what you care about, in this case Puerto Rico,” Rubio said. “We’ve made that argument as part of our general argument.”

Rubio also expressed doubts about how badly Puerto Rico will be affected.

“I don’t think it’s clear that it’s going to be as devastating or as dramatic as what the governor is saying — it could be, but it’s not necessarily something there’s a lot of clarity on right now,” Rubio said. “We’ve talked to multiple employers there. Not a single one of them has told us they’re moving … they’ve told us that the cost of moving would be higher than what they would save by moving.”

Later this week, Rubio said, Congress is set to pass a spending bill that includes more money for the storm-ravaged island and allows a major swath of Puerto Rico to be declared an “opportunity zone” where companies would pay lower taxes.

“By the time our work is done here this week, both in tax reform and in the continuing resolution [spending bill], most if not all of Puerto Rico will be an opportunity zone where companies will be able to invest for little or no capital gains tax,” Rubio said.

But Rep. Darren Soto, a Democrat who is the first member of Congress of Puerto Rican descent from Florida, is skeptical. He said Republicans are turning off large “swaths of Puerto Rican voters. The treatment of new Puerto Rican arrivals to Florida after Hurricane Maria will be foremost on the minds of 'Florida Ricans' both existing and new. The tax bill adds to the fire by decimating an already struggling manufacturing sector there. However, I maintain hope we can fix these matters soon in a bipartisan fashion before it’s too late.”

Rubio, disputing the threats to manufacturing posed by the tax bill, said there was only so much he could do in the Senate to ease the impact of problematic provisions harming Puerto Rico. Republican leaders were determined not to turn Puerto Rico into a tax haven, though they might still provide some relief in targeted fixes expected to be made to the comprehensive tax reform bill next year.

The lobbyist who criticized Rosselló for being more focused on the oversight board said it would surprise him if a fix doesn't come because House Speaker Paul Ryan promised it would after the House initially passed tax reform legislation.

Rubio spent most of his time fighting to expand the child tax credit, which would benefit working families, and at one point threatened to withhold his vote if his demands weren’t met. Critics said his stance was too little, too late. But Rubio blamed Democrats for deciding not to vote for his child care tax credit amendment, thereby ensuring the item would be stuck in the bill at the last minute. Democrats point out that Republicans in both chambers disproportionately opposed the tax credit.

Among the provisions of the child tax credit amendment: extending it to Puerto Rican families.

“There were a lot of issues like this that didn’t get nearly as much attention or prioritization. It’s not unique to Puerto Rico. And the child tax credit was one of them,” Rubio said.

“I’m not sure that going after the one person in the Senate who has made this a priority on the Republican side in particular is fair or right,” Rubio said of Rosselló. “But you’ll have to ask him why he decided to do that.”


Puerto Rico Gov. Ricardo Rosselló told The Miami Herald he was “very disappointed" Sen. Marco Rubio (pictured) would vote for the tax bill "when we had the opportunity to address the potentially devastating effects on Puerto Rico.” | Pablo Martinez Monsivais/AP Photo

By MARC CAPUTO, COLIN WILHELM and LORRAINE WOELLERT

Rubio, Puerto Rico governor spar over tax reform

2 top U.S. officials pledge more help for Puerto Rico

Two U.S. Cabinet secretaries visited Puerto Rico on Tuesday and promised to speed up recovery efforts and increase federal assistance for an island struggling nearly three months after Hurricane Maria.

Homeland Security Secretary Kirstjen Nielsen said officials talked about areas “where things are not moving as quickly as they could,” speaking during a one-day trip to the U.S. territory with Housing and Urban Development Secretary Ben Carson.

Nielsen said federal officials will look into how to help get more supplies to Puerto Rico to speed up power restoration as well as provide federal assistance more quickly and possibly open more recovery centers across the island.

She noted that the number of people who registered for financial assistance in Puerto Rico after the Category 4 storm is greater than all those from hurricanes Katrina, Irma and Sandy combined. On Sept. 20, Maria ripped across the island with winds of up to 154 mph, killing dozens of people and causing damages estimated at up to $95 billion.

“This was an unprecedented storm,” Nielsen said. “We will not rest until the families here are back in their repaired homes, until parents are back at work, children are back at school and communities are back to life.”

Nielsen and Carson did not visit any areas affected by the storm and instead met with local and federal officials to talk about the recovery process that many Puerto Ricans have complained has been inadequate and slow.

Power generation is at 65 percent of normal, with nine of Puerto Rico’s 78 municipalities still completely in the dark, and the U.S. Army Corps of Engineers has estimated power will not be fully restored across Puerto Rico until May, more than eight months after the hurricane hit. In addition, more than 200,000 homes were damaged and more than 30,000 people have lost their jobs, sparking an exodus of more than 200,000 people to Florida alone.

Federal officials said they would focus recovery efforts on power restoration and housing, with Carson pledging to do what is needed to help Puerto Rico get back on its feet. He said his agency is considering practical steps to get people back into their homes, such as moving them into the first floor while the second floor is being repaired.

“We do recognize that the situation is different here than it is in Texas or Florida or many other places,” he said, adding that he understands the need to provide urgent housing. “We’re quite willing to look at the regulatory burden and present appropriate waivers and changes.”

Gov. Ricardo Rossello has requested flexibility in how community development block grants could be used, among other things, as the U.S. territory awaits nearly $5 billion in funds pledged by Congress.

The governor said a lot more financial assistance is needed as he praised the visit by federal officials and said they were committed to establishing a sense of urgency especially with power restoration: “Puerto Ricans are U.S. citizens, and we deserve equal treatment in the aftermath of this event.”

In this Oct. 14, 2017 photo, what was once the home Arden Dragoni and his family lies in ruins after the passing of Hurricane Maria in Toa Baja, Puerto Rico. (Ramon Espinosa / Associated Press)
2 top U.S. officials pledge more help for Puerto Rico

Mexico scores big tourism gains after hurricanes devastate Caribbean islands

hen devastating hurricanes pummeled Texas, Florida and several Caribbean islands this summer, vacationers didn’t stay home and mope.

Instead, airline data show that many travelers rebooked their vacations in Mexico.

From October 2017 through March 2018, U.S. and international airlines have cut more than 1.2 million seats to hard-hit vacation spots such as Puerto Rico, the U.S. Virgin Islands, Cuba and the French-Dutch island St. Martin/St. Maarten, according to airline data analyzed by the aviation consultant ICF.

In that same period, U.S. and international carriers added more than 600,000 seats on flights to popular Mexican destinations such as Puerto Vallarta, San Jose del Cabo, Mexico City and Cancun.

Airlines added another 200,000 seats on flights to Caribbean islands that suffered less hurricane damage, including Aruba, Bermuda, the Cayman Islands and Jamaica.

“Customers want to travel someplace warm with a beach,” said Mark Drusch, ICF vice president and a former airline executive. “And airlines want to book them to places that have hotel rooms available.”

Drusch said the airline data analyzed by ICF didn’t show a significant increase in seats to other winter and spring destinations, such as Las Vegas, Phoenix and Denver.

Puerto Rico, which suffered the worst toll from Hurricane Maria in September, took the biggest hit of all destinations in the Caribbean, with more than 454,000 airline seats cut from flights to the island in the winter and spring period, compared to the same six-month period in 2016-2017. That amounts to a 20% drop in airline seats.

St. Thomas, one of the U.S. Virgin Islands, lost more than 282,000 airline seats, a 69% drop compared to a year earlier, according to ICF.

Cancun recorded the biggest increase in airline seats, 237,000 in the October-March period, a 10% increase over the same time a year earlier, ICF data says.

Mexico City had an increase of 187,000 airline seats, an 18.5% increase, according to ICF.

The uptick in airline capacity to Mexican tourist destinations has come despite the U.S. State Department issuing a travel warning in August that cautioned travelers about “the activity of criminal organizations” in several parts of Mexico, including Baja California.

The travel warning said most of the crime problems are in the interior parts of the country but it also pointed out dangerous conditions in regions of Baja California around the tourist hot spots of Los Cabos, and in Sinaloa outside of the beach resort of Mazatlan.

Rodrigo Esponda, managing director of the Los Cabos Tourism Board, said tourism to Mexico has increased 10% so far this year and has surged even more — by as much as 19% — in the southern tip of Baja California.

To ease tourists’ concerns, the Mexican government and hotel operators in southern Baja California’s beach towns have teamed up to increase security by creating a “rapid response” communications network to share information about criminal activity with police, Esponda said.

“We take the travel warning seriously,” he said. “We believe that safety is definitely a priority.”

In addition, the government and business operators in the region have increased to 250 from 40 the number of surveillance cameras installed along roads, beaches and near hotels to monitor tourist safety, he said.

To further attract American visitors, 16 luxury hotels are under construction in the Los Cabos region, including a St. Regis, a Ritz Carlton, a Hard Rock Cafe and a Park Hyatt hotel. In total, the hotels are expected to add more than 4,000 rooms by 2021.

“We truly believe the product is particularly good,” Esponda said. “That is why the airlines have been adding more capacity.”

Hugo Martin


This photo taken on Jan. 18, 2017, shows Mexican Federal Police patrolling a beach in Cancun, Mexico, where a shooting occurred in a nightclub the day before. Despite past problems, Cancun scored thousands of new visitors during the hurricanes that struck the Caribbean. (STR / AFP/Getty Images)
Mexico scores big tourism gains after hurricanes devastate Caribbean islands

Repair of Puerto Rico’s power grid won’t be complete until May, Army Corps of Engineers says

Puerto Rico’s electrical grid is unlikely to be fully restored until the end of May, the head of the U.S. Army Corps of Engineers said Wednesday -- months longer than the timeline offered by the island’s governor.

Lieutenant General Todd Semonite, commanding general and chief engineer for the Corps, said in an interview Wednesday that he expects the Puerto Rico’s electric grid to reach 75 percent of customers by the end of January, 95 percent by the end of February, and 100 percent by the end of May, more than eight months after Hurricane Maria hit.

That departs from statements by Puerto Rico Governor Ricardo Rossello, who said in October that he hoped power would be restored to 95 percent of the grid by Dec. 15. The Puerto Rico Electric Power Authority made a similar pledge last month, saying it would reach 95 percent of customers by the end of December.

The slow pace of restoring electricity following Hurricane Maria has become shorthand for the U.S. government’s uneven response. Just 61 percent of electricity had been restored as of Wednesday, according to data on a website run by the island’s government.

The Army Corps is a key part of a task force of U.S. government and outside groups working with Puerto Rico’s government to restore power on the island.

Semonite said he had told Rossello on Oct. 27 that the Dec. 15 timeline was unrealistic. "Governor, there’s no way you’re going to get 95 percent" by that point, Semonite recounted telling Rossello. "And he was very, very upset."

"The bottom line is, he ought to be upset, because all of his people ought to have electricity," Semonite said. "We’re just as compassionate as the governor is at getting his guys electricity. That’s why I have 700 guys that are going to be there over Christmas."

To illustrate the challenge of getting the grid fully restored, Semonite described flying over a cluster of four homes on the top of a mountain, fed by a single wire that goes up the side of a cliff.

"Those four houses, what I call the last mile, they’re going to take a long time. So I said probably the end of May to get to 100 percent. I’d love to go faster."

Yennifer Alvarez, a spokeswoman for Rossello’s administration, didn’t immediately have a comment. 

--With assistance from Yalixa Rivera

To contact the reporter on this story: Christopher Flavelle in Washington at cflavelle@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Mark Drajem

©2017 Bloomberg L.P.

© (AP Photo/Ramon Espinosa, File) In this Oct. 15, 2017, file photo, Whitefish Energy Holdings workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico.
Christopher Flavelle
Repair of Puerto Rico’s power grid won’t be complete until May, Army Corps of Engineers says

Are We Finally Going To Help Puerto Rico Power Up?

Puerto Rico and the U.S. Virgin Islands are in the midst of the largest blackout in American history. But it appears that a more serious contractor has come to the islands to help resurrect their electrical and power systems.

The Louis Berger Group has won an Army Corps of Engineers contract, worth a potential $860 million, to supply temporary power to these islands after the devastation of Hurricane Maria. A previous contractor has high-tailed it back to Montana in the midst of controversy and lawsuitsconcerning its performance in the aftermath of the devastation.

To appreciate the obstacles facing Berger, it’s important to understand how much worse this disaster is compared to previous hurricanes. In our nation’s history no hurricane ever caused so much infrastructure destruction as Hurricane Maria.

In the words of Hector Pesquera, Puerto Rico's public safety commissioner, ‘There was a brand new island 24 hours after Maria hit. Life as we knew it just collapsed. There was no food, there was no water, there was no gasoline, no diesel, no power, no banks, no ATMs…there was nothing.’

Because of the magnitude of this disaster, emergency power will probably not give way to more permanent power until next summer, and temporary systems will be kept on where needed. There are now 700 temporary generators operating in Puerto Rico providing emergency power until the power system is rebuilt. And until power is restored, all other problems really cannot be solved.

NASA

On Sept. 20 at 10:50 a.m. EDT (14:50 UTC) NASA's Terra satellite captured this visible image of Hurricane Maria as it was ravaging Puerto Rico and the other islands in its path. NASA Goddard MODIS Rapid Response Team

On September 20th, Hurricane Maria made a direct hit as a Category 4 hurricane on the mountainous American island with winds up to 155 mph. Since then, the 3.4 million United States citizens that live on Puerto Rico have had little in the way of a normal life.

To make matters worse, Puerto Rico was first hit by Category 5 Hurricane Irma which left a million people without power. Hurricane Maria then took down 80% of the island’s transmission lines.

Even with some rebuilding and restoration, on November 9th, electricity on the island had sunk from 40% to 18% after another power outage. Hurricane Maria has caused a loss of 1.25 billion hours of electricity supply, and over a thousand lives.

Even the United Nations has scolded the U.S.response to a disaster on our own people, and they particularly noted how our response in Puerto Rico has been so much worse than our response to mainland storms in Texas, New Jersey and Florida. You can blame hurricane-fatigue by Americans, but Puerto Rico became a territory almost 120 years ago, well before Oklahoma, Arizona, New Mexico, Alaska and Hawai’i became states, which makes our poor response even more appalling.

So all eyes are on Louis Berger. Their division in the United States has already begun work in the islands, deploying hundreds of commercial power generators. Berger has about 900 people working on this crisis - 40% from Puerto Rico and 60% from the mainland. Those workers are supporting the Federal Emergency Management Agency, the Army Corps of Engineers, the Postal Service and the Defense Logistics Agency.

U.S. Army Corps of Engineers

As of Thanksgiving, 700 large temporary generators are operating in Puerto Rico to provide emergency power until the power system is rebuilt.

Unlike the previous contractor, this is not the first effort by Louis Berger to support communities following major disasters. They aided the Philippines after Typhoon Yolanda hit in 2013, American Samoa after the 2009 tsunami, and helped rebuild the World Trade Center site after 9/11. They were in New York and New Jersey following Superstorm Sandy, not just to restore and rebuild power, water, structures and transportation systems, but to make them more resilient to future disasters.

That means doing things like putting power lines underground - the few underground lines weathered Maria quite well – and making those poles that can’t be subsurface out of high-strength concrete. It also means installing power systems whose fuel and physical structures are resistant to extreme weather events.

Solar and battery companies are sending materials to Puerto Rico to begin building an significant solar sector on the island. Puerto Rico’s young Govenor, Ricardo Rosselló has recently become a champion of renewables, tweeting with Elon Musk before Tesla began installing a solar and battery array to power the island’s Hospital del Nino.

Some solar arrays and wind farms on Puerto Rico made it through the storm fine, but many didn’t. Dams had a tough time as well.

For long-term sustainability beyond 2025, more robust systems should be installed as they come online. A set of new small modular nuclear reactors , with distributed solar and modest storage, could power the entire island cheaply and most reliably, especially during hurricanes.

SMRs will begin construction in the U.S. in the early 2020s, but many exist around the world already. And our military has been the world leader in developing and using small nuclear reactors. A new report from the Nuclear Innovation Alliance outlines ways to accelerate this process.

That’s the real goal here – to remake the infrastructure in Puerto Rico so it will not just survive the next super storm, but be little affected by it.

I asked Tom Lewis, President of the Berger’s U.S. Division, just what he thinks that means for Puerto Rico and how Berger intends to help that future. Lewis was in Puerto Rico last week meeting with elected officials and the Corps.

‘We’re already working with private equity, insurance and power system suppliers on solutions to offer more large scale, modern, sustainable and resilient power solutions for the islands and businesses there, including replacing coal with cleaner natural gas, solar, battery storage and microgrid technologies,’ said Lewis.

The power in Puerto Rico has been the most expensive electricity next to Hawaii, and one of the most carbon-intensive in America. Before Hurricane Maria hit, Puerto Rico’s power mix was 48% oil, 30% natural gas, and 18% coal, all imported at significant cost. Four main power plants had a capacity of about 3,500 MW. There are less than 3% renewables.

Berger hopes to see renewables rise in that mix to double digits and that is much more likely by transitioning to a microgrid solution - with the actual mix varying considerably from region to region with differences in weather/seasonality, terrain, available land for solar/wind, etc.

‘Given the pre-existing challenges that the islands already faced, public-private partnerships and the commercial sector in general also can be leveraged and play a key role in the long-term recovery as they can provide additional solutions that government alone would not be able to provide,’ noted Lewis.

Public-private partnerships will be key since Maria sliced across not just the island, but the island’s financial landscape as well. Puerto Rico was already bankrupt from a combination of factors. For years, bond holders extended credit to Puerto Rico, capitalizing on federal, state and municipal tax advantages. Then in 2006, Congress ended these special tax breaks but credit kept flowing in. When the Great recession hit in 2008, Puerto Rico could not recover.

Qualified workers have fled to the mainland. The island has lost more than 20% of its jobs. Retirement funds are defunked. Medicaid funds were cut by Congress.

In July, the Puerto Rico Electric Power Authority declared bankruptcy. Deferred maintenance on 40-year-old power plants, poor management, and losing 4,000 employees in key jobs such as linemen, power plant operators and mechanics, made the utility completely unprepared for Maria in every way.

With respect to power, Louis Berger has two immediate missions - 1) help get critical power up to support emergency power needs, and 2) advance the grid of the future, especially distributed generation such as renewables, battery storage and microgrids, to become more resistant to extreme weather.

 Louis Berger Group

Louis Berger Group construction workers install a microgrid in Puerto Rico using diesel generators as the initial power source.

While everyone is talking about a futuristic grid, the immediate needs are paramount. So repairing as much as possible with what was there before is fastest. But with an eye on replacing it with something that could accommodate, or morph into, newer systems.

The government has set priorities for critical facilities like hospitals and water treatment plants, but all areas need attention. This means that urban areas will look pretty much the same. But rural and outlying areas, especially the two populated islands of Vieques and Culebra, will look very different, with microgrids and distributed energy generation including solar (see a USACE video on microgrids in Culebra).

Berger has been scouting a pilot site for a solar hybrid microgrid and they have solar generators arriving on the island that will be provided pro bono to one of the at-need communities furthest from the central grid.

Microgrids are discrete energy systems consisting of distributed energy sources like demand management, storage, generation and loads capable of operating in parallel with, or independently from, the main power grid.

Microgrids are envisioned as necessary to efficiently integrate distributed energy generation sources, such as renewables, as well as make the whole system withstand extreme weather events and other disasters that would take out older larger grids entirely. The modularity and flexibility of microgrids allows mixing and matching, operating independently or together, to deal with disasters that effect different points on the islands differently.

This is vital in places like the Puerto Rico island-municipality of Culebra. Culebra is midway between the main island of Puerto Rico and Saint Thomas of the U.S. Virgin Islands and was powered by the larger grid on cables that came from Puerto Rico through the other large Puerto Rican island, Vieques. Louis Berger is working with USACE on a pilot microgrid on Culebra that will eventually power the island with no need to connect to the other islands (see figures).

The challenges facing Puerto Rico are immense but can be handled if effective and continuous support is provided. Berger’s mission is part of that.

But the biggest challenge facing the islands is to remain on the radar of Washington, D.C. and on the minds of Puerto Rico’s 300 million fellow citizens of the United States.

Dr. James Conca is an expert on energy, nuclear and dirty bombs, a planetary geologist, and a professional speaker. Follow him on Twitter @jimconca and see his book at Amazon.com

Hurricane Maria devastated the power grid in Puerto Rico, mainly by taking out most of the power lines.
James Conca
Are We Finally Going To Help Puerto Rico Power Up?

Puerto Rican officials lobby Congress against ‘devastating’ GOP tax measure

Puerto Rico is still drowning from Hurricane Maria but it’s already facing its next crisis — a U.S. tax reform bill that island officials fear will devastate the economy.

Puerto Rico Gov. Ricardo Rosselló and Lt. Gov. Luis Rivera Marín will make a final plea on Wednesday to Republican officials, asking them to exempt the U.S. territory from a 20 percent excise tax on goods that American companies import from their overseas subsidiaries.

The measure in the GOP tax bill is designed to stop American companies from avoiding taxes by shifting profits overseas. But it would also apply to Puerto Rico because the island is treated as both a foreign and domestic entity under the U.S. tax code.

“If the U.S. Congress ignores our situation and gives us this mortal blow to our economy, the immediate and direct effect will be Puerto Ricans boarding airplanes,” Rivera Marín told the Miami Herald.

Puerto Rico already was struggling through a deep recession before hurricanes Irma and Maria hit in September. The island’s unemployment rate hovered around 10 percent and the country was $72 billion in debt. Since the storms, thousands of Puerto Ricans have lost their jobs as businesses remain without power and unable to reopen.

Rivera Marín warned that the tax could wipe out the island’s manufacturing sector and a third of the government’s tax revenue, sending thousands more families fleeing to Florida and New York.

Compared to the potential economic damage from the tax reform bill, “Maria will seem like a drizzle,” he said.

Puerto Rico’s Federal Affairs Administration in Washington and Jenniffer González-Colón, the island’s non-voting representative in Congress, have been lobbying lawmakers for weeksto exclude Puerto Rico from the provision.

So far, they’ve failed. The House version of the bill imposes a 20 percent excise tax on goods produced by the offshore subsidiaries of U.S. companies. The Senate version includes more limited taxes, which Puerto Rican officials say would be less damaging but still a serious threat to the island’s economy.

House and Senate negotiators this week will start to hash out a compromise tax plan that can pass both chambers and be sent to President Donald Trump to become law.

Rosselló and Rivera Marín will meet with White House economic advisers and Congressional staffers, Rivera Marín said. Their visit kicks off 10 days of back-to-back visits from Puerto Rican politicians, including local legislators and mayors.

Puerto Rico’s manufacturers are responsible for generating roughly 40 percent of the island’s gross domestic product and officials predict the tax bill would affect more than 200,000 jobs either directly or indirectly linked to manufacturing. The current tax code allows U.S. subsidiaries operating in Puerto Rico to enjoy some of the tax benefits they would get from operating in a foreign country, providing an incentive for manufacturers to set up shop on the island.

“This is supposed to be a reform that saves American jobs but they’re going to kill jobs in Puerto Rico,” Rivera Marín said. If U.S. manufacturers leave the island because of the tax reform, “they’re not going to take the jobs to Michigan, they’re going to take them to Singapore, they’re going to take them to Ireland.”

BY KYRA GURNEY
Puerto Rican officials lobby Congress against ‘devastating’ GOP tax measure