The Role of a Power Sector Regulator to Strengthen Sector Performance in Puerto Rico
Puerto Rico is confronting a growing list of challenges in the electricity sector. Perhaps chief among them are high rates and inefficient generation. These challenges are increasingly recognized as concerns connected to governance and oversight of the Puerto Rico Energy Power Authority (PREPA), the government-owned, self-regulated, and largely vertically-integrated power company. Indeed, there are now calls for the establishment of an independent electricity regulator. A sector regulator can strengthen the performance of PREPA and establish a policy and institutional foundation that preserves the options for later sector reforms. A sector regulator with clear mandates would also provide sector stability necessary to attract investor commitment of capital over time. This paper explains the role of a utility regulator and why a well-endowed institution is essential to deliver on its promise.