Puerto Rico Electric Power Authority

Stock performance

History

The Puerto Rico Electric Power Authority (PREPA, or AEE in Spanish) was created in 1941 as the Puerto Rico Water Resources Authority to electrify the island and was renamed in 1979. Decades of underinvestment and political interference left it with about $9 billion of debt, and it entered bankruptcy under the federal PROMESA law in 2017, months before Hurricane Maria destroyed much of its grid and caused the longest blackout in US history.

Business model

PREPA remains the publicly owned electricity utility, but since 2021 its transmission and distribution system has been operated under contract by the private company LUMA Energy, and since 2023 its power plants have been run by Genera PR. Most of its generation still comes from aging oil- and gas-fired plants, which makes electricity prices high and closely linked to fuel costs.

Market position

PREPA is the island's sole grid owner and the dominant source of power generation, though rooftop solar paired with home batteries has been spreading rapidly as households and businesses seek protection from outages.

Country impact

Unreliable and expensive electricity is one of the biggest obstacles to Puerto Rico's economic recovery, and island-wide blackouts have continued since Maria. PREPA's unresolved debt restructuring, years of litigation with bondholders, and disputes over the private operators' performance remain among the island's most contentious economic and political issues.