The island Housing Department has disbursed less than 1% of nearly $2 billion allocated in 2021 for electrical grid projects and is requesting an extension for using the funds, according to a federal audit.
The U.S. Department of Housing and Urban Development (HUD) Office of the Inspector General (OIG) published a report earlier this month highlighting the status of the Puerto Rico Department of Housing’s (PRDOH) Electrical Power System Enhancements and Improvements initiatives.
In June 2021, HUD designated close to $2 billion in Community Development Block Grant-Disaster Recovery (CDBG-DR) funds aimed at improving and enhancing electrical systems in regions affected by hurricanes Irma and Maria.
PRDOH allocated the majority of its $1.93 billion disaster recovery funds for its two principal electrical grid initiatives: $500 million for the Energy Grid Rehabilitation and Reconstruction Cost Share Program (ER1), and $1.3 billion for the Electrical Power Reliability and Resilience Program (ER2). The electrical grid initiatives were initiated by PRDOH in 2023, and both programs are currently in their initial phases of implementation.
On April 26 of this year, PRDOH sent a correspondence to LUMA Energy, which operates the island’s electric power transmission and distribution system, and Genera PR, the energy service provider, asking to finalize the Project Prioritization Strategy with the Puerto Rico Electric Power Authority (PREPA). On May 21, PREPA provided a prospective project list comprising 14 project worksheets. A project worksheet is the document employed to outline the work scope and cost estimate for a project. This form provides the Federal Emergency Management Agency with vital information required to sanction the work scope and detailed cost estimate before funding can occur. Each project is required to be recorded on an individual project worksheet. The projected cost share was $65.95 million.
By July 12, PRDOH had expended less than 1% of its entire budget for both initiatives – merely $179,761 of the $1.93 billion. The report details the actions taken thus far by PRDOH, such as formalizing a memorandum of understanding with HUD, the Government of Puerto Rico, the U.S. Department of Energy, and the U.S. Department of Homeland Security, as well as preliminary activities including publishing program guidelines, formulating project selection processes, and executing subrecipient agreements.
“PRDOH has sought from HUD an extension to utilize grant funds for both initiatives until May 2033, extending nearly 5 years beyond the original deadline of August 2028 and 15 years after Congress allocated funds for Puerto Rico’s electrical grid requirements,” the report indicates.
“It is nearly seven years since Hurricanes Irma and Maria wreaked havoc on Puerto Rico and its power grid. The unresolved energy demands on the island are of utmost importance, as are PRDOH’s programs to tackle these issues,” remarked inspector Rae Oliver Davis. “This report grants essential transparency regarding program statuses and their advancement, along with an update on PRDOH’s utilization of the significant HUD funding aimed at improving the island’s power grid.”
“As part of our continuous strategic planning, we will routinely assess the status of both ER1 and ER2 to evaluate their progress against intended timelines, challenges faced, and critical risks that may necessitate further attention from HUD OIG,” added Oliver Davis.
