Puerto Rico’s Municipal Lawsuits Threaten To Derail Energy Recovery

The Puerto Rican flag is seen behind power and communication lines in San Juan, Puerto Rico. (Photo by Ricardo ARDUENGO / AFP)

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Puerto Rico’s energy crisis has gone on far too long, and Washington has finally signaled that change is coming.

Earlier this month, President Trump removed five members of the island’s Financial Oversight and Management Board (FOMB), citing its “inefficient and ineffective” leadership. After years of mismanagement, Puerto Rico’s electricity system remains broken, its debt unresolved, and billions of federal recovery dollars have been squandered.

The island’s government-owned utility, PREPA, sits at the center of the mess. Once the sole provider of power across Puerto Rico, PREPA is drowning in debt and reliant on antiquated oil-fired power plants that drive some of the highest electricity costs in the United States. Despite years of promises, the utility has failed to restructure its obligations or transition to more efficient natural gas-fired generation. Litigation has stalled a viable debt deal, leaving ratepayers and U.S. taxpayers to bear the cost of dysfunction.

The Energy Information Administration recently found that Puerto Ricans lose power an average of 27 hours every year. On the mainland, the average is just two hours. Even more troubling, outages on the island have grown more frequent every year since 2021. Despite more than $20 billion in federal recovery funding since Hurricanes Irma and Maria, the lights are still going out across the island.

As I previously wrote, Puerto Rico supported a lawsuit by a California-based plaintiff attorney against U.S. oil and gas companies, seeking more than $1 billion in damages from the energy producers for allegedly deceiving the public about the risks of fossil fuels and their contribution to climate change. Puerto Rico Gov. Jeniffer Gonzalez Colon eventually dropped the lawsuit against energy producers, bringing the Commonwealth in line with the Trump administration’s energy dominance agenda.

Unfortunately, more than a dozen Puerto Rico municipalities are persisting with a campaign against U.S. companies by targeting FEMA recovery dollars. Nearly a decade after Cobra Acquisitions restored much of the grid under an emergency FEMA-funded contract, local mayors are demanding more than $70 million in so-called unpaid construction taxes. The lawsuits ignore the fact that federal disaster work performed for PREPA is exempt from these taxes.

If these municipalities succeed, the precedent would be disastrous. Contractors could face years of retroactive litigation for work done in good faith under federal authority. Recovery costs would soar, discouraging qualified companies from stepping in after future disasters. And in Puerto Rico, every extra dollar diverted to litigation is a dollar not available to rebuild generation, strengthen transmission, or lower electricity costs.

Meanwhile, billions in federal funds remain unspent. PREPA recently submitted a Consolidated Project Plan to FEMA, requesting approximately $3.6 billion for long-overdue grid modernization. At the same time, the Department of Homeland Security has given Secretary Kristi Noem new authority to review major contracts and grants. She should use it to ensure that FEMA dollars flow to infrastructure, not to courtroom cash grabs. Pausing or withholding funds until Governor Jeniffer González Colón reins in municipal litigation may be the only way to restore accountability.

President Trump’s National Energy Dominance Council can play a leading role in Puerto Rico’s recovery, aligning federal oversight with an agenda that harnesses America’s energy abundance. A reconstituted FOMB should prioritize PREPA’s debt restructuring, fast-track natural gas generation and LNG import projects, and work with private partners to build a modern, resilient grid.

The stakes are high. Puerto Ricans deserve affordable, reliable power, and U.S. taxpayers deserve to know that recovery funds are being used to strengthen the grid rather than bankroll frivolous lawsuits.

Puerto Rico has a choice. It can continue the cycle of mismanagement and litigation, or seize this moment to modernize the island’s grid and align with America’s energy future. With new oversight, strong federal leadership, and an end to municipal cash grabs, the Commonwealth can finally deliver on the promise of a stable and prosperous energy system.