P.R. Laws tit. 22, § 232
(a) The “Hydroelectric System of the Isabela Irrigation Service” includes the hydroelectric works and transmission and distribution lines and all facilities, improvements, extensions and additions making up the Hydroelectric System constructed or acquired under the provisions of the Isabela Public Irrigation Law approved June 19, 1919, and laws amendatory thereof or supplementary thereto, hereinafter referred to as the “Isabela Public Irrigation Act”, §§ 301—315 of this title, in use as of the effective date of §§ 232—237 of this title for the generation and distribution of electric power, operated by the Department of Transportation and Public Works of Puerto Rico pursuant to the provisions of said act, all of which works shall be hereinafter collectively referred to as “the Hydroelectric System”.
(b) The operation by the Department of Transportation and Public Works of the Hydroelectric System under the present set-up does not adequately meet the requirements of the district served by said System, and the integration of said System with the present electric properties of the Puerto Rico Electric Power Authority, hereinafter designated as “The Authority”, will provide the means, not otherwise available, for expanding and improving the properties now making up the Hydroelectric System and thus meeting the ever increasing demand for electric power service in the district.
(c) The conveyance of the Hydroelectric System to the Authority will permit further expansion and improvement of the System so conveyed and will improve the electric power service throughout the district.
(d) Under the provisions of §§ 301—315 of this title, all profits deriving from the sale of hydroelectric power developed in connection with the construction of the Irrigation System shall be covered into the Isabela Irrigation Fund and shall be applied, as provided by said sections, to reduce the amount of the special annual assessment until all indebtedness incurred on behalf of the Irrigation System has been fully paid; but the right and title of ownership to such hydroelectric power shall remain in the Commonwealth Government.
(e) In accordance with the provisions of Act No. 178 of the Legislature of Puerto Rico, approved May 14, 1941, as amended by Act No. 431, approved May 14, 1951, the Legislature reduced the amount of the assessment theretofore required to be levied on the lands included in the Isabela Irrigation District in order to be able to render an adequate service to water users without incurring losses in the operation of the irrigation system proper, as had been the case in previous years.
(f) It is estimated that the available net amount which would have resulted from the operation of the Hydroelectric System for the fiscal year 1954-55 to be covered into the Irrigation Fund established by §§ 301—315 of this title, once the electric power rates and the operating costs of the said System were brought to the levels of those of the Authority, would be one hundred and twenty-five thousand dollars ($125,000).
(g) The proceeds of the tax levied and collected at present by the Secretary of the Treasury of Puerto Rico on the lands comprising the Isabela Irrigation District, together with other revenues deriving from the operation of the Isabela Irrigation System and the net amount available from the operation of the Hydroelectric System, will not, after the lowering of the electric power rates and the raising of the wage rates of the Isabela Irrigation Service to the level of those of the Authority and the providing for the payment of a royalty to the Commonwealth Treasury, which it is required to be paid once the conveyance takes place, pursuant to §§ 191—217 of this title (which royalty is at present estimated at approximately forty-five thousand dollars ($45,000), and after the establishing of the reserves required by the Authority, be sufficient for paying the principal and interest of the outstanding bonded indebtedness incurred by the Commonwealth of Puerto Rico for the account of the said Service and the operating expenses of the Irrigation System; and to cover such deficiency the Commonwealth of Puerto Rico will provide funds in the manner provided in §§ 232—237 of this title.
(h) Under the provisions of §§ 191—217 of this title, the Authority may, whenever it deems it advisable in the public interest, take over and operate the Hydroelectric System upon the authorization of the Legislature of Puerto Rico.
(i) The Authority has found, and such findings have the approval of its consulting engineers, who were employed pursuant to the provisions of the Trust Indenture dated January 1, 1947, by and between the Authority and the First National City Bank of New York:
(1) That in case the Authority issues its bonds under the provisions of said Trust Indenture in such an aggregate principal amount, bearing interest at such rate, and maturing on such dates as to render same equivalent to annual payments to the holders of such bonds, in the way of principal and interest, in the amount of [one hundred twenty-five thousand] dollars ($125,000) a year over a period of nineteen (19) years (which is the annual burden imposed on the Authority by §§ 232—237 of this title as an item of Operating Expenses to be paid by it), and sells such bonds at par in order to raise funds to acquire by purchase the Hydroelectric System, the purchase price of one hundred twenty-five thousand dollars ($125,000) year for nineteen (19) years would be a reasonable price to pay for said properties;
(2) that the acquisition of the Hydroelectric System would, in the opinion of the said Consulting Engineers, preserve, develop and improve the “System” as such word is defined in said trust indenture;
(3) that the additional annual revenues of the “System” (as so defined) will be at least one hundred seventy thousand dollars ($170,000) over and above the additional annual expenses resulting from such acquisition, figured as provided by § 209 of the said trust indenture;
(4) that after adding such additional annual revenues to the average annual revenues of the “System”, computed as provided in § 209(e)(i), the percentage obtained by dividing such total amount by the maximum amount of the principal and interest payable in any subsequent fiscal year on the score of all the bonds theretofore issued under the provisions of the said trust indenture and then outstanding and all such additional bonds as it might be required to be countersigned and delivered in order to obtain the money for the said purchase price of the Hydroelectric System, should same be purchased in this fashion, would not be less than one hundred and fifty percent (150%);
(5) that the conveyance of the Hydroelectric System to the Authority under the provisions of §§ 232—237 of this title and subject to the conditions hereof, in lieu of the purchase of the Hydroelectric System through the issuance and sale of bonds of the Authority, is acceptable to the Authority, the effect of such conveyance being, substantially, the same as if the Authority had issued its bonds for the acquisition by purchase of the Hydroelectric System and equally profitable to the Authority, and
(6) that it is advisable in the public interest for the Authority to take over and operate the Hydroelectric System.
History —June 20, 1955, No. 84, p. 326, § 1, eff. July 1, 1955.