Friday, April 27, 2018

Prepa hikes basic tariff, conditions approval of Aguirre Offshore Gasport

By on January 10, 2017

SAN JUAN – While lower than the provisional energy rate that went into effect in June, on Tuesday the Puerto Rico Energy Commission (PREC) hiked the Puerto Rico Electric Power Authority’s (Prepa) basic rates, ordered an economic evaluation of alternatives to the Aguirre Offshore Gasport and banned the utility from expanding its subsidiaries.

“With some exceptions, the hike will appear in customers’ bills as a hike of 1.025 cents per kilowatt-hour [kWh]. This reduction is approximately 0.274 cents per kilowatt hour, or 21 cents less than the current provisional rate established in our June 24 order,” the PREC says in a document.

The PREC performs public hearings to investigate Prepa's rate hike, established last August. (Agustín Criollo/CB)

The PREC holds public hearings to investigate Prepa’s rate hike. (Agustín Criollo/CB)

The difference of about $45 million between the provisional tariff and the new base tariff must be returned to customers, the energy commission said.

The order comes after more than three weeks of technical hearings to determine the public utility’s revenue requirement. The PREC concluded that the utility’s revenue requirement was of $3.4 billion, not $3.5 billion as the utility had requested.

Prepa must submit no later than Feb. 15 a document detailing the hike in each type of tariff, the date it will go into effect and the language explaining the tariff hike to customers.

A significant change made by the PREC is it maintained its decision to keep the $15 million cap on Aguirre Offshore Gasport (AOGP) expenditures subject to the results of an economic study evaluating other alternatives. As previously reported by Caribbean Business, two PREC experts suggested such a study. Former Prepa Executive Director Javier Quintana had said the AOGP is the only alternative to reduce energy costs because customers had rejected a proposed gas pipeline.

In order to set rates in the future, the PREC adopted three different processes. The first entails a rate case every three years to evaluate Prepa’s efforts to reduce costs and the physical condition of its facilities to determine its revenue requirement. Between each rate case, the PREC will do yearly budget studies to determine what is the fair and reasonable revenue for the following year.

By fiscal year 2018, there will be a special process to deal with any amendments to the approved 2017 revenue requirement to prevent Prepa from providing requirements that aren’t based on the budget.

The PREC also banned Prepa from expanding its subsidiaries to avoid damaging the public corporation financially. In 2009, Prepa created Prepa Holdings as a subsidiary, which owns Prepa Networks LLC, Consolidated Telecom of Puerto Rico, and InterAmerican Energy Sources.


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