Wednesday, October 16, 2019

Prepa to Submit Rate-Hike Request of About 4 Cents per kWh

By on May 24, 2016

SAN JUAN–The Puerto Rico Electric Power Authority (Prepa) is on its way to submitting a rate-hike request of about 4.2 cents per kilowatt-hour (kWh) to the Puerto Rico Energy Commission (PREC), as previously reported by Caribbean Business.

Lisa Donahue, Prepa Chief Restructuring Officer

Lisa Donahue, Prepa Chief Restructuring Officer

After Prepa’s board gave its green light, Carlos Gallisá, one of two consumer representatives on the board, said that as early as August, consumers will see a provisional hike of 1.3 cents per kWh on their bills but after the November elections, there will be another hike of about 2.9 cents per kWh.

The proposed hike, combined with a proposed transition charge, is expected to result in a rate hike of 28.6% for residential, 22.1% for commercial and 26.2% for industrial users.

“The average hike will be 26.5%,” Gallisá told Caribbean Business.

Based on Prepa documents obtained by Caribbean Business, the utility has been using 2014 rates for comparisons, which are higher than most recent rates. Due to factors affecting supply and demand, oil prices began to drop in the summer of 2014 and continued to be low in 2015 and so far in 2016.

Gallisá said he voted against the hike, which was approved by the rest of the board in a 6-1 vote. Carlos Santini Gaudier, the other consumer representative, was absent from the recent meeting, which was convened to evaluate the rate hike, and was not announced on Prepa’s website because it was not a regular meeting.

He noted that the hike was less than what the board had originally been told because Prepa managed to reduce operational costs by $55 million, which coincides with recent lending from bondholders.

The request for a hike in the utility’s base rate, part of the process for restructuring its $9 billion debt, was agreed to with bondholders.

The utility has not changed its base rates since 1989. The rates for residential customers are $4.35 for the first 4.25 cents kWh of consumption and 4.97 cents per kWh for anything above that. The rate includes a $3 fixed rate. The rates for commercial and industrial customers are higher and vary.

 

For more on this story, check out this Thursday’s print edition of Caribbean Business.

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