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Prepa’s 2nd Transition Charge Hinders Renewables, Increases Utility Costs

By on June 16, 2016

Instead of a fixed charge, the Puerto Rico Electric Power Authority’s (Prepa) Revitalization Corp. is now proposing an alternate transition charge for residential and nonresidential customers to securitize the utility’s debt, which may result in higher costs and hinder efforts to increase the use of renewable energy.

Fidencio Aldamuy, managing partner & chief operations officer for New Energy, says that while his industry knows they have to pay a charge, he says it should be reasonable to avoid hindering efforts to increase the use of energy produced by renewables as mandated by law.

Prepa headquarters in San Juan (CB photo/Eduardo San Miguel Tió)

Prepa headquarters in San Juan (CB photo/Eduardo San Miguel Tió)

“It is going to be 3.5¢ per kWh [kilowatt-hour] for anything that is generated behind the meter…. That is in addition to the increases [in utility charges] in August and January,” he said.

According to Revitalization Corp. documents, the Puerto Rico Energy Commission (PREC), the entity in charge of examining all Prepa charges, as well as investors raised certain issues that forced the corporation to propose a revised calculation methodology that establishes transition charges for residential customers based on their historic energy usage (in kWh) instead of a servicing agreement charge, and imposes a transition charge only on the net usage of “grandfathered” customers who have or are eligible to enter into net-metering agreements that satisfy the requirements of the Revitalization Act. These “grandfathered net-metered customers” (whether residential, nonresidential or governmental, as specified) had a net-metering agreement with Prepa as of Feb. 16, 2016.

Non-grandfathered customers will pay a transition charge calculated and adjusted based on gross kWh usage.

Aldamuy said a home that produces 900 kWh a month behind the meter will end up paying $27 more. A business that produces about 15,000 kWh of energy will end up paying $450 more per month.

Luis Acosta, managing partner & chief marketing officer for New Energy, noted that the transition charge will be detrimental to industries such as pharmaceuticals because they will be charged for “merely turning on a cogeneration plant.”

He said that instead of detailing charges, they will now be lumped into the securitization charge.

Alejandro Uriarte, president & CEO of the company, said that if there is going to be a charge to connect to the grid, then Prepa should complete the process more quickly. Right now, it takes up to 200 days for a net-metering customer to get connected to the grid, compared to 120 days in other jurisdictions.

According to documents submitted to PREC, the proposed transition charge will be about 0.03166¢ per kWh for residential customers and 0.03066¢ per kWh for nonresidential customers but it was unclear how this charge would be applied according to customers’ historical energy use.

On the other hand, public housing customers who pay a fixed charge for an applicable consumption-based block of electricity, will now only pay the transition charge on their kWh usage beyond their permitted block of electricity under Law 22-2016.

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