Puerto Rico Energy Commission claims goal is to ‘protect the people’
SAN JUAN — Puerto Rico Energy Commission (PREC) Chairman José Román refuted Monday statements contained in the Electric Power Authority’s (Prepa) fiscal plan that classifies PREC as intransigent and unreasonable in detriment to both the public corporation and private investors who could obtain the utility’s assets.
“[Prepa] wants to create conflict, and wants to create conflict to avoid supervision,” Román said.
“The fiscal plan states that you want a reasonable regulatory framework, [that is] reasonable for [Prepa] and reasonable for the investor. The regulator doesn’t choose to be reasonable with the utility. Its function is to protect the public interest and align all private and particular interests with the public interest, not to be a reasonable regulator,” he added.
The fiscal plan targeted the commission because in 2016 it rejected a formula rate mechanism proposed by Prepa that would modify the rates charged to customers annually to cover expenses or resolve emergencies after arguing the system would encourage misuse of funds in Prepa. The commission then ordered Prepa to establish a fixed rate structure that will take effect during the summer.
“The facts are distorted to present something differently for the benefit of the [Prepa’s] agenda. The fiscal plan makes a recount of the rate review process and tries to make us look like an intransigent commission,” Román said. “The reality is that the commission rejected that because it was not beneficial for the people of Puerto Rico
The official said that the formula rate mechanism allows for Prepa to “spend the money as it pleases, then [it] comes to the commission and says it spent the money as it pleased, and then tells the commission it will increase rates to recover the money.”
“The commission did not accept that proposal because it does not lead to fiscal discipline for the authority nor does it lead it to develop rates that are fair and reasonable,” the PREC chairman argued.
PREC also resolved to approve the budgets before Prepa spent the money. Once that budget reflects reasonable expenses, then it would be approved and, if it were necessary to increase rates, they would be increased. That is why the fiscal plan accused PREC of wanting to take operational control over Prepa.
“At no time do we want to manage the authority. Prepa is who sells energy. The commission manages the performance standards and the [governing] board establishes the mechanisms to comply with those performance standards,” Román assured.
He reiterated that the Energy Commission has the power to regulate private entities that come to buy Prepa, so it is prepared to complete the energy transformation, and there is no need to merge it with another agency. Gov. Ricardo Rosselló has proposed to eliminate PREC and create another regulator or transfer its duties to another entity, such as the Public Service Commission.
Although the fiscal plan classifies PREC as an impediment to energy transformation, the entity is in favor of Prepa’s privatization and recently approved regulation to facilitate the creation of energy microgrids.
Moreover, Román insisted that the federal Promesa law mentions the Energy Commission as the entity needed to green-light projects classified as critical under the statute, suggesting its elimination could create problems.
“What I can say is that the Energy Commission is empowered within Promesa to ensure and verify that the critical projects are within the integrated resource plan, as approved by the Energy Commission,” he said.