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Puerto Rico power utility chairman assures no rate hikes amid privatization

By on April 11, 2018

SAN JUAN – A resounding “no” to a possible rate increase was expressed by Ernesto Sgroi, chairman of the Puerto Rico Electric Power Authority’s (Prepa) governing board, when categorically refuting the possibility of the panel allowing any consumer rates to be raised amid the creation of the controversial Law to Transform the Puerto Rico Electric System.

Sgroi was replying to questions from the chairman of the Puerto Rico House of Representatives’ Economic Development, Planning, Energy, Telecommunications and Public-Private Partnerships Committee, Rep. Víctor Parés, in the continuation of work with the chairman of the Government Committee, Rep. Jorge Navarro, both of whom are analyzing the sale of the public power company’s assets, as well as  the transfer of operations, functions and services.

“The objective is to lower the cost of the kilowatt-hour, that it be predictable and low; this is of great importance for the Puerto Rican people. If the sale contract of Prepa affects the [power] authority’s customers, the governing board won’t approve it,” he said while favoring House Bill 1481 to privatize the public corporation.

Prepa Governing Board Chairman Ernesto Sgroi (Courtesy)

“The bill is compatible with the fiscal plan we have in the Authority. We, Prepa’s governing board, endorse the testimony given last week by engineer Justo González on behalf of Mr. Walter M. Higgins,” the utility chairman said.

He also said the measure allows the proposals of interested companies to be evaluated and confirmed that discussions are underway and no bids have been received.

The Government Committee chairman then required him to provide the committees a list of the entities interested in the privatization.

To questions by Rep. Parés about the hiring of Prepa’s new director, Sgroi acknowledged that the $450,000 annual salary was high.

“We sought a person who would make decisions to the benefit of customers, that…process will be carried out by Mr. Higgins. We reiterate here our selection of the new executive director, we cannot make the same changes that have been made in the past years, we have [to do] something different to see changes,” he said.

The president of the Puerto Rico Society of CPAs (CCPA by its Spanish initials), Ramón Ponte, supported the general concept of transforming the island’s electric power system. However, he voiced concern over the “lack of clarity and gaps in the current language of the measure that could hinder or even impede the goal of achieving the transformation proposed by the bill.”

“It’s crucial for the industrial development of Puerto Rico to have reliable energy sources that are produced at costs that allow maximum development of this,” said Jaime García, the legal adviser of the Puerto Rico Manufacturers Association (PRMA).

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“It is of vital importance that every private operation of generation, transmission, distribution, and commercialization of electric power of Puerto Rico remain under the jurisdiction of the Puerto Rico Energy Commission (PREC) as a supervisory and independent entity that establishes uniform and impartial rules, guidelines and parameters applicable equally to all components of this industry,” the PRMA president added.

Likewise, the president of the United Retailers Association (CUD by its Spanish initials), Nelson J. Ramírez, endorsed the measure after first suggesting the bill provide for the transfer to privatize hands not only the generation, but also the transmission, which is what delayed the restoration of power on the island after the passage of Hurricane Maria.

Lastly, Alicia Laboy, Chamber of Commerce president, supported the transformation into a modern, efficient and cost-effective entity. She alluded to the change as necessary to stabilize the manufacture of products, commerce and services on the island “with the objective making us a viable and competitive investment alternative.”

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