Puerto Rico senator rails against utility’s restructuring support agreement
Argues it will raise rates and hinder transition to renewable energy use
SAN JUAN – Senate Minority Leader Eduardo Bhatia blasted the debt-restructuring support agreement of the Puerto Rico Electric Power Authority not only because he said it would raise consumers’ energy bills but also because it would cast aside advances toward the use of renewable energy sources.
Bhatia said he will submit his opinion that the agreement should be rejected to Judge Laura Taylor Swain despite understanding that parts of it have to be passed by the Legislature, not approved by her. The agreement has already been submitted to the court and is expected to be evaluated in June.
Months ago, the Popular Democratic Party lawmaker, along with Senate Majority Leader Larry Seilhamer, backed the public energy policy bill that requires Prepa to only use renewable energy sources by 2050. Act 17 of 2019 establishes the goal of ensuring affordable and fair rates for electric service that get as close as possible to the 20 cents per kilowatt-hour (kWh) objective established in the fiscal plan the island’s financial oversight board certified for the utility.
The Prepa restructuring support agreement, revealed May 3, entails the exchange of Prepa’s bonds for two types of bonds that will be paid through a fixed transition charge, which would begin at 2.768 cents per kWh and gradually rise to 4.552 cents per kWh in 2044. In July, consumers will pay 1 cent per kWh as a “settlement charge.”
Gov. Ricardo Rosselló insisted Tuesday that the agreement will not result in higher electricity bills.
Although Seilhamer said Tuesday that any rate increase will be offset with the use of natural gas, among other savings, Bhatia said those expectations are theoretical.
“Those are efficiencies that we do not know will help compensate for the increase; all of that is speculative,” Bhatia said after reiterating the charge will result in higher rates. “That’s an increase” to the electric bill, he said, adding, “The country has been lied to.”
Bhatia recalled that the agreement negotiated by AlixPartners in 2016–which the island’s Financial Oversight and Management Board later rejected–reduced the debt by 15%, not 30% as would the current agreement, but that at that time, the Puerto Rico Oversight, Management and Economic Stability Act, which allowed Prepa to file for bankruptcy-like protection, did not exist.
The agreement, Bhatia said, is a step backward in the use of renewable energy because consumers would be penalized for installing solar panels and batteries in their homes. The senator said he has no problem with utility customers being charged for the energy they consume from Prepa, but that they should not be charged for energy they self-generate.
On May 3, the director of the Puerto Rico Fiscal Agency and Financial Advisory Authority, Christian Sobrino, said consumers who are disconnected from the electricity grid would not pay any transition charges, but all other customers will have to pay for it.
However, consumers who install renewable energy equipment in their homes before Sept. 30, will pay a lower transition charge for the next 20 years. Under the agreement, these grandfathered customers with behind-the-meter generation (BTMG) “will be subject to a monthly Transition Charge in the form of a fixed charge calculated for each month by multiplying the Transition Charge Rate applicable to such month by a monthly average of the Grandfathered BTMG Customer’s Net Consumption over the prior twenty-four (24) month period, after taking into account a three (3) month lag time,” the RSA reads.
Customers who install solar panels and batteries after September “shall be subject to a monthly Transition Charge in the form of a charge that shall be the greater of (x) a fixed charge calculated for each month by multiplying (i) the Transition Charge Rate applicable to such month by (ii) the monthly average of that NonGrandfathered BTMG Customer’s Gross Consumption during the then-applicable Twenty-Four Month Period, and (y) the product of the Transition Charge Rate applicable to such month and the Non-Grandfathered BTMG Customer’s Net Consumption for such month,” the agreement further says, adding that “All Customers other than BTMG Customers will be subject to a monthly Transition Charge calculated by multiplying each Customer’s Consumption by the then-applicable per kilowatt hour Transition Charge Rate.”