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Renewable industry calls for just and fair power rate hike for net metering

By on September 15, 2016

SAN JUAN – Members of the renewable energy sector are insisting to the Puerto Rico Energy Commission (PREC) that the proposed rate hike for all Puerto Rico Electric Power Authority customers will hinder efforts to increase the use of renewables.

The Puerto Rico Electric Power Authority, or Prepa, is currently in violation of laws that state that between 2015 and 2019, 12% of Prepa’s energy production must come from natural resources. By 2035, that number must be at 20%. If Prepa were to fall short of the laws’ requirements, the authority faces hefty fines.

“We have to take into account the monetary and nonmonetary benefits of renewables,” noted Máximo Torres, owner of Máximo Solar Industries, when asked at a recent rate-hike hearing by PREC held in Mayaguez about how much net-metering customers should pay to Prepa for electricity.

The commission approved on June 24 a uniform increase to all customer classes of 1.299 cents per kilowatt-hour (kWh), which will be added to the existing base energy consumption rate. The hike, which is needed to produce $222,256,790 in revenue, went into effect Aug. 1.

This provisional increase does not modify or affect the formulas to recover the cost of fuel and purchased power. Regarding customers under the Fixed Rate for Public Housing, who pay a fixed charge for an applicable block of consumption, the provisional increase will only apply to consumption in excess of that block. In the case of net-metering customers, the provisional rate increase applies only on their net consumption.

Separate from the hike in the basic rate, PREC approved a 3-cent per kWh transition charge and adjustment mechanism that will be used to pay for securitized debt. The charge applies to the gross kWh consumption of all Prepa customers, with two exceptions. For fixed block public-housing customers, the transition charge will apply only to kWh consumption exceeding the applicable consumption-based block of power usage.

For grandfathered net-metering customers, the transition charge will apply only to their net-metering consumption. Nongrandfathered customers will pay a transition charge calculated and adjusted based on gross usage.

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

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

Grandfathered net-metered customers are those (whether residential, nonresidential or governmental, as specified) who had a net-metering agreement with Prepa as of Feb. 16, when the Revitalization Act came into effect. Any customer who increases the capacity of their renewable energy system up to a 20% cap, as provided in the Revitalization Act, will cease to be considered a grandfathered net-metered customer the moment the increase in capacity to Prepa’s system is completed.

While the transition charge was not part of the rate-hike hearing, the imposition of the charges means Prepa is seeking to raise electricity prices by 22% in the first year of the plan, or 4.2 cents a kWh, increasing rates from 16.5 cents per kWh to 20.1 cents per kWh in 2017.


Prepa’s rate-hike request, the renewable industry claims, does not address the impact the rate hike will have on net-metering customers. Prepa’s rate petition includes the testimony of Ralph Zarumba, who said customers without distributed energy resources (DER) are subsidizing customers with DERs and that net metering will increase the rates to nonparticipating customers.

Torres said the costs paid by net-metering customers should be associated with “each one’s contribution.” While he claimed net-metering customers are having very little impact on the electric grid, he also said most net-metering customers produce their own energy during the daytime and then use the energy produced by Prepa unless they have their own batteries.

Based on remarks made at the hearing, it appears PREC is considering having a separate net-metering power bill for such customers.

On the other hand, Ángel Figueroa Jaramillo, president of Utier, the Spanish acronym for the Irrigation & Electrical Power Workers Union, urged PREC to avoid imposing a specific tariff using market values and instead “be sensitive” and think about the impact on Puerto Rico’s economic development and sustainability. He said Prepa was created to be able to provide power to everyone at the lowest cost possible.

“The commission has a social justice role…. Here, everyone is going to talk about the market and costs but no one will talk about social justice…. Instead of rates, we should talk about an energy policy that is structured, viable and feasible,” Figueroa Jaramillo said.

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