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Strong opposition to consolidation of Puerto Rico Energy Commission

By on February 6, 2018

SAN JUAN – During the first public hearing on a series of evaluations of the five reorganization plans submitted to the Puerto Rico legislature by the administration of Gov. Ricardo Rosselló, the acting director of the Puerto Rico Energy Commission (PREC), José Román, defended the entity’s independence ahead of the Electric Power Authority’s (Prepa) proposed privatization.

Before the House Government Committee, chaired by Rep. Jorge Navarro, Román said the consolidation of his and two other regulatory bodies “significantly disrupts the structure of PREC, affecting fundamental principles of the regulation of utilities, such as its substantive and financial independence.”

Rep. Jorge Navarro. (Courtesy)

House Speaker Carlos Méndez, however, said PREC’s autonomy and that of the Independent Consumer Protection Office (OIPC by its Spanish initials), which is also included in reorganization plan 5, would not be disrupted by the proposal;s approval.

“To say there isn’t going to be independence, that’s false. There’ll be independence. We’re going to guarantee that this independence exists,” Méndez assured during the hearing. In an aside with the press, he said that to address the concerns about PREC and ICPO’s autonomy, there could be changes to the bill, because what cannot be amended is the governor’s reorganization plan.

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Were the amendments to the debated House Bill 1408 not be compatible with the reorganization plan proposed to create the Public Service Regulatory Board (JRSP by its Spanish initials), Méndez said the plan would be rejected for the Executive to adapt it to the legislative amendments.

Similarly, the island’s fiscal oversight board established in a letter that an independent energy regulator is crucial for a successful transformation of the energy sector. Therefore, the fiscal body required the governor’s administration to include a plan for an independent and robust energy regulator in the commonwealth’s fiscal plan apart from introducing a bill that forms the model no later than next summer.

Despite agreeing with this order, PREC’s executive director stressed that new legislation is not necessary because the entity already abides by board requests such as three commissioners, power to approve rates and total autonomy.

Román put into question the proposed Energy Bureau’s efficacy, as it would have only one commissioner, appointed by the governor and that could be removed at any time, “with or without just cause.” For the interim PREC director, it is important that the entity have at least three members, to promote the exchange of ideas and opinions.

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On the matter, Popular Democratic Party (PDP) minority Rep. Luis Vega Ramos asked if the power of the governor to dismiss the commissioner could inhibit the energy expert from making decisions that contradict the executive’s position.

According to its enabling law, PREC receives an annual budget of $5.8 million from the Electric Power Authority (Prepa), while another part of its revenue comes out of 0.25% of the annual gross income of electric service companies that generate “income when generating electricity.”

In the reorganization plan, PREC’s budget would come from the General Fund. “This act creates an additional burden on the general fund that currently doesn’t exist,” in addition to not eliminating the regulatory charge subscribers currently pay, so the consolidation of the agency in economic terms “doesn’t represent a saving for the citizen nor for the government,” Román said.

House PDP spokesman Rafael Hernández questioned whether using the government’s general fund for the PREC’s budget could jeopardize its funding amid the bankruptcy process under Title III of the Promesa law.

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