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Utility’s consumer rep warns of Puerto Rico energy policy challenges

By on April 12, 2019

The Puerto Rico Electric Power Authority’s headquarters in San Juan (CB file)

Plan projects additional 6.2 cents over 10 years to pay Prepa debt, pensions

SAN JUAN – The consumer representative on the Puerto Rico Electric Power Authority’s (Prepa) board, Tomás Torres Placa, praised the new energy public policy enacted on the island this week, but warned that the challenge will be its implementation.

“The bill is historic and positive for the country,” he said. “Now the challenge is the implementation, and everything should benefit the consumer.”

This is due to the fact that the utility’s integrated resources plan (IRP), which presents different portfolios and scenarios to provide electricity to consumers in the future, projects an impact on the consumer rate of 6.2 additional cents per kilowatt-hour (kWh) for the next 10 years for the payment of the corporation’s debt and retiree pension plan.

The IRP, which is being reviewed by the Puerto Rico Energy Bureau after rejecting as defective, establishes that there is a component in the rate that cannot be ignored by Prepa. This component reflects the charges for inherited liabilities such as pensions and debt. The amount included is approximately 3 cents per kWh for servicing the debt and 2 cents per kWh to fund the pension plan.

“This component is static and does not change with the asset mix of the portfolio,” the plan reads.

Torres said the projected 6.2 cents that would be added to the current rate, cannot come exclusively from the pockets of the 1.5 million Prepa subscribers.

“This would raise the energy cost in such a way that even if savings of about 3 cents per kilowatt-hour are achieved, the rate would increase to 25 cents per kilowatt-hour. Alternatives should be sought to help pay some of this debt value and that it does not fall exclusively on consumers,” Torres said. “Therefore, once the debt is restructured, we must look for other ways to pay it.”

To questions from CB en Español, Torres said the adjustment to the basic rate to take effect May 1 is not “important” since, in the end, the adjustment would be of about 0.3 cents for the consumer.

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