November 28, 2020

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Energy Bureau rejects automatic rise in bills

The president of the Puerto Rico Energy Bureau, Edison Avilés, said yesterday that the privatization of the Puerto Rico Electric Power Authority (PREPA) operation does not automatically lead to an increase in the electricity bill, but he acknowledged that the new operator “has the right” to request a rate review.

“(The operator) can come to the Bureau, argue that numbers don´t balance, and ask for a rate review. That’s their right, but it doesn’t mean it will be approved. The Bureau has to verify everything,” he said in an interview with El Nuevo Día.

With this answer, Avilés sought to dispel concerns about the possibility that selecting LUMA Energy – to operate the transmission, distribution, and customer service systems – may result in a rate increase. The president of the Electrical and Irrigation Industry Workers Union (Utier), Ángel Figueroa Jaramillo, the consumer representative on PREPA’s Governing Board, Tomás Torres Placa, and even the associate commissioner of the Energy Bureau Ángel Rivera de la Cruz are among those who raised alarms regarding this issue.

Ángel Rivera de la Cruz was the only member of the Bureau that voted against the agreement between PREPA and LUMA, warning that the information provided to the regulatory body was not sufficient to determine the cost-benefit of the transaction and would not result in reasonable fees.

“Signing the contract does not imply a rate increase, and this was explained yesterday (Monday) by Fermín Fontanés (executive director of the Public-Private Partnerships Authority, P3A) and Wayne Stensby (LUMA chief executive officer). It doesn’t mean that, because it’s a $1.5 billion contract, they’re going to come requesting an increase. It doesn’t. There will be no rate increase here regarding this contract,” Avilés said.

He also noted that LUMA’s contract does not alter the powers of the agency over rate issues.

“That remains our exclusive responsibility. In due course, LUMA will establish its annual operating expenses and, if it is far from what has been approved, whether it is higher or lower, they have the right to ask the Bureau to review the rates, but this does not mean that request will be approved,” insisted Avilés.

“The Bureau asks for documentation on expenses and investments, for example, and reviews everything. That’s the theory. But, going back to this contract (LUMA), it does not modify or alter the responsibilities of the Bureau provided by Law 57-2014, Law 120-2018, and Law 17-2019, and as they said yesterday (Monday), it does not imply a rate increase,” he added.

The transition process between PREPA and LUMA will take between 10 and 12 months. During that period, the U.S.-Canadian joint venture will analyze PREPA´s income and expenses, including the $240 million the public utility currently pays to external consulting.

Avilés explained that, if LUMA eventually requests a rate review, they would initiate a process that could last up to six months and would include citizen participation.

He added that the Bureau could also start a “motu proprio” review process. “If we see something that doesn’t look good in the numbers, we can start a “motu proprio” review,” he said.

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