Another hike, another battle
United Retailers Center opposes imposition of monthly increase in electricity bill to meet obligations to bondholders & unpaid pensions
By Richard Gutiérrez
Electricity today is almost essential to basic survival -- for refrigerating food, and for powering medical equipment, air conditioning and the overall production and manufacturing of many necessities. When it comes to everyday consumption, it’s not just important to consumers, but also to vendors. Unfortunately, Puerto Rico pays a high price for its electric power -- a whopping 1.299 cents per kilowatt-hour. This price is not only an issue for residents, but also for the small and midsize businesses on the island as well, as they also must pay electricity bills and other expenses. And this is not to mention the blackouts that happen constantly.
As it stands now, the electricity bill is plenty high, but it doesn’t stop there. On Tuesday, United Retailers Center of Puerto Rico (CUD by its Spanish acronym) President Lourdes M. Aponte Rodríguez lamented that unfortunately the increase in the electricity bill will continue to rise just to meet the demands of Puerto Rico Electric Power Authority (PREPA) bondholders. Aponte warned that apart from the additional legacy charges, there are also charges regarding the PREPA workers’ pensions that are estimated by the Financial Oversight and Management Board, and which represent a 20% increase in the already skyrocketing power bill.
“Our merchants can only take so much. They are outraged by the situation,” Aponte said at a press conference. “We are dismantling the people and an enterprising sector that moves the economy of the island forward, similar to the pymes [small and midsize enterprises], only to help the PREPA bondholders and pay the pensions that are the responsibility of the government.”
“This is a product of the bad administrative decisions that the government of Puerto Rico has made over the past several years,” she added. “We cannot allow them just to pay for the sinner’s crimes. We can no longer withstand this abuse. The expenses of small businesses in terms of electricity have absolutely no end. It’ll shut down production, employees and services, at a time when it is difficult to pass on the costs to the consumers.”
In other words, the government continues to put a stranglehold on the private sector, the business leader said, and in the current inflationary economic environment, it is asking too much of customers to pay higher prices when they already have a high cost of living. The CUD president noted further that the current economic conditions also greatly impact the already dire situation of small and midsize businesses. She said many pymes can no longer operate as they used to; hiring is down and dismissals are up, which in turn reduces production and eventually causes the inevitable closure of the company, something that has happened repeatedly across the board in Puerto Rico.
“These decisions don’t benefit the island in the slightest, all they are doing is sucking us dry and eventually we won’t have any more to give,” Aponte said.
Meanwhile, the oversight board may request the rejection of two PREPA collective bargaining agreements in order to cut pension benefits, a status report submitted to the Title III bankruptcy court late Monday said. The oversight board is negotiating with the unions as part of PREPA’s bankruptcy restructuring to reduce pension benefits, which are going to be treated separately. The report says that if no agreement is reached, the board may invalidate the collective bargaining agreements, arguing that the pension funds are underfunded.
“If a consensus on pension treatment is not reached, the oversight board may have to request rejection of two collective bargaining agreements for the limited purpose of altering pensions based in part on the fact that the pension plans are underfunded by billions of dollars,” the status report said.
The oversight board cut bondholder and other creditor recoveries in the third amended plan of adjustment filed Aug. 25.
The CUD president called on Gov. Pedro Pierluisi Urrutia to act immediately regarding the determination of the oversight board, which she called nefarious, not only for businesses but also for citizens, and to search for the funds needed to pay the pension costs owed by PREPA, so that neither businesses nor citizens in general are affected. She reiterated that the citizens of Puerto Rico should not sit back with their arms crossed and allow the island to drown in misery.
The press conference was filled with numerous and diverse private sector representatives, one of them being engineer Tomás Torres Placa, the consumer representative on the PREPA governing board.
“This is a 20% increase for the commercial and residential sector and a 22% increase for the industrial sector,” Torres Placa said. “In the end, with these increases the [cost per] kilowatt-hour will be 26.5 cents for some sectors and for others it’ll be 27 cents per kilowatt-hour. Which would turn Puerto Rico into something other than what it already is.”
He estimated the island’s current annual gross domestic product at close to $114 billion.
“Because of this [electricity cost] increase the economy could change drastically; we would probably have an economy close to Jamaica’s, whose gross domestic product is around $17 billion every year,” Torres Placa said. “We would also have an even greater migration outside of the island because the economy would be focused not on the economic sector but the tourist sector, making us have a smaller economic development. That is why it is imperative to address the adjustment charge by lowering the cost of the electricity bill to 1 cent per kilowatt-hour, thus providing more economic development on the island, and with the economic development that is created, PREPA can cover such costs.”
“There are solutions, but the first thing we must do is attend to the spending that is reflected by the PREPA pensions,” he added. “The [oversight] board actually intends to pass that directly to the consumers with spending of 2.4 cents per kilowatt-hour.”
When asked when the next meeting with the oversight board will take place, Aponte invited members of the press to “come to the commission next Saturday where they will be giving an information dump in terms of the results and the impact the increase will have on the private sector and the consumers.”
“It will be on that day that the CUD will solicit another meeting with the oversight board,” she said. “They want to show the situation as it is and they have plans and solutions to show to the financial oversight board.”
“The government is already bankrupt, [and] now they are going after us, the private sector,” Aponte said. “This isn’t about complaining; we can complain as much as we want but if we don’t act right now, and quickly, they will bankrupt the private sector as well and we cannot allow this. We need a balance and we need to talk with reality and talk with reality to the people of Puerto Rico.”
“This will affect us for the next 35 years,” the CUD president added. “We have always been willing to work with the government, but unfortunately the government has become an obstacle for the private sector. It’s time for that to stop.”