Citizens challenge PREPA pension charge in energy bill as illegal, unconstitutional.

The Puerto Rico Electric Power Authority Retirement System says that because the Provisional Charge funds retiree pensions, any order halting or nullifying it would cause “immediate, irreparable harm” to thousands of former authority workers who depend on monthly pension checks.

By THE STAR STAFF

A group of Puerto Rico electricity consumers is asking the federal court overseeing the Puerto Rico Electric Power Authority (PREPA) bankruptcy to let their lawsuit proceed, arguing that a controversial pension-related charge added to all power bills is unconstitutional and illegally imposed.

The petition, filed last Friday by Eduardo Horrutiener Socias, Cynthia Boscio Matos, José Alberto Morales Rodríguez and the Puerto Rico Medical Emergency Group Inc., represents 1.5 million residential and commercial customers. It aims to block what they call an “unlawful tax” created by the Puerto Rico Energy Bureau (PREB). The charge, called the Provisional Charge, was approved on July 31, 2025, and initiated on Sept. 1, 2025.

The plaintiffs, who also represent a class action filed in 2025 against LUMA Energy and others (Case No. SJ2025CV11155), say the PREB went beyond its legal authority under Puerto Rico law when it approved the charge. They argue the fee breaks both the Puerto Rico and U.S. Constitutions because it makes consumers pay for PREPA retirees’ pensions without getting any service in return.

On Feb. 17 of this year, the Financial Oversight and Management Board paused the class action by using the automatic stay that protects PREPA from lawsuits during its bankruptcy process under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). The plaintiffs then filed an emergency motion asking the federal court to lift the stay so the case can continue.

PREPA, the oversight board, and PREPA’s Retirement System have opposed that request, arguing that because the lawsuit challenges PREPA’s rates and revenues, it interferes with property protected under the bankruptcy stay.

The filing points out that the pension charge is not related to the current operation of the electrical system. It also does not meet the legal criteria for recoverable costs under Puerto Rico’s Energy Transformation and RELIEF Act (Act 57‑2014), which defines what expenses PREPA and its operators can recover through customer rates.

The petition argues that pension payments are pre-petition debts included in the bankruptcy years ago. They are not operating costs such as fuel, maintenance or current labor.

The petition also notes that customers have already paid amounts meant to fund PREPA’s pension obligations for years. However, PREPA’s management allegedly misused or diverted those funds, which led to the Retirement System’s insolvency.

The challenge further asserts that forcing consumers to pay for PREPA’s past pension debts amounts to an unconstitutional taking of private property, and that PROMESA does not override the U.S. Constitution’s Takings Clause.

The petitioners also say the oversight board does not have the authority to impose or require a pension charge. They refer to PROMESA §303, which protects Puerto Rico’s legislative powers, and mention past federal rulings that make clear the oversight board cannot make laws.

PREPA has cited the Fiscal Plan as justification for embedding pension costs into electric rates. But the plaintiffs counter that the plan merely suggested exploring such funding -- not mandating it -- and that only the Puerto Rico Legislature could validly impose such an obligation on consumers.

The plaintiffs insist the court should let their lawsuit move forward. They argue they have clear legal reasons to lift the bankruptcy stay. They say the Provisional Charge is an illegal act by PREB and an improper attempt to collect pre-bankruptcy debt from ratepayers.

The federal court has not yet decided whether to lift the stay. If the case moves forward, the class action could have major effects on PREPA’s restructuring and on all electricity customers in Puerto Rico. PREPA’s Retirement System defended the charge, saying that because the charge funds retiree pensions, any order halting or nullifying it would cause “immediate, irreparable harm” to thousands of former PREPA workers who depend on monthly pension checks.