• The San Juan Daily Star

Doubts raised over figures behind expected hike in electric bills

By The Star Staff

It appears that a hike of about 3 cents per kilowatt-hour (KWh) in the consumer utility bills expected in September as a result of adjustments to the purchase of energy and fuel purchase riders may not move forward.

LUMA Energy attended a Puerto Rico Energy Bureau (PREB) technical hearing last Thursday seeking approval of the adjustments for September that were the result of fuel purchase and power purchase adjustments for the months of June and July. However, during the hearing, PREB commissioners noted that calculations were done incorrectly, so the hearing ended without the energy regulator making a decision.

LUMA officials submitted their presentation at 6 a.m. on the same day as the technical hearing, prompting Ángel Rivera de la Cruz, one of the PREB commissioners, to give the private operator a scolding because PREB did not have sufficient time to evaluate the request.

“I am in the minority but if it were up to me, I would reject it from the get go,” he said.

As part of the rate tariff process, PREB a few years ago approved the creation of several riders to allow the Puerto Rico Electric Power Authority (PREPA) to recover certain costs. Those riders include fuel purchase, energy purchase, fuel subsidy, contribution in lieu of taxes, social interest subsidy and energy efficiency subsidy. The energy purchase and fuel subsidy are calculated quarterly, while the rest are calculated annually. The energy efficiency rider has not been implemented, PREB Commissioner Lilian Mateo said.

LUMA Energy Regulatory Vice President Mario Hurtado said that after finishing the review of the inventory and the cost of fuel, it was necessary to invoke the accelerated adjustment clause and submit new factors to take effect Sept. 1. The rules state that each month after PREPA disposes of final expenses for the purchase of fuel and purchased energy, it will prepare a new estimate comparing the recovery of purchased fuel and purchased energy for the quarterly period. If purchased energy and fuel purchase expenses deviate from the estimate by more than $20 million, the adjustment factors for purchased fuel and energy expenses will be re-estimated to arrive at the expected value of zero for the quarterly period.

José Gándia, a LUMA official who made the calculations, said realized costs of fuel increased by 17% from a forecasted $270.6 million to $316.5 million in June and July. There were $277.5 million of billed sales, which was 4.8% below the projection of $291.7 million. Added to that were the previous period adjustments totaling $18 million.

When applying reconciliations from June and July for fuel purchase charge and for power purchase charge, the result was a difference of about 3 cents for September.

The key drivers of the deviation were reduced availability due to an increase in plant outages, and lack of available generation reserves and functionality as well as longer-than-expected power outages, according to LUMA Energy.

After various officials made presentations, Rivera de la Cruz noted that the methodology used by LUMA to arrive at its numbers was not the one that had been approved by the PREB.

“There are at least two errors,” he said.

LUMA officials insisted that while they simplified the formula, they obtained the same numbers they would have obtained using PREB’s methodology.

In the end, Hurtado said they were going to continue to clarify their numbers.

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