Electricity consumers group seeks to revive challenge to pension charge in bankruptcy court
By THE STAR STAFF
A group of electricity consumers is again asking the federal court overseeing the Puerto Rico Electric Power Authority’s (PREPA) debt restructuring to allow a legal challenge to continue against a pension surcharge that has been added to electricity bills, arguing that the fee is an unconstitutional tax that unfairly forces ratepayers to finance legacy pension obligations.
In a “Renewed Motion for Lift of Stay” submitted Nov. 5, four petitioners asked the Title III court to lift a stay that has prevented their proposed class-action lawsuit from moving forward in Puerto Rico courts. The challenge targets a pension charge imposed on more than 1.5 million residential and commercial electricity customers across the island.
The surcharge took effect Sept. 1, 2025, and was later made permanent for a three-year period by the Puerto Rico Energy Bureau through a
n order issued on April 15 of this year. According to the filing, consumers have already paid more than $200 million through the charge, which is expected to generate some $307 million annually, or about $25.6 million each month.
The petitioners contend that the charge is illegal because customers receive no electricity service in exchange for the payments. They argue that the funds are being diverted to PREPA’s retirement system rather than being used for current utility operations. The filing points to findings by the Puerto Rico Energy Bureau (PREB) indicating that PREPA must transfer the collected revenues to a separate pension system and does not control how those funds are spent.
The consumers further argue that the surcharge is being used to pay legacy debt obligations that should instead be addressed through PREPA’s ongoing bankruptcy restructuring. They maintain that the Financial Oversight and Management Board cannot create legal authority for the charge simply by including pension funding assumptions in its fiscal plans.
The latest motion follows an earlier setback. The bankruptcy court denied a previous request for relief from the automatic stay on March 24. The consumers appealed that decision, and the appeal remains pending before the U.S. Court of Appeals for the First Circuit.
In their new filing, the petitioners argue that allowing the Puerto Rico courts to decide the legality of the charge would not interfere with PREPA’s restructuring process. They say the case is already well developed and could resolve important legal questions that the PREB itself declined to answer, including whether pension obligations should be treated as current operating expenses or as prepetition debt subject to restructuring.
The motion asserts that ratepayers continue to suffer harm as long as the surcharge remains in effect and asks the court to permit the state-court litigation to proceed through a final judgment. The consumers contend that doing so would promote judicial efficiency while providing a definitive ruling on whether Puerto Rico electricity customers can legally be required to fund PREPA’s pension system through their monthly bills.
