Electricity price hike questioned

By John McPhaul

Tomás Torres Placa, the consumer representative to the Puerto Rico Electric Power Authority (PREPA) governing board, questioned on Tuesday the projected increase in the electricity rate for January, February and March of 0.81 cents per kilowatt-hour (kWh), equivalent to 4.7 percent of the current cost.

The projected rate hike was in accordance with the Dec. 31, 2020 resolution and order of the Puerto Rico Energy Bureau.

“Although the intention of the Energy Bureau order of Dec. 31 is to adjust the cost of electricity based on the cost of fuel, this order makes serious indications regarding multiple inconsistencies found between the fuel costs presented by PREPA and the market costs,” Torres Placa said in a written statement.

The order, he said, reveals that there is a gap in the fuel inventory, which has an effect on the cost that PREPA recognizes in its records, especially during June, July and August 2020.

For this period, according to the data presented by PREPA for the total cost of fuel purchased versus consumed, the San Juan and Palo Seco plants had a diesel cost of $102 and $76 per barrel, respectively, when the cost in the market was approximately $59 per barrel, Torres Placa said.

The adjustment in the rate requested by PREPA for the cost of fuel for the June, July and August period was an increase of 2.75 cents per kWh (about 16 percent of the bill). That increase did not materialize in the October-December 2020 quarter, as the reconciliation process in terms of fuel cost was stopped until PREPA presented additional information.

Then, in November, it was reported that the Energy Bureau hired the firm Larking and Associates to conduct an audit of the purchase, acquisition, transportation, storage, and supervision and consumption analysis processes for the past three years.

“Because these incongruities in fuel costs continue to be evaluated, the Energy Bureau should not have approved an increase until all these required reconciliations and analyses are finally completed,” Torres Placa said.

“Any irregularity in the cost of fuel must be detected and addressed by PREPA before passing the data on to the [Energy] Bureau within a framework of diligence and good administration,” the consumer rep added. “The [Energy] Bureau, on the other hand, as part of its analysis and audit, must make its findings public and make specific recommendations to eradicate once and for all the problems related to the purchase, management, and processes of supervision and analysis of fuel consumption at PREPA, that directly harm consumers with high costs.”

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