Energy groups oppose 900% hike in residential fixed charge

Javier Rúa Jovet, public policy director at the Puerto Rico Solar and Energy Storage Association

By THE STAR STAFF

Puerto Rico’s solar and energy‑storage advocates are urging regulators to reject a proposal by LUMA Energy that would raise the residential fixed charge from about $4 per month to more than $40. 

The Puerto Rico Solar and Energy Storage Association (SESA) and Solar United Neighbors (SUN) filed a motion before the Puerto Rico Energy Bureau (PREB) opposing the request, which comes as part of LUMA’s rate design restructuring in the ongoing rate review case.  

The basic rate has not been revised in years. An increase is needed to pay for PREPA’s $9 billion debt and pensions. 

Javier Rúa Jovet, SESA’s public policy director, said the utility is attempting to overhaul its rate structure by imposing higher monthly fixed charges on all customers -- an increase he warned would disproportionately affect low‑income households, low‑consumption users and solar customers. He said regulators should immediately reject the increase to ensure just and reasonable rates and to protect consumers from unjustified hikes. Rúa Jovet added that LUMA’s proposal undermines the gradual and predictable transition that rate‑design principles are meant to guarantee. 

Rúa Jovet said the proposed fixed charges would deal a heavy economic blow to people living alone, residents of small or energy‑efficient homes and customers who have installed solar panels. Instead of being penalized, he said, these customers should be rewarded for contributing to the island’s energy‑efficiency and renewable‑transition goals. 

SESA and SUN argued that LUMA’s request violates the principle of gradualism in rate design, which the PREB itself has promoted to ensure rate revisions are predictable and phased in to avoid sudden increases in customer bills. They added that high fixed charges tied to demand force low‑consumption customers to subsidize heavier users, penalizing those who invest in energy‑efficiency measures. 

Another concern raised by the groups is that the proposed fixed charges violate Section 4(c) of Law 114‑2007, because they effectively impose illegal indirect charges on renewable generation from “prosumers” and discourage net‑metered solar adoption by undermining the value proposition of solar energy -- something the law prohibits. 

David Ortiz, senior director of SUN’s Puerto Rico program, concurred that such a drastic increase in fixed charges would unfairly punish low‑income families, low‑usage consumers and those who have invested in solar power. He said the proposal conflicts with rate equity and discourages solutions that strengthen Puerto Rico’s energy resilience. 

Both organizations said they are willing to provide recommendations to help build a more efficient and resilient energy system and urged regulators to keep the current fixed charge in place. They also proposed exploring alternative mechanisms to ensure revenue stability, such as inclining block rates (IBRs). They further called on the PREB to begin a formal proceeding that would result in an IBR proposal for review and deliberation.