La Fortaleza objects to proposed hike in basic power rate

Public Affairs Secretary Hiram Torres Montalvo

By THE STAR STAFF

Public Affairs Secretary Hiram Torres Montalvo on Thursday criticized a request by LUMA Energy to increase the base electricity rate for customers, potentially by up to 11 cents per kilowatt-hour (kWh).

The official said the government opposes the increase because LUMA, the private operator of Puerto Rico’s electric power transmission and distribution system, has failed to recover millions of dollars in federal reimbursements that it is entitled to. That funding could be utilized to prevent such rate increases, he said.

“Our governor’s stance on this request is clear: everything related to the daily operations of both LUMA and [power plants operator] Genera, including infrastructure and energy generation projects, should first seek funding from federal sources, such as FEMA [the Federal Emergency Management Agency] and others,” Torres Montalvo stressed. “Our administration has consistently criticized the situation. It is shameful that the Puerto Rico Electric Power Authority [PREPA] is at the forefront of seeking federal reimbursements while LUMA has left millions of dollars in reimbursements unclaimed. Before discussing rate increases for consumers, LUMA should focus on securing the federal funds they have overlooked.”

LUMA said the 11-cent increase in the base electricity bill pertains to fuel adjustments and energy purchases. It would not only affect LUMA but also Genera PR and PREPA, potentially establishing a new rate of 35 cents per kWh. The most recent review of the issue took place in 2017.

“This process is led by the Energy Bureau [PREB], which has initiated it. We are responding to their request and submitting a proposal that includes all three components,” said Alejandro Figueroa, LUMA’s chief regulatory officer, during an interview on “Pega’os en la Mañana.” “For our part, LUMA is proposing investments ranging from $1.2 billion to $1.6 billion at the high end, which is essential for improving the system. The total proposed increase in the bill is approximately 11 cents, with 6 cents allocated to LUMA for transmission and distribution system purposes. All that money will be reinvested into the system.”

Figueroa could not specify how much of the increase would benefit PREPA or Genera PR, but emphasized that the new revenue generated by the proposed hike would be intended for system investments (see related story this page).

He noted that the island’s energy system requires nearly $1 billion for its improvement projects in its “optimal budget for 2026.” Last year, that budget was $692 million.

“What we are presenting to the Bureau is that the system’s needs require an investment of about $1.6 billion,” Figueroa said. “This aligns with the Bureau’s request for us to clarify these needs. Based on our assessment, they can determine which needs will be prioritized and which can be deferred to address the most immediate requirements of clients.”

The LUMA official added that it is up to the PREB and PREPA to ensure that any approved increase will cover pension obligations and PREPA’s debts.

The PREB will now have at least 180 days (six months) to consider the request for an increase, including conducting public hearings and technical conferences.