Lawmakers propose electricity rate stabilization fund
Measure aims to shield consumers from sharp hikes in power bill
By THE STAR STAFF
Independent at-large Sen. Joanne Rodríguez Veve and New Progressive Party Sen. Ángel Toledo López have introduced legislation that would create a Puerto Rico Electric System Rate Stabilization Fund, a government-managed reserve designed to soften the impact of sudden increases in electricity bills caused by spikes in fuel costs.
Under the proposal, the fund would be held by the Treasury Department and could be used solely to provide credits on electricity bills when fuel prices rise dramatically. The measure comes in response to a sharp increase in power costs earlier this year, when the typical residential customer’s quarterly bill rose by some $42.27 per month, from $228.59 to $270.86, an 18.5% increase.
“In Puerto Rico, electricity is not only expensive, but also unpredictable,” Rodríguez Veve said in a statement. “No family should have to face extraordinary increases from one quarter to the next due to factors beyond their control that disrupt household budgets. This fund would not eliminate the impact entirely, but it would help cushion the blow and provide relief to consumers.”
Toledo López said the proposal aims to establish a financial safeguard against future rate hikes while ensuring responsible use of public funds.
“This bill protects consumers from future increases by creating a savings mechanism with clear rules and specific implementation deadlines,” he said. “In addition to ensuring responsible management of public money, it protects those who need it most: families and small businesses.”
The legislation would create a reserve fund owned by the Puerto Rico government, rather than the Puerto Rico Electric Power Authority (PREPA). Lawmakers emphasized that the money could not be used to pay PREPA debts, finance bankruptcy-related obligations, or cover expenses of government agencies. Its sole purpose would be to offset electricity costs for consumers.
The fund would be triggered only under extraordinary circumstances, including when the fuel adjustment charge increases by at least two cents per kilowatt-hour from one quarter to the next, or when the Puerto Rico Energy Bureau declares a fuel supply or generation emergency.
Under the proposal, the fund would cover up to half of a qualifying increase in electricity costs. To preserve the reserve for future emergencies, no more than one-third of the fund’s balance could be spent in any given quarter.
Funding sources would include legislative appropriations, 10% of annual General Fund surpluses, fines collected by the Puerto Rico Energy Bureau (PREB), and penalties paid by fuel suppliers and contractors that fail to meet contractual obligations.
Supporters of the measure argue that it has been structured to avoid conflicts with the federal Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, or the rights of creditors involved in PREPA’s ongoing bankruptcy proceedings.
The PREB would have 120 days to establish the program if the measure is enacted. The fund would also be subject to semiannual reports to the Legislature and oversight by the Office of the Comptroller.
The proposal revives an effort first advanced in 2022, when the Legislature approved a similar stabilization fund through Senate Bill 728. Former Gov. Pedro Pierluisi Urrutia ultimately vetoed the measure because it relied on PREPA accounts receivable tied to the utility’s Title III bankruptcy process, rather than because of opposition to the fund itself.
The lawmakers noted that Puerto Rico has reported more than $2.2 billion in budget surpluses since then. Had 10% of those excess funds been set aside as the new bill proposes, more than $220 million would now be available in reserve, they said, enough to absorb more than half of the latest fuel-related rate increase.
“As long as Puerto Rico continues to depend on imported fuel, and it will continue to do so for years to come, this tool is a necessity, not a luxury,” Rodríguez Veve and Toledo López said. “We are putting this proposal on the table today. It is now up to the Legislature and the government to fill the fund.”
