LUMA: Rate review process will cover all of PREPA’s expenses

LUMA Energy officials told the House Government Committee that the rate review procedure was initiated by the Puerto Rico Energy Bureau, and it is that body that will decide on any changes to the billing of power customers.

LUMA Energy, the private operator of the island’s electric power transmission and distribution system, said the Puerto Rico Energy Bureau (PREB) has been conducting a rate review process since March with the goal of covering all of the Puerto Rico Electric Power Authority’s (PREPA) expenses.

The changes to the basic rate are the first review since 2017. The STAR reported on the process, which is being carried out by attorney Scott Hempling, who said the rate review will include the payment of pensions. PREPA is currently in bankruptcy with the goal of restructuring more than $9 billion in debt. Any adjustments to the debt must be paid through the rates.

The information on the rate review was shared Wednesday during a public hearing of the House Government Committee, which is chaired by Rep. Víctor Parés Otero, focusing on evaluating the breakdown of electricity service bills, including the charges applied and the justifications for each.

Joseline Estrada Rivera, director of load research forecasting at LUMA, said “The Energy Bureau has already opened a budget review process, referred to as a ‘rate review,’ which encompasses the entire bill.”

Rebeca Maldonado Morales, LUMA’s director of stakeholders affairs, added that the “process is just beginning, and we cannot predict at this time what determination the PREB will make.”

“Our responsibility is to present information to the Bureau, and they will analyze it and make their determination,” she said.

When questioned by Parés Otero, LUMA officials said the rate review procedure was initiated by the PREB, and it is that body that will decide on any changes to the billing.

During discussions, it was pointed out that the base rate was revised in 1989 and again in 2017. However, the current review has just begun -- a topic that has been under discussion since last year, with even the Financial Oversight and Management Board requesting an evaluation.

If there is a rate increase, it would cover the operating expenses of the electrical system, including both transmission and generation, as well as the operation of PREPA. The revision would affect some 1.5 million customers in the system, encompassing residential, commercial and industrial users who are billed around $360 million monthly.

LUMA officials were also questioned at the hearing about the monthly bills sent to customers, particularly those under residential rates. Lawmakers pointed out that the complexity of the bill, due to the numerous lines included, makes it difficult to understand.

“The bill is complicated and hard to grasp,” Parés Otero said. “I empathize with the many older adults who struggle with it. My goal is to seek an invoice that has important information for transparency but is also accessible for people.”

The committee chairman suggested requesting an amendment to simplify the bill before the PREB, and said he is preparing to summon PREB components to explain the reasons behind the current design of the customer invoice, questioning whether they consulted with the public or conducted surveys, or if the design was made by someone merely following a law or regulation from a desk.

“This issue needs to be communicated to the people,” he said. “While it may be transparent, not everyone has the ability to understand it.”

Nilka Guevara, billing manager, noted that out of the total number of customers receiving bills, only 1,500 lodge objections each month, a figure described by the legislator as “minimal.” Still, Parés Otero contended that “[s]omething is wrong, because regardless of the claims that there are mechanisms to challenge the bills over the phone, the reality is that half of the population lacks internet access or doesn’t know how to use online pages.”

“Alternatively, the process for challenging bills may be so onerous that many choose not to contest and simply pay,” he added.

Reps. Wanda del Valle Correa and Luis Pérez Ortiz urged LUMA to take a more proactive stance in assisting customers with their payment options and in reporting billing disputes or outages. They suggested using their district offices to distribute educational materials that can help subscribers meet their payment obligations.