LUMA seeks 4 cents/kWh temporary rate hike, citing fuel price fluctuations
By The Star Staff
Citing increases in fuel and generation costs for July and August, LUMA Energy, the private operator of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution system, asked for a temporary 4 cents per kilowatt-hour hike in utility rates to offset costs.
LUMA informed the Puerto Rico Energy Bureau (PREB), the sector’s regulator, on Wednesday of the required quarterly adjustments to the cost of generation fuel and purchased energy according to the information provided by Genera PR and other generating companies.
Based on the information provided by Genera PR, the cost of fuel used by generation facilities during July and August was 20% higher than expected because of the impact of the global hike in fuel prices and the higher-than-expected demand for energy during the quarter.
The international oil price increased more than 28% during July and August, reaching $90 per barrel compared to $70 per barrel on July 1.
“Considering these factors, the estimated adjustment in the purchase of energy and fuel in the report presented to the PREB foresees an increase of approximately four cents per kilowatt hour,” LUMA said, noting that the PREB, not LUMA, determines the ultimate impact of the fuel cost adjustment on customer rates or bills.
“Global fuel prices are a factor that is out of our control and is a serious problem affecting utility customers in Puerto Rico and the United States,” LUMA CEO Juan Saca said. “LUMA has no control over these fuel prices. These are established worldwide. It is important to remember that LUMA does not produce electricity or determine fuel costs’ impact on customer rates. Although LUMA is not responsible for the increase in generation fuel costs, we are committed to helping our customers.”
“We will be sharing information about various economic assistance programs, and we are working with our collaborators in the government and in the generation sector throughout Puerto Rico to develop energy solutions that reduce the need to use expensive fossil fuels in the future,” Saca indicated.
The recent global rise in fuel costs represents an ongoing problem affecting customers in Puerto Rico, the mainland U.S. and elsewhere. For example, the price of gasoline in Puerto Rico has increased 11% in the past three months. LUMA does not benefit financially from any rate changes due to increased generation fuel costs, the company said.
Rep. Jesús A. Hernández Arroyo, who chairs the Energy Committee in the island House of Representatives, said later on Thursday regarding the possible hike in the electricity bill that “the people cannot stand another increase in the cost of energy, and although global fuel prices are an external factor, it cannot translate into more economic burdens for Puerto Ricans who already face very high electricity rates.”
“This week I am in Washington, D.C., specifically addressing various critical issues for Puerto Rico, including the energy crisis we face,” Hernández Arroyo said in a press release. “In the Puerto Rico House of Representatives we are fully committed to the search for sustainable energy solutions that reduce our dependence on fuel costs.”
“I am aware that the volatility of oil prices has a significant impact on the economy of every home and business in Puerto Rico,” the lawmaker added. “Therefore, our work is focused on diversifying our energy sources and strengthening the resilience of our electrical system.
“It is imperative that financial assistance initiatives for consumers be explored and implemented and that all stakeholders be working together to mitigate the impact of these costs.”