Manufacturers object to power rate hike to cover PREPA pensions

Puerto Rico Manufacturers’ Association President Rafael Vélez Domínguez

By The Star Staff

The Puerto Rico Manufacturers’ Association (PRMA) on Wednesday expressed deep concern and strong opposition to the government’s proposal to increase electricity rates to cover the Puerto Rico Electric Power Authority’s (PREPA) pension obligations.

The PRMA warned that the measure would place an additional economic burden on the industrial sector, which is already struggling with unreliable electricity service, high rates and outdated infrastructure.

“We recognize and respect the right of retired PREPA workers to receive their pensions fairly and promptly. This is an act of justice for those who served the country with dedication,” PRMA President Rafael Vélez Domínguez stated. “However, the industrial sector, which is the engine of our economy, should not be penalized for past administrative decisions over which it had no control. Placing this cost on us is not the right path.”

Puerto Rico is facing one of its most severe energy crises in recent history. The average electricity rate on the island is 24.5 cents per kilowatt-hour. With the potential increase proposed by PREPA, electric power transmission and distribution system operator LUMA Energy and legacy power plants operator Genera PR, that rate could rise to 37 cents per kilowatt-hour, the PRMA asserted, significantly exceeding the national average of 17.45 cents. Adding a charge to cover accumulated liabilities from years of mismanagement at PREPA is, according to industry leaders, unacceptable for the nation’s productive framework.

“This proposal would negatively affect our companies’ global competitiveness, hinder investment, jeopardize job creation, and undermine the country’s ability to achieve sustainable economic growth,” Vélez Domínguez stressed.

The PRMA urged the government and relevant authorities to explore responsible alternatives, such as identifying funding sources outside the fee system, including budget reallocations or establishing a special fund with both state and federal participation. The private sector entity also suggested creating a trust or fee stabilization fund as a financial mechanism to mitigate fluctuations in electricity rates, with resources stemming from savings generated by new generation projects, reductions in fuel costs, or other system efficiencies.

Additionally, the PRMA recommended conducting a specialized and independent audit of PREPA to gain a clear understanding of its actual debt structure and the factors contributing to its accumulation, and accelerating the energy transition by focusing on a modern, diversified, and sustainable electricity grid, which has real potential for long-term cost reduction.

“The current situation should be viewed as an opportunity to structurally reform the energy system,” Vélez Domínguez said. “Puerto Rico cannot continue to repeat the mistakes of the past.”