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  • Writer's pictureThe San Juan Daily Star

Power rate hike could result in business, hospital closings



The executive president of the island Hospitals Association insisted that a power rate hike would be “disastrous” for health institutions, some of which, such as the HIMA system, have already sought bankruptcy.

By The Star Staff


The proposed power rate hike that will come after the Puerto Rico Electric Power Authority (PREPA) exits bankruptcy will lead to closings in the business and hospital sector, business groups said Wednesday.


After the Financial Oversight and Management Board supported a hike in the power rate to guarantee the operations of the electrical system, Chamber of Commerce President Ramón Pérez Blanco announced that it will cause the closure of businesses, or raise the prices of goods for consumers.


Hospitals Association Executive President Jaime Plá Cortés lamented the oversight board’s support, which was also requested by LUMA Energy, the private operator of PREPA’s transmission and distribution system and service. Plá Cortés insisted it will be “disastrous” for health institutions, some of which, such as the HIMA system, have sought bankruptcy.


The Puerto Rico Energy Bureau (PREB) recently postponed the start of a rate case order it had issued, citing the pending confirmation of the PREPA Plan of Adjustment and its ultimate contents being a key input in such a process. PREPA appeared to be nearing its exit from bankruptcy and approaching the end of the Title III process after confirmation hearings concluded in March.


On June 17, however, following the U.S. Court of Appeals for the First Circuit’s determination establishing that PREPA bondholders hold a non-recourse claim against the utility secured by a valid, perfected security interest in PREPA’s net revenues, the oversight board announced plans to seek a limited reopening of the confirmation hearing record in order to deal strictly with the value of that collateral.


Due to the PREB’s postponement of the rate case, the fiscal year 2025 PREPA budget for the energy system is expected to continue to be constrained by the base rate currently in place. The budget is now in deficit by almost $60 million. The oversight board has stressed the need for a budget that provides sufficient revenues for PREPA and private operators to work.


“This financial imbalance must be resolved to ensure fiscal responsibility to ensure critical works continue and PREPA remains sustainable,” the board said.


LUMA has said, meanwhile, that it wants to avoid a repeat of the errors of the past resulting from PREPA’s mismanagement.

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