PREB postpones decision on adding fixed charge for pensions in LUMA bill

By THE STAR STAFF

The Puerto Rico Energy Bureau (PREB) has postponed a decision on whether to approve a fixed-charge pension rider for electricity customers, opting instead to address the issue as part of its upcoming permanent rate order for the Puerto Rico Electric Power Authority (PREPA).

In a resolution issued earlier this week, the PREB acknowledged LUMA Energy’s request submitted Dec. 9 to amend its Model Bill to replace the current per-kilowatt-hour (kWh) pension charge with a fixed customer fee.

LUMA argued that its billing system upgrades would allow implementation by Jan. 1, 2026. However, regulators said the matter will be resolved during the ongoing rate review process, giving stakeholders time to brief pension-related questions and consider evidence presented during recent hearings.

The pension rider stems from the PREB’s July 31 order establishing provisional rates and a provisional budget for fiscal year 2026, which included $307.5 million in pension costs for PREPA’s Employee Retirement System. While the PREB initially favored a fixed charge, technical constraints forced LUMA to apply a per-kWh rider starting Sept. 1.

“The July 31 Order also stated that the pension cost should be recovered from customers through a fixed customer charge rather than through a per-kWh charge. Constraints in LUMA’s billing system made it infeasible to implement a fixed-charge rider by September 1, 2025, the date on which the provisional rate would go into effect,” the resolution issued Monday reads. “The Energy Bureau therefore allowed the rider to recover the costs on a per-kWh basis but required LUMA to create a fixed-charge rider as soon as possible. On August 12, 2025, LUMA submitted a document titled Amendment of Model Bill to Implement Provisional Rate Riders Approved on July 31, 2025 through which LUMA sought authorization to amend its Model Bill to include two new line items for the provisional rate rider and pension payment rider recently approved by the Energy Bureau.”

The PREB warned LUMA that any noncompliance with its orders or applicable laws could result in fines ranging from $10,000 to $125,000 per day, escalating to as much as $250,000 for repeated violations under Act 57-2014.

The permanent rate order in Case No. NEPR-AP-2023-0003 is expected to clarify how pension costs will be recovered from customers going forward.