PREPA chief: 20 years of fixed consumer rates fueled utility’s deep debt
By The Star Staff
Puerto Rico Electric Power Authority (PREPA) Executive Director Josué Colón Ortiz said Thursday that although the public utility issued debt, having a fixed consumer rate from 1989 to 2009 contributed to its fiscal deficits because the utility did not have enough funds to pay for its operations.
At a public hearing to analyze PREPA’s finances, Colón Ortiz said “until 2009, most of the indebtedness arose from the payment for electrical infrastructure, which prevented the clients’ fixed rates from being affected.”
“After 2010, the corporation’s bond issues were directed to continue with the infrastructure projects and, in addition, refinance previous debt,” he said.
“The goal of obtaining financing was to obtain capital so as not to immediately impact the clients who receive the service,” he added.
The official noted that the only way to pay the debt once Judge Laura Taylor Swain approves PREPA’s restructuring plan to reorganize the utility’s $9 billion debt will be through the energy bills of PREPA subscribers.
Colón Ortiz said that between 2009 and 2012, an evaluation showed that the way to create “substantial efficiencies” that will lead to savings for PREPA, in order to manage its fiscal commitments, is by reducing the largest component of the rate, which is the purchase of fuel. This would be achieved, the official stressed, by gasifying all the units of the generation system and moving Puerto Rico to a renewable energy system, according to the mandate of Law 82-2010.