PREPA seeks dismissal of rate case

By THE STAR STAFF

The Puerto Rico Electric Power Authority (PREPA) has asked the Puerto Rico Energy Bureau (PREB) to dismiss the ongoing electricity rate review case while courts resolve a series of legal challenges seeking to invalidate LUMA Energy’s indefinitely extended supplemental contract.

In a filing submitted as part of a motion for reconsideration of a $25,000 administrative fine imposed for missing a deadline to answer initial rate‑design filings, PREPA argued that moving forward with the rate case amid unsettled litigation would undermine regulatory prudence.

Although the utility acknowledged its failure to meet the deadline, it said the delay did not stem from bad faith, but rather from concerns over setting rates based on financial and operational data that may become irrelevant should courts strike down LUMA’s 2022 contract extension for operating the island’s electric power transmission and distribution system. The utility asked for measures with the goal of ensuring its liquidity.

“In the event of any dismissal, structure any provisional rate reconciliation … including amortizing any credit adjustments over a multi‑year period sufficient to preserve PREPA’s liquidity and ensure continuity of essential services,” PREPA wrote.

PREPA warned that if LUMA’s contract were nullified and a new operator had to be hired to manage the transmission and distribution system, the PREB would be forced to conduct a second full rate review. Issuing a permanent rate order now, the utility argued, would risk basing customer charges on assumptions tied to an operator whose legal authority remains uncertain.

“The Energy Bureau should not risk establishing a new rate based on financial and operational data that could soon become inapplicable,” PREPA said, adding that dismissing the proceeding without prejudice would prevent unnecessary burdens on ratepayers.

The public corporation further argued that pushing ahead would “penalize” customers by forcing them to absorb costs modeled on an operator that may not remain in place if lawsuits succeed.

The government of Puerto Rico and allied entities have filed multiple legal actions challenging the 2022 extension of LUMA Energy’s supplemental operating agreement, arguing the extension was executed without required regulatory or statutory approvals. 

Earlier this winter, Gov. Jenniffer González Colón asked a federal judge to return one of the lawsuits to Puerto Rico’s courts, insisting the case concerns local law and the limits of the Public‑Private Partnerships Authority’s (P3A) power to extend LUMA’s contract. 

Separately, the government filed suit in late 2025 in its first formal bid to terminate LUMA’s multimillion‑dollar contract entirely, citing outages, slow grid reconstruction and rising customer bills. 

The PREB initiated the current rate review in 2023, describing it as a comprehensive examination of PREPA’s revenues and expenditures. The proceeding has drawn in creditors, agencies, and system operators as testimony has detailed liquidity problems, operational constraints, and disputed budgeting across PREPA, LUMA and Genera PR, the private operator of PREPA’s legacy power plants. 

Hearings in late 2025 and early 2026 highlighted emergency‑funding shortfalls, chronic underfunding of operational accounts, and extensive debates over proposed base and provisional rates — including projections that would significantly increase monthly residential bills. 

PREPA emphasized that, despite the advanced stage of the regulatory proceedings, “administrative efficiency and procedural economy” should guide the PREB until the courts determine whether LUMA’s contract extension is valid.

In recent weeks, the government has also asked the Title III bankruptcy court to remand related lawsuits filed jointly by PREPA and the P3A involving the same contract dispute — a move that could accelerate judicial resolution at the local level.