Rate review examiner scolds PREPA for neglecting to share expenses information

Attorney Scott Hempling is overseeing the power rate review at the Puerto Rico Energy Bureau. (LinkedIn)

By The Star Staff

Scott Hempling, a lawyer overseeing the power rate review at the Puerto Rico Energy Bureau (PREB), will hold a conference today regarding a complaint that the Puerto Rico Electric Power Authority (PREPA) has not provided LUMA Energy with necessary information on its revenue requirement.

The PREB has been conducting a rate review process since March, aiming to cover all of PREPA’s expenses. The adjustments to the basic rate will be the first since 2017.

Hemling, a professor at Georgetown University Law Center, recently received a letter indicating that, despite numerous requests from LUMA, PREPA has failed to supply the information needed for LUMA to include PREPA’s proposed revenue requirement in the rate case application that is due to the PREB on July 3. LUMA is the private operator of PREPA’s transmission and distribution system.

He convened today’s meeting to address the seriousness of the situation. By statute, contract, and PREB orders, LUMA is responsible for submitting a comprehensive revenue requirement, covering both a constrained budget and an optimal budget, on July 3. This full revenue requirement includes the revenues necessary for all three entities -- LUMA, PREPA, and Genera, the private operator of PREPA’s fleet or legacy power plants.

“There should be, and is, no ambiguity about PREPA’s and Genera’s obligations to submit to LUMA the information that LUMA needs, at the time that LUMA reasonably requires, to carry out LUMA’s obligations. We are long past the date by which LUMA needed to receive this information,” Hempling said. “Reliable electric service to millions of Puerto Rico’s citizens requires close professional, technical, and financial cooperation among the three companies.”

Hempling stressed that in forming this tripartite arrangement, neither the Legislature nor the negotiators of the associated contracts intended for the three companies to operate in isolation, act as opponents, or ignore essential cooperative procedures.

“Nor did they envision that a proposal to set rates reflecting, finally, the true cost of electric service would consist of three independently constructed proposals, stapled together a mere three weeks before the deadline,” he said.

He expressed hope that the issue would be resolved.

“Please do not put me in a position of having to inquire, up the chain of command, into why this problem has occurred, who is responsible for it, and whether there has been any outside interference preventing the companies from doing what the statute, contract, and Energy Bureau orders require,” the attorney added. “Also please do not put the Commissioners in a position of receiving, on July 3, a rate case application that is deficient.”