Puerto Rico Energy Commission Approves Rate Increase

The Puerto Rico Energy Commission approved a provisional 1.3 cents per kilowatt-hour increase in Puerto Rico Electric Power Authority rates, meeting a demand of the utility's creditors.

Taken together with the 3.1 cents per kilowatt-hour increase as a "transition charge" the commission approved on June 21, PREPA customers will soon be paying 4.4 cents more per kilowatt-hour.

The increases are part of a process of an authority restructuring that has been going on for about two years. Creditors have demanded the increases as part of a package of changes that also includes cuts to their principal and interest.

Whereas the transition charge is to be used to pay off debt, the PREPA provisional rate increase will be used to cover what the authority estimates is a $222 million operating income gap.

PREPA filed a petition for review of its rates with the Energy Commission on May 27. The authority can implement the provisional rate in 30 days, according to the commission.

The authority requested the right to charge different rates to different classes of customers, due to the different costs of providing them with electricity. The commission said the evidence to support the different rates was too complex to adequately assess when setting the provisional rates.

As of March the average PREPA rate was 16.9 cents per kilowatt-hour. An additional 4.4 cents would be a 26% increase.

The new rate of 21.3 cents per kilowatt-hour would still be less than the 23.52 cents per kilowatt-hour that Puerto Rico residents paid on average in February 2015. Rates decreased to March 2016 from February 2015 because of decreasing oil costs. Rates are partly dependent on these costs.

The commission has six months to decide what the authority's non-provisional rates should be. If these rates are different from the provisional rates, the authority is supposed to retroactively adjust the customer accounts, according to the commission.

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Puerto Rico
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