The Puerto Rico Electric Power Authority said it plans to increase rates by 4.3 cents per kilowatt-hour, part of its restructuring support agreement with bondholders and other creditors.
PREPA's governing board approved requesting a 1.3 cents per kilowatt-hour provisional rate increase on Tuesday and will make the request from the Puerto Rico Energy Commission on Friday. The authority expects this increase will go into effect in August 2016.
The Corporation for the Revitalization of PREPA presented a petition to the commission to approve methods for calculating securitization charges in April. PREPA estimates that the commission will grant it a 2.99 cents per kilowatt-hour securitization charge. This would be used to service PREPA debt, cover initial operating costs, and provide liquidity to "catch up on payments for the first year," according to the authority.
As of March the average PREPA rate was 16.9 cents per kilowatt-hour. An increase of 4.29 cents per kilowatt-hour would be a 25.4% increase.
The new rate of 21.19 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.
"As a result to negotiations with creditors and operational efficiencies that have been implemented, it has been able to reduce by two thirds the rate adjustment that we are proposing," said Lisa Donahue, PREPA chief restructuring officer. "[Out of] the impact of 11 cents per kilowatt-hour that would have to implement not having started a transformation process, creditors absorbed 5.2 cents and PREPA achieved savings of 2.4 cents per kilowatt-hour so the impact is reduced to customers." Because of the creditor concessions and operational efficiencies, consumers will actually pay 61% less rather than 66% less.
