Private sector groups ask PRASA to delay new water fee

Written by  //  October 30, 2013  //  General Biz News  //  No comments

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From left: Carlos Morell, Waleska Rivera, Manuel Cidre, Ismael Vega, and José Izquierdo

From left: Carlos Morell, Waleska Rivera, Manuel Cidre, Ismael Vega, and José Izquierdo

Sixteen organizations representing a cross-section of the island’s private sector warned the Puerto Rico Aqueduct and Sewer Authority that a new environmental fee currently under review will represent a blow to economic development, cause business closures, bankruptcies and the loss of thousands of jobs.

In a news conference Tuesday, the groups officially came together to present alternatives to amend this new charge — known as the Environmental Compliance Regulatory Fee (known as CCAR for its initials in Spanish) — calling for a moratorium. The rate that went into effect July 1 and is currently under consideration by a PRASA examiner, would triple monthly water bills for some, they said.

“The group considered the CCAR proposal in depth and reached a consensus of two alternatives that would be more viable for the sector and would also meet PRASA’s needs to apply a fee to pay the environmental charge,” said Carlos Morell, president of the Puerto Rico Restaurants Association, who along with Puerto Rico Manufacturers Association President Waleska Rivera, Puerto Rico Hotel & Tourism Association Chairman Ismael Vega, Puerto Rico Chamber of Commerce President-elect José Izquierdo, and Puerto Rico Products Association President Manuel Cidre outlined the options.

The first, that the CCAR be calculated based on consumption, with a charge of 10 cents per cubic meter for all users. The second is that each commercial or industrial client have the option between a diameter-based rate or the consumption-based rate, without altering the approved and proposed rates.

Morell said the CCAR charge translates into an increase of between $3,000 per month to millions of dollars a year, depending on the sectors in question, which is “unsustainable for any business.”

Meanwhile, the PRMA’s Rivera described the new rate that seeks to shore up revenue for PRASA as “unreasonable and unfair.”

“The new rate seeks to raise about $300 million, which would go beyond the total deficits reported by the agency. According to the consulting engineer’s report and the $1.8 billion bond issue in 2012, PRASA needs less than that to meet its obligations in 2014,” Rivera said, adding the CCAR fees “fail to meet the basic requirements of justice, fairness and reasonableness of any rate revision or with the conditions and profitability requirements published by the Environmental Protection Agency by congressional requirement.”

That said, Rivera asked for a payment moratorium until the final formula is determined.

“The bills already issued should be suspended until the new billing criteria is determined,” she said.

The private sector executives concurred that the rate hike works against the island’s economic development, competitiveness and stability.

“It goes against this administration’s public policy that promises to create 50,000 new jobs. In the case of the private sector, some 15,000 jobs could be threatened. For every $20,000 in fees imposed on the island’s productive sector makes companies think about creating a new job and threatens retaining existing ones,” Rivera said.

Unforseen expense
Meanwhile, Cidre said the CCAR also represents an increase in consumer prices and reiterated that the imposition of this charge should be fair to all without overburdening the productive sector.

For his part, the PRHTA’s Vega said the sector has already expressed concern about not being able to pay for the rates charged in July, as they represent a substantial increase for which they had not budgeted.

The additional CCAR is the “final blow to the hotel and tourism industry, and will represent the end of many hotels and the loss of thousands of jobs,” he predicted.

The group made a collective call to Gov. Alejandro García-Padilla and Economic Development and Commerce Secretary Alberto Bacó to intervene with the proposal presented by PRASA Executive Director Alberto Lázaro.

PRASA Executive Director Alberto Lázaro

PRASA Executive Director Alberto Lázaro

PRASA reacts
In a statement issued following the group’s morning news conference, Lázaro reiterated his “openness to analysis and dialogue with the island’s business and industry community to reach a consensus on the alternative to the CCAR that better suits them and that also allows PRASA to meet its contractual obligations,” including projects required by the EPA, as well as its financial obligations to the agency’s bondholders.

The CCAR charge was announced Feb. 1, and since then, the agency has drafted 14 alternatives and economic models that Lázaro said were presented to organizations and that contained their main claims and concerns.

Private-sector groups have until today to present their alternatives to independent examiner Esteban Mujica-Cotto.

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