Public, private sectors back energy subsidy reform

Written by  //  January 28, 2015  //  Government  //  No comments

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From left: José Maeso and Agustín Carbó during their turns to testify at Tuesday’s public hearing.

From left: José Maeso and Agustín Carbó during their turns to testify at Tuesday’s public hearing.

About 32 percent of Puerto Rico Electric Power Authority customers receive some sort of a subsidy on their monthly bills, which is floated by those who pay the full rate. A reform proposed by the Senate could bring changes to how subsidies work and whom they will benefit.

During a hearing Tuesday headed by the Senate’s Energy and Water Resources Affairs Commission, Puerto Rico Energy Affairs and the State Energy Public Policy Office representatives backed Senate Bill 1256, which seeks to create the “Law to reform energy service and payment of arrears by agencies and public corporations.”

“The bill prohibits that subsidies be billed to unsubsidized customers. To this end, it supports public policy and the Commission’s mandate to ensure that electricity rates are fair and reasonable,” said Puerto Rico Energy Affairs President Agustín Carbó in his testimony.

Meanwhile, José Maeso, executive director of the State Energy Public Policy Office, expressed his opposition to the subsidies.

“Of PREPA’s 1.5 million customers, a total of 484,000 receive some sort of subsidy on their bill,” said Maeso.

On subsidies to the hospitality industry, Maeso suggested that commercial facilities operated inside hotels use a separate meter from the property’s.

“The restaurants could be benefiting from the same subsidy the hotel has,” he said, referring to subsidies offered to island hotels.

The bulk of energy and water subsidies were granted many years ago and have not been evaluated to determine their current justification and confirm if the same conditions still stand in comparison to when they were approved, said Edgar Rodríguez-Pérez, president of the College of Engineers and Surveyors.

Later in the day, the heads of the Puerto Rico Housing Department and Public Housing Administration, Alberto Lastra and Gabriel López-Arrieta, respectively, both objected to the measure’s proposal.

During his turn to speak, Lastra recommended restructuring subsidy programs without eliminating them, and including an education plan that spurs a culture of saving energy. Meanwhile, López-Arrieta supported the proposal to reduce the debt of public housing residents by half.

Sen. Ramón Luis Nieves, who chairs the commission conducting the hearings, rejected López-Arrieta’s claims that the bill would spur the eviction of thousands of public housing residents, countering that the Public Housing Administration is the one responsible for a $70 million water and power debt that has racked up as a result of its failure to enforce the existing law.

The senator reiterated that the purpose of the bill is not evict public housing customers in arrears, but to solve the problem caused by not properly implementing the laws.

“You have not brought a solution today. I hope that in the next few weeks we can sit down to find a permanent solution to the problem,” said Nieves, author of the measure.

‘Dialogue is important’
The Council of Churches of Puerto Rico recognized Tuesday that the legislative effort opens an “important dialogue” and asked lawmakers to consider weigh the services provided by the island’s religious organizations, versus how much it would cost the government if they had to assume the full monthly utilities expenses.

Felipe Lozada, who represented the Council at the hearing, said churches do not receive a subsidy, but rather a reduced rate that is lower than the current commercial rate.

Senate Bill 1256 would amend the laws that enabled certain subsidies, would impose requirements for the approval of future subsidies and payment plans, would require PREPA and the Puerto Rico Aqueduct and Sewer Authority greater control over them, and addresses the problem of debt settlement by commonwealth agencies with PREPA to improve the agency’s fiscal situation, its cash flow and reduce energy costs paid by subscribers.

The measure is the outcome of the final report on Senate Resolution 858, which ordered the Commission to investigate the effect of subsidies and default by government agencies and public corporations on PREPA’s finances.

The hearings continue today and Friday.

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