The Puerto Rico Energy Commission issued a resolution Thursday denying a petition by the National Public Finance Guarantee Corp., which insures $1.4 billion in Puerto Rico Electric Authority bonds, for a rate review and establishment of a temporary rate increase of at least 4.2¢ per kilowatt-hour.
National, the successor in interest to MBIA Insurance Corporation, filed the request on Sept. 17, asking for the PREC to also order PREPA to respond to the petition within 14 days of service, and to complete the consolidated rate review proceeding within four months of the filing of National’s petition.
On May 29, 2015 the PREC issued a “First Order on Rate Case Proceeding” stating, among other things, that it would issue a regulation on rate filing requirements to insure it had the information needed to establish just and reasonable rates.
On July 24, 2015 the PREC enacted Regulation 8620, known as “Regulation on Rate Filing Requirements for PREPA.” Its purpose is to establish the information PREPA must include in its formal application proposing new rates to ensure that PREC had all the elements it needs to fulfill its statutory mandate to approve just and reasonable rates.
“Any rate review by the PREC, including a temporary rate, must be based on sufficient substantial evidence assessed in an adjudicatory proceeding. In its rate review process, the PREC must thoroughly evaluate PREPA’s entire financial and operational condition in order to be in a position to approve rates,” the agency said in a statement issued Thursday.
“This must include detailed information related to PREPA’s plant investment, income statements, financial statements, projections and forecasts, and the cost of service, among other things,” the quasi-judicial regulatory body further noted, adding the information National submitted in its petition did “not meet the standards and submission requirements set forth on Regulation 8620.”
“As a consequence, it does not constitute sufficient evidence to substantiate National’s request for a temporary base rate increase,” the PREC said.
The information provided by National is mostly focused on PREPA’s obligations to its bondholders and creditors, which does not represent PREPA’s entire financial condition. Furthermore, the provided information is not final nor it is necessarily representative to the costs PREPA will face in the “rate year,” the first year in which PREPA’s new rates will go into effect, as defined on Regulation 8620.
“Therefore, National’s request for a temporary base rate increase was denied,” the PREC said.
Regarding National’s request to set a completion date for the rate review proceeding, the PREC rejected establishing such date. On the other hand, in terms of National’s request to order PREPA to respond to the petition within 14 days of service, the PREC’s decision released Thursday made it a moot point to require PREPA to respond to each point in National’s petition, the agency said.
If National is not satisfied with the PREC’s determination, it may file a motion for reconsideration before the agency.