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Energy Commission orders 21% drop in PREPA rate

PREPA’s infrastructure spending has been based not on actual needs, but on company-wide ceilings rooted in political concerns about rate increases, the Energy Commission notes. (Credit: © Mauricio Pascual)

The Puerto Rico Energy Commission on Tuesday issued an order establishing a reduction of 21 percent on the provisional rate that the Puerto Rico Electric Power Authority effected in August 2016.

To that end, the new rate approved by the agency will consider a consumer credit of approximately 0.274 cents/kWh.

“Because the rates we establish today are different from the provisional rates, the difference will be reconciled on customer bills over the same number of months during which the provisional rates were in effect, starting when the permanent rates go into effect,” the order said.

In addition to providing a reduction in the price paid by consumers, the Energy Commission’s order requires the elimination of the controversial fuel adjustment clauses and unrelated power purchase costs.

In addition to setting new rates, the order includes several sets strict guidelines and fiscal controls to ensure that PREPA “uses the revenues it receives from its customers responsibly and efficiently,” the agency said.

The Energy Commission’s new tariff will enter into force in March 2017 and will be applied to monthly consumer bills for the nearly eight months that the provisional rate was in effect, the agency said.

“The specific steps we take in this order are to establish the revenue requirement and rates for PREPA for fiscal year 2017 and a procedure for updating those rates for the years thereafter,” the agency said in its resolution and order.

The order also establishes that “PREPA shall treat the revenue requirement established in this order as a cap on annual spending until the Commission changes such revenue requirement and shall prepare departmental budgets that conform to that cap. There will be no over-spending by PREPA,” the order stated.

PREPA is currently in negotiations with creditors to restructure some $9 billion in debt and is working to overhaul the public corporation’s operational infrastructure.

Author Details
Author Details
Business reporter with 29 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.

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