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Private sector balks at PREPA’s planned rate hikes

From left: Rubén Piñero and Josen Rossi, during a morning news conference.

From left: Rubén Piñero and Josen Rossi, during a morning news conference.

Puerto Rico’s private sector, represented by more than 20 organizations, on Thursday banded together to reject the proposed energy rate increases unveiled by the Puerto Rico Electric Power Authority this week.

During a news conference, the spokespersons for the group blasted PREPA’s plan to “channel its debt via transition charges, with no demand studies to support it, in an environment of clear economic slowdown and with PREPA’s obstinate insistence that they’re approved without consideration of how they affect an a real energy reform plan.”

“We have been taking our message with a single voice, both on the island, participating in the different interveners processes at the Puerto Rico Energy Commission, and Washington, D.C., due to the urgency of creating an energy reform that promotes economic development with competitive private investment regulated by supervision independent from PREPA,” said Josen Rossi, of the Institute for Economic Competitiveness and Sustainability.

“We adamantly oppose the proposals for a so-called transition for PREPA, which will end up strangling the island’s economic development, denying opportunities for future generations to prosper,” Rossi said.

Earlier this week, PREPA unveiled a two-tiered plan to increase energy rates for both the residential and commercial sectors of between 22 percent and 24 percent monthly that would begin in August.

Rubén Piñero, head of the United Retailers Association, said PREPA “insists on channeling about 80 percent of its debt through so-called transition charges, regardless of the capacity of a population and business sector in decline, with less money in their pockets.”

The coalition that spoke out on Thursday also includes the Puerto Rico Manufacturers Association, the Private Sector Coalition, the Hospitals Association, Puerto Rico 3000and the Puerto Rico Builders Association, which separately warned of the “serious consequences of the proposed rate increase to the island’s socioeconomic development.:

“We understand the importance and usefulness of PREPA’s restructuring as an effective mechanism to remedy its precarious fiscal situation and guarantee repayment of its obligations,” said Builders Association President Ricardo Álvarez-Díaz.

“However, this process should not lead to such a significant increase as it adds another burden to local business and will impact negatively the possibility of economic development for Puerto Rico,” he said

“Those companies that invested in the construction, renovation and operation of facilities or shopping malls, tourist or industrial facilities, who planned investment based on certain energy costs, now face a dramatic adjustment in their budget for electricity costs that radically changes the landscape they had when they decided to invest,” said Álvarez-Díaz.

The trade groups collectively urged the Puerto Rico Energy Commission not to give way to the rate increase that would disrupt the island’s residential, commercial, tourism and industrial sectors, which are the foundations of economic recovery efforts, which could be achieved in the short and medium term.

“Other solutions must be adopted to avoid this increase that’s so damaging to our economy. A combination of strategies or tools could avoid this increase, among them, public-private partnerships for investment in new infrastructure or rehabilitation of existing infrastructure, a substantial reduction in PREPA’s operating costs, real reform in all its processes and services, even more substantial modification to subsidies given to municipal governments, greater effectiveness and efficiency in the collection and use of electricity, among other mechanisms,” he said.

Author Details
Author Details
Business reporter with 30 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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