Eight days before an energy efficiency charge was scheduled to take effect, the Energy Bureau issued a resolution paralyzing the Energy Efficiency Rider, which would’ve generated $13 million for the implementation of energy-saving initiatives meant to slash the utility bill that the new hike -in fact- would’ve increased.
Facing backlash for its decision from all sectors of society and even Gov. Wanda Vázquez, the president of the Energy Bureau Edison Avilés Deliz indicated in a press release that after listening to those concerns the Bureau “deemed appropriate at this time to leave without effect” the resolution that ordered the Puerto Rico Electric Power Authority (Prepa) to implement the charge beginning Nov. 1.
“The purpose was exclusively for the implementation of energy efficiency programs aimed at giving incentives, such as rebates and economic benefits to those who traded their high energy consumption appliances for energy-efficient ones, the replacement of old street lights for LED lights, among other saving energy initiatives. In the long term, each dollar invested would have represented a $3 savings in energy consumption,” Avilés said.
But while the public won this round, for now, another surge in the cost of electricity looms ahead with far more damaging consequences for the island’s economy, stalled by a decade-long recession and a $70 billion-plus debt load.
Worried about the proposed rate increases in Prepa’s Fiscal Plan and the new charges contemplated in the public utility’s debt restructuring process, last week a private sector coalition urged Gov. Vázquez “to withdraw” the Restructuring Support Agreement (RSA) and renegotiate a new deal, citing the devastating conclusions of a study published recently by economist Ramón Cao García.
Cao concluded that the RSA and Prepa’s fiscal plan will increase electricity rates by up to 50 percent over the next five years, resulting in the loss of up to 170,000 jobs and causing the gross domestic product to drop 22 percent.
Head of Seacastle PR discusses challenges in this sector
In an open letter to the governor, Carlos Rodríguez, president of the Manufacturers Association, Liliana Cubano, president of the Puerto Rico Products Association, José Ledesma Fuentes, president of the Chamber of Commerce and Emilio Colón Zavala, president of the Builders Association detailed the findings of the analysis conducted by Cao and echoed the concerns of judge Laura Taylor Swain, in charge of the island’s bankruptcy process, who has expressed unease about the lack of information and a legal framework to support the agreement.
“Governor, the RSA and measures included in Prepa’s Fiscal Plan go against Puerto Rico’s economic development,” insisted the private sector coalition as it pleaded for those charges to be redistributed and not included in the electricity bill.
These private sector leaders, that usually shy away from controversies, also warned the governor that the proposed electricity rates would aggravate the current fiscal crisis and hinder the already weakened manufacturing industry.
Analysts evaluate the government's debt management
According to Cao, the proposed rate increases in both of Prepa’s proposals could turn Puerto Rico into the country with the most expensive electricity costs in the world.
In public appearances to discuss his findings, Cao has noted that Puerto Rico has the most expensive electricity when compared to the United States. For instance, while a household on the island pays 21 cents per kilowatt-hour, the average price of electricity in the states is 11 cents without taking into account Hawaii and Alaska.
Engineer Tomás Torres Placa, executive director of the Institute for Competitiveness and Sustainable Economy and the Consumer Interest Representative to Prepa’s governing board, has also voiced his objection to the RSA and the Fiscal Plan, among a long list of detractors.
“We would have a country industrially disqualified for investment and uncomfortable to live in because we would literally suffer energy poverty as we wouldn’t be able to afford or consume the energy being produced,” Torres said during an intervention in the podcast “Economía con Calle”.
Last June, the Financial Oversight and Management Board (FOMB) certified Prepa’s Fiscal Plan, while Gov. Vázquez has already endorsed the RSA that’s before the consideration of Swain. With a debt load of over $8.3 billion, the agreement with the bondholders contemplates a reduction of $3.2 billion over 10 years.
To address the questions left unanswered by the RSA, judge Swain will celebrate hearings on Oct. 30 and 31 to receive comments and information.