Energy Rate Increase, Electricity Rate Hike

Based on the lack of data to be evaluated and on the incorrect information that was submitted, the Puerto Rico Energy Bureau (PREB) denied the increase in the electric power service rate requested by LUMA Energy to take effect in September, but it is not ruled out for October, Lilliam Mateo, associate commissioner of the regulatory entity, told THE WEEKLY JOURNAL.

According to the PREB's determination, LUMA requested a review of the quarterly factors of the Fuel Clause Adjustment (FCA) and the Purchase Power Charge Adjustment (PPCA) that would come into effect during this month of September.

LUMA indicated in the request that the combined reconciliation of the FCA and PPCA clauses for June was $20.6 million, and $31.4 million for July. In both cases, it is recovered from clients.

With these numbers, LUMA presented its proposal of revised factors for the month of Sept. 2021, in accordance with the provisions for the accelerated adjustment of the clauses, established in the rate book of the Puerto Rico Electric Power Authority (PREPA).

As discussed in the technical conference to analyze the request, the Energy Bureau ordered that LUMA - as part of the proposal that must be presented on or before Sept. 14 - present the factors proposed for the FCA, PPCA and Fuel Oil Subsidy (FOS) clauses that will come into effect on Oct. 1. They must also include the proposed reconciliations for the months of June, July and August 2021, which correct the errors indicated with respect to the corresponding fuel reports.

Mateo explained that due to the denial by the PREB, the rates remain unchanged and the adjustment made last June that came into effect in July remains, with a 7.6 percent increase in the residential rate, which raised the kilowatt hour (kWh) to 21.17 cents.

However, Mateo assured that the next billing cycle - which comes into effect in October - is uncertain due to the increase in spending recorded by factors such as the use of generation units in recent months, which are less efficient. In addition, she said that the fuel they require is more expensive than that used by PREPA to cover energy demand.

"In the technical conference, all the elements will be evaluated to deduce the possibility of a rate increase due to the dispatch of units that were not used and whose fuel is more expensive, which impacts the factors," said Mateo, who does not rule out the increase, but the amount of the increase is unknown, although LUMA had requested that the increase be four cents per kWh.

These increases are discussed at a time when the island has registered recurring power service interruptions, which, according to reports from people on social networks and the media, have caused the loss of food and breakdowns in electrical appliances.

On this matter, Mateo acknowledged that there is discomfort among consumers, who, according to her understanding, continue to pay for an old and fragile fleet and infrastructure, alluding to the island's energy system. However, she assured that the increase in the bill does not respond to a rate hike, but rather a higher consumption due to the high temperatures registered in Puerto Rico.

The associate commissioner pointed out that “other issues could be altering the bill, but it is not an increase in the rate. This has remained unchanged since last July."

Governor Absolves Himself

Gov. Pedro Pierluisi left in the hands of the Energy Bureau the possibility of the electricity bill being increased again, and took refuge in the process established by law.

“If there is an increase, it falls out of the bush, which will be due to the increase in the cost of fuel, because there would be an increase in the cost of fuel due to breakdowns and that, instead of using natural gas, you had to burn diesel or in Instead of burning bunker C, you had to burn diesel," the governor said. "But it is the business that has to justify it," he added.

Given the possible new increase in the cost of energy, Pierluisi underscored that it would be speculative to opine because it is decided based on the data.

"If PREPA can achieve efficiencies, savings, that compensate for the rise in fuel costs, we may not have the rise, but whoever is responsible is the Energy Bureau," he said. "I could have an opinion, but the one who has the last word is the Energy Bureau."

Blackouts

Concerning the blackouts reported on Monday night and those projected for yesterday afternoon, the governor reiterated that the responsibility lies with the Electric Power Authority and not with LUMA.

"The interruption in service is again a matter of generation and, from what I saw reported, it is a failure at the Palo Seco plant. What LUMA is there for is basically to respond to the situation, but the responsibility lies with PREPA," Pierluisi asserted.

"We have said - as on many occasions - that these plants are old plants. We've been biting the bullet. They have to be changed, improved, converted. We are looking for private capital to take control of these plants, so we transform the system to one that depends on renewable energy and not on burning oil," he affirmed.

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