Private sector coalition and Prepa workers union blast Revitalization Act

BY EDISON REYNALDO MISLA

emisla@marketnext.net

 

Representatives from a private sector coalition that includes manufacturing, retail and renewable energy sectors publicly asked that Senate Bill 1523 –also known as the Puerto Rico Electric Power Authority (Prepa) Revitalization Act– not be approved as submitted on November 2015. The legislation’s approval is required by the restructuring support agreement (RSA) negotiated by the troubled utility with its fuel line lenders, bondholders, and bond insurers.

 

“The revitalization bill takes away the powers given to the Puerto Rico Energy Commission (PREC) by Law 57,” said Puerto Rico Manufacturers Association (PRMA) President Carlos Rivera Vélez, summarizing the group’s position. “That is a mortal blow” to the economy in its current state, he added.

 

If approved, the Revitalization Act would allow to Prepa to regain control over setting electricity rates and limit the PREC’s powers as an independent regulator. “As an independent regulator, the energy commission needs to have complete power over the evaluation and validation of proposed rate increases”, said Rivera Vélez.

Tomás Torres, president of the PRMA’s energy committee, explained that the bill does not allow the PREC to modify Prepa’s restructuring resolution beyond determining the methodology for the transition rates. “That means we will have a truncated energy commission, with limited interference that could turn out to be academic in regards to the securitization process,” he said. The new rates will have two components: the energy component and the securitization component, Torres said.

A hotly contested provision of the bill sets new additional charges for the private generation of renewable energy and limits the growth of renewable energy adoption as it pushes back compliance with previously established goals of renewable generation, currently slated for 20% by 2035. The new charges would apply to the generation of distributed energy by solar panels in residential or commercial facilities. Furthermore, the bill revises net metering processes to reduce the amount reimbursed by Prepa to its clients to a marginal, fixed cost and not the real cost.

 

“If you talk about revitalizing Prepa, you need to talk about revitalizing the economy of Puerto Rico, because soon the utility will have no clients, or investors for the electric system,” stated José Rossi, chairman of the board for the Institute for Competitiveness and Economic Sustainability. Therefore, he said the project needs to strengthen the processes for evaluation and adjudication of what are the legal, moral and reasonable expenses that should be passed on to consumers. Rossi said the bill does not do this. “It cannot be a Prepa revitalization bill because it doesn’t revitalize the economy or the confidence of consumers and investors, which in other jurisdictions can rely on robust energy commissions.” 

It is expected that the Puerto Rico legislature will take up the Prepa Revitalization Act in the regular session that begins Monday. The legislative majority dominated by the governing Popular Democratic Party has been working on amendments to the bill submitted by Gov. García Padilla.