SAN JUAN, Puerto Rico (AP) — Puerto Rico is holding key hearings on private utility rate hike requests that, if approved, could see the average U.S. housing bill rise by at least 40% on an island with high poverty rates and soaring living costs.
Residents are balking as officials at the private utility companies that oversee Puerto Rico’s power generation, transmission and distribution insist more funding is needed to upgrade the crumbling grid. Hurricane Maria demolished in 2017.
The hearings, which do not include public input, began in mid-November and are scheduled to continue until the end of December. They are held by the Puerto Rico Energy Authority, which would decide whether to allow the proposed increases.
Overall, the proposed new fees would raise the base bill rate from $4 a month to more than $40, according to the Puerto Rico Solar and Energy Storage Association and Solar United Neighbors.
“The bigger issue here is the impact on low-income people … on older people,” PJ Wilson, president of SESA, said in a telephone interview Tuesday.
One of the proposals from Luma, which oversees the island’s power transmission and distribution, calls for the flat fee for households to rise from about $4 a month to $15 starting in January.
“This request from Luma represents … an unjustified economic blow to households and families on the island,” said Javier Rúa-Jovet, director of public policy at SESA.
He said in a phone interview that there is currently no analysis to justify the request.
Meanwhile, Wilson warned there were further implications related to recent requests for additional fixed fees. “It makes the financial situation worse and worse and worse,” he said.
Puerto Rico, which aimed to achieve a 100% renewable energy system by 2050, distances itself from this goal under the administration of Governor Jennifer González, a supporter of the US President Donald Trump.
Proponents say the island should use renewable energy given the damage caused by Hurricane Maria eight years ago, which left some people without power for up to a year.
Chronic outages persist, p massive power outages hit Puerto Rico this year during Easter week and last year on New Year’s Eve.
The island of 3.2 million people has a poverty rate of more than 40% and people are still angry about the ongoing outages, the damage they have caused to electrical appliances and the proposed increase in the electricity bill, one of which could lead to an increase in Puerto Rico’s electricity rate to 33 cents per kWh.
In the U.S. mainland, the average electricity rate is 17 cents per kWh, according to the U.S. Energy Information Administration.
Puerto Rico’s governor has vowed to terminate the government’s contract with Luma. Chief of Staff Francisco Domenech told reporters on Tuesday that the legal process to do so would begin by the end of the year.
“Reducing energy costs: the number one priority,” he said.
Domenech said the government has been and is negotiating with companies based in the US mainland that could replace Lumu, but declined to provide details.
He noted that even if the contract was terminated, Luma would have to provide services for one year. “It’s not like Luma is leaving tomorrow,” he said.
Luma was shut down in June 2021 by the Puerto Rico Electric Power Authority, which is trying to restructure its debt exceeds $9 billion. Acrimonious negotiations are underway, and experts warn that Puerto Ricans are likely to see further increases in their electricity bills to pay off the debt if a deal is not reached with bondholders.
Puerto Rico’s grid was already precarious before Hurricane Maria, due to a decades-long lack of investment and maintenance.
Luma said the Electric Power Authority’s shaky finances prevented access to credit and financing options and forced it to divert money from planned improvements to emergencies, including unplanned outages. Luma also noted that lack of access to financing forced the company to pay for all network investments in full each year — instead of several years, as is standard.
Luma also emphasized that it would not benefit financially from the proposed rate hike, saying the funds would be used to improve and strengthen the network.
