Puerto Rico associations file suit to block power rate hike

Aug 18, 2016

Some of Puerto Rico's largest business associations have joined forces to file a lawsuit aimed at blocking an electricity rate hike they say will worsen the island's economic slump

SAN JUAN, Puerto Rico — Some of Puerto Rico's largest business associations announced Thursday that they have joined forces to file a lawsuit aimed at blocking an electricity rate hike they say will worsen the island's economic slump.

The lawsuit takes aim at a recently imposed transition charge of 3.1 cents per kilowatt hour that will pay for new bonds issued under a proposed $9 billion debt restructuring at Puerto Rico's Electric Power Authority. That new charge is a key requirement of the proposed restructuring.

Customers have also been hit with a provisional rate increase of 1.299 cents per kilowatt hour aimed at covering a $222.25 million annual revenue shortfall. A regulatory board is still considering whether to make that increase permanent or adjust it up or down.

The hikes translate into a 23 percent increase over current rates for residential customers for early 2017. Commercial and industrial businesses could face a 22-24 percent permanent increase depending on the company's size.

"If the increases take place, I am very concerned that we may lose a good percentage of companies," said Rodrigo Masses, president of Puerto Rico's Manufacturers Association, among the groups represented in the lawsuit.

The groups' representatives acknowledge some sort of rate hike is needed to cover the debt, but reject a proposed fee on those who generate renewable energy and worry there will be no cap on increases.

Many Puerto Ricans have complained that the increased costs will scare away investors, noting that high power bills already have forced businesses to close during the economic crisis.

Many people are also angry about paying bills that are on average double those on the U.S. mainland.

"We are being held hostage by a utility that is not being well managed," said Tomas Torres, coordinator of the nonprofit Institute for Competitiveness and Economic Sustainability of Puerto Rico, which is also part of the lawsuit.

Electric Power Authority officials did not immediately return a request for comment.

A group representing the power company's bondholders said the lawsuit was misguided and would fail to increase the use of renewable energy in Puerto Rico.