Puerto Rico holds hearings on proposed power bill increases as customers fume and outages persist

Puerto Rico residents face a potential 40% increase in electricity bills as the U.S. territory holds hearings on fee hike requests from private power companies. The controversial proposals come amid ongoing struggles with an outdated electrical grid that was devastated by Hurricane Maria in 2017.

The Energy Bureau of Puerto Rico is conducting hearings through late December to decide whether to authorize the proposed increases. Public input is not included in these proceedings, fueling frustration among residents already burdened by high poverty rates and rising living costs.

If approved, the combined new charges would raise a bill’s base rate from $4 per month to more than $40, according to advocacy groups including the Solar and Energy Storage Association of Puerto Rico (SESA) and Solar United Neighbors.

“The larger issue here is the impact on low-income people… on elderly people,” said P.J. Wilson, SESA’s president.

One specific proposal from Luma Energy, the company managing transmission and distribution of power on the island, would increase the residential fixed charge from approximately $4 per month to $15 beginning in January 2024.

Javier Rúa-Jovet, SESA’s public policy director, called this request “an unjustified economic blow to households and families on the island,” noting there is no analysis justifying such a substantial increase.

Critics also warn that higher fixed charges will discourage the adoption of renewable energy solutions. “It makes the financial case to go solar worse, and worse and worse,” Wilson explained.

Puerto Rico once aimed to achieve a 100% renewable energy system by 2050, but the current administration under Governor Jenniffer González, a supporter of former U.S. President Donald Trump, has been retreating from this commitment. This shift comes despite advocates pointing to Hurricane Maria’s devastation as evidence for the need to embrace renewable resources.

Eight years after Maria, chronic power outages continue to plague the island. Massive blackouts disrupted Puerto Rico during Easter week this year and New Year’s Eve in 2022. These persistent issues have damaged electrical appliances and further strained residents’ patience.

The proposed rate increases could push Puerto Rico’s electricity rate to 33 cents per kilowatt-hour, nearly double the U.S. mainland average of 17 cents, according to the U.S. Energy Information Administration. This disparity is particularly problematic on an island where over 40% of the 3.2 million inhabitants live in poverty.

In response to public outcry, Governor González has promised to terminate the government’s contract with Luma Energy. Chief of Staff Francisco Domenech told reporters that the legal process to end the agreement will begin before year’s end, though he emphasized that even after cancellation, Luma would continue providing service for another year under contractual obligations.

“Lowering power costs: priority number one,” Domenech stated, adding that the government has been negotiating with U.S.-based companies as potential replacements, though he declined to provide specifics.

Luma began operating in Puerto Rico in June 2021 under contract with the Puerto Rico Electric Power Authority (PREPA), which is working to restructure its more than $9 billion debt. Experts warn that Puerto Ricans may face additional bill increases to pay off this debt if negotiations with bondholders fail.

For its part, Luma has defended the proposed rate increases, claiming that PREPA’s financial instability has prevented access to credit and financing options, forcing the diversion of funds from planned improvements to emergency repairs. The company has emphasized that it would not financially benefit from the rate increases, stating the funding would be directed toward improving and strengthening the grid.

The outcome of these hearings will have far-reaching implications for both Puerto Rico’s economic recovery and its energy future.