Groups Seek to Block Rate Hike Tied to Puerto Rico Debt Restructuring

A collection of advocacy and business groups brought a legal challenge to a debt restructuring deal for Puerto Rico’s power utility that they claim will unfairly and excessively raise electricity rates for the utility’s customers.

The Puerto Rico Electric Power Authority (PREPA) is asking for approval for a new surcharge and a rate hike it from 16.5 cents per kilowatt-hour to 20.1 cents/kWh by next year, as part of a $9 billion restructuring deal struck earlier this year, the groups said. The Institute for Competitiveness and Sustainable Economy of Puerto Rico (Spanish acronym: ICES-PR) and eight other industry groups representing retailers, hospitals, hospitality firms and other consumers of electricity filed their separate challenges to this action in a Puerto Rican commonwealth court.

The rate increase is “one of the largest in recent U.S. history to be imposed on a state-wide or territory-wide basis,” according to a statement from the plaintiff groups.

“As approved, these charges are an unnecessary and direct hit to Puerto Rico’s already struggling economy,” Tomas Torres, a coordinator for ICES-PR, said in a statement. “It also goes against national and international market trends toward expansion of renewable energy and distributed generation. If electricity rates are allowed to continue to increase, and options for establishing own generation are blocked with excessive surcharges, production costs would considerably rise and Puerto Rico will lose competitiveness in the manufacturing and other important sectors of our economy, with fewer options for economic development.”