San Juan, Puerto Rico — SAN JUAN, Puerto Rico (AP) — Puerto Rico is holding a major public hearing on requests for rate increases from private power companies. If approved, the request could raise average housing prices in the U.S. territory by at least 40 percent on an island with high poverty rates and rising costs of living.
Puerto Rico residents are balking after officials at the private utility company that oversees power generation, transmission and distribution say they need additional funding to modernize a crumbling power grid that was destroyed by Hurricane Maria in 2017.
Public hearings, which will not include public comment, are expected to begin in mid-November and continue through late December. They are kept by Puerto Rico's Energy Department, which will decide whether to approve the proposed increases.
In total, the proposed new rates would increase the base rate from $4 a month to more than $40 a month, 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…older people,” SESA President P.J. Wilson said in a phone interview Tuesday.
One proposal from Luma, the company that oversees electricity transmission and distribution on the island, calls for residential fixed rates to rise from about $4 a month to $15 a month starting in January.
“This request from Luma… represents an undue economic blow to households and families on the island,” said Javier Rua Jobe, SESA's director of public policy.
He said in a phone interview that there is currently no analysis to justify that request.
Meanwhile, Mr Wilson warned that there were other implications related to the recent demand for additional fixed fees. “This makes the financial situation for solar even worse and worse,” he said.
Puerto Rico once aimed to achieve a 100% renewable energy system by 2050, but has distanced itself from that goal under the administration of Gov. Jennifer González, an ally of U.S. President Donald Trump.
Advocates say the island should embrace renewable resources given the damage caused by Hurricane Maria eight years ago, which left some residents without power for up to a year.
Chronic power outages continue, with large-scale power outages occurring in Puerto Rico during Easter week this year and New Year's Eve last year.
The island of 3.2 million people has a poverty rate of more than 40 percent, and people are angry about ongoing power outages, damage to appliances caused by power outages, and proposed increases in electricity rates, including one that could push Puerto Rico's electricity prices up to 33 cents per kWh.
According to the U.S. Energy Information Administration, the average cost of electricity in the continental United States is 17 cents per kWh.
Puerto Rico's governor has promised to end government contracts with Luma. Chief of Staff Francisco Domenech told reporters on Tuesday that legal proceedings to do so would begin by the end of the year.
“Reducing power costs is a top priority,” he said.
Domenech said the government is in talks and negotiations with a company based in the continental United States that could potentially replace Luma, but he did not provide details.
He pointed out that even if the contract is terminated, Luma must continue to provide services for one year. “Luma is not leaving tomorrow,” he said.
In June 2021, Luma signed a deal with Puerto Rico's Electricity Authority, which is struggling to restructure more than $9 billion in debt. Intense negotiations continue, and experts warn that unless a deal is reached with bondholders, Puerto Ricans are likely to see their electricity bills rise even further to pay off the debt.