2023 Laws of Puerto Rico › TITLE TWENTY-TWO - Public Works (§§ 1 — 1104) › Chapter 11 - Puerto Rico Electric Power Authority (§§ 191 — 240) › § 212 - Tax exemption; use of funds

(a) It is hereby provided and declared that the purposes for which PREPA is created and shall exercise its powers are: the conservation of natural resources, the improvement of the general welfare, and the promotion of commerce and prosperity, all of which are public purposes for the benefit of the Commonwealth of Puerto Rico, and therefore, PREPA shall not be required to pay any municipal or Commonwealth taxes or assessments of any kind on any real or personal property acquired by it or under its domain, control, possession, or supervision, or on its activities in the operation and maintenance of any undertaking; or on the income derived from any of its undertakings or activities; or on the volume of business. Persons that enter into contracts with the Authority shall not be subject to the government tax on contracts imposed by §§ 30011 of Title 13, as amended, known as the “Puerto Rico Internal Revenue Code of 2011”.
(b) Subsidies, CILT, and other contributions.—
(1) As of the effective date of the new rate, the Authority shall compute annually the cost of subsidies, grants, and contributions granted under laws in effect, rural electrification programs, public irrigation systems, public lighting system, and the contribution in lieu of taxes (CILT), and shall establish as a separate charge in its transparent bill the cost of the CILT and all other aforementioned subsidies as follows:
(A) Payment equal to municipal taxes, CILT;
(B) Cost of subsidies, contributions, public lighting, rural electrification programs, and public irrigation system.
(2) Beginning on Fiscal Year 2015-2016, the Authority shall establish the maximum amount or cap of the CILT per municipality that shall be established by computing the average energy consumption per municipality on an annual kilowatt-hour basis, for the three years of highest consumption since the change in the formula in 2004 up to Fiscal Year 2013-2014. In order to determine the maximum cap of the contribution to each municipality, the average energy consumption of public lighting, on a kilowatt-hour basis, included by the Authority in the CILT during said three years of highest consumption shall be subtracted from the previously computed average. Likewise, public lighting consumption shall not be included in the CILT nor billed to municipalities as of the implementation of the new bill and the charges established in clause (1) of this subsection. Municipalities shall be required to reduce the maximum amount or cap of the CILT by five (5%) percent annually during the three years following the approval of this Act, that is to say, five percent (5%), the first year; ten percent (10%), the second year, until a fifteen-percent (15%) reduction from the maximum consumption cap is achieved on the third year. Any consumption in excess of the maximum amount or cap established as contribution by virtue of the CILT shall be billed to the municipality by the Authority for the collection thereof. If the municipality exceeds the annual five percent (5%) savings percentage rate, it shall receive from the Authority an additional contribution in a monetary value equal to one hundred percent (100%) of the savings achieved in excess of the five-percent (5%) reduction rate established for the first year; of ten percent (10%) for both the second and the third years. The payment of the additional contribution to municipalities shall be subject to a five-percent reduction in the aggregate consumption of all municipalities for the first year, and to a ten-percent (10%) reduction for both the second and third years. If the required reduction in the aggregate municipal consumption is achieved, the surplus or excess of such savings shall be reimbursed subject to the following conditions:
(A) If any or some municipalities exceed their maximum consumption cap, the Authority shall reserve such excess from the additional amount to pay municipalities that exceed five-percent (5%) savings in the first year, and ten-percent (10%) savings in both the second and third years, and shall distribute the surplus among the municipalities that are entitled to the additional contribution, on a pro rata basis, allowing for a proportional distribution, based on their individual amount in excess of the savings rate required for the corresponding year. The amount reserved shall be distributed to these municipalities as the municipalities that failed to comply with the maximum consumption cap pay their excess amounts.
(B) Notwithstanding the foregoing, in the event that the Authority is unable to recover from its customers an amount of money equal to the municipal consumption cap that is collected by means of a separate charge in the rate for such purposes, the payment on account of savings shall not be made and the amount corresponding to each municipality as a reimbursement for their energy consumption savings shall be reserved to be paid when the revenues of the Authority on account of the CILT are sufficient to comply with the reimbursement owed. Said reimbursement shall be made by establishing the priority of payments in accordance with the proportionality criteria based on the consumption savings achieved by each municipality.
(C) Each fiscal year shall be deemed to be a different and separate one, for purposes of the reimbursement for the energy consumption savings achieved according to the reduction percentages required for each particular year.
(D) If the municipality fails to meet the annual five-percent (5%) reduction established, its reduction or savings rate shall be increased by an additional five-percent (5%) as a penalty for the following year; therefore, it shall not benefit from the incentive of receiving a reimbursement for its energy consumption reduction until it exceeds the fifteen-percent (15%) consumption reduction in the second and third years of the CILT’s maximum cap.
Through Fiscal Year 2017-2018 or as of the implementation date of the new consumption baseline in accordance with clause (3) of this subsection, the maximum amount or cap of the CILT of each municipality may be adjusted in light of the new burden caused by new municipal developments; provided, that new construction has been duly certified as efficient in accordance with the rules established by the Commonwealth Energy Public Policy Office (CEPPO) through regulations. In the event that the project fails to comply with the efficiency guidelines, the CILT’s cap shall be adjusted in an amount to be determined by CEPPO in accordance with the regulations adopted by the Energy Commission, with the advice of CEPPO, for such purposes, as provided in clause (6) of this subsection. In order to promote a better use of our energy resources, CEPPO shall also prescribe by regulations criteria and guidelines to determine the origin or justification of any application for the installation of new public lighting or the replacement of existing public lighting, taking into account the reasonableness of the application, as well as efficiency of the equipment to be installed for the purpose of achieving greater energy savings at the lowest reasonable cost.
The consumption of corporations and businesses offering public services related to healthcare and healthcare facilities, as defined in §§ 331 et seq. of Title 24, known as the “Puerto Rico Health Facilities Act”, shall be included in the computation of the CILT’s cap for municipalities. However, there shall not be included in the computation of the CILT’s cap for municipalities, the energy consumption of public facilities that house for profit corporations and business, which shall pay for the electricity service. In the case of multi-purpose municipal facilities that include for profit and nonprofit activities where metering cannot be separated due to technical or cost reasons, the Authority may bill the consumption of the for profit business or activity based on estimates, using submetering, or a combination of both, as provided by the Commission in its CILT regulations, unless, due to exceptional circumstances and as determined by the Commission, by a duly grounded petition of the municipality, such consumption is included as part of the CILT.
The Authority shall send to each municipality every month a consumption report of each facility that has an independent meter. Such report shall state in detail the consumption on the same month of the preceding year and a computation of the consumption accrued as of the same date on the preceding year. Said report shall also provide a total per reported item. To facilitate the evaluation of reports, the Authority shall, within twelve (12) months after the effective date of this act, modify its reading systems and programs so that all meters of the municipality whose billing is charged against the CILT are read on the same day.
(3) The Commonwealth Energy Public Policy Office shall establish and review every three (3) years the baseline energy consumption of municipalities in order to ascertain such municipalities’ compliance with their individual energy conservation and efficiency goals. The first revision of the energy consumption cap of municipalities or CILT shall be made by CEPPO and shall take effect beginning on Fiscal Year 2018-2019, in accordance with the rules established in the Regulations to be adopted for such purposes by the Energy Commission with the advice of CEPPO. CEPPO shall recommend the mechanism to be used to establish temporary caps in the case it is unable to implement the energy consumption revision of one or more municipalities. New consumption caps shall be notified to the municipalities not later than April 15, 2018. If due to duly grounded reasons CEPPO is unable to comply with the revision of the energy consumption cap of municipalities or the CILT for Fiscal Year 2018-2019, the mechanism provided in clause (2) of this subsection to establish a new temporary consumption cap shall be adopted and shall remain in effect until the new baseline consumption or cap established by CEPPO pursuant to the aforementioned joint regulations takes effect. The Energy Commission shall prescribe by regulations, with the advice of CEPPO, the measurement to be used for measuring the energy consumption of real property, which shall be based on kilowatt-hour (kWh) per square foot (ft2) per year per type of building or structure, or the necessary criteria to promote and measure the energy efficiency of municipal facilities. Standard energy consumption shall be considered to determine the amount of the subsidy corresponding to each municipality within the parameters of the contribution in lieu of taxes established in this subsection. On a monthly basis, the Authority shall publish on its website information about the electric power consumption of municipalities. CEPPO shall offer technical collaboration to the municipalities, free of cost, in order to help them achieve the goals set forth in this section.
(4) In the event that the Authority’s projection of income billed directly to customers to cover the cost of subsidies, rural electrification program, public irrigation systems, public lighting system, contributions and the CILT is not sufficient or exceeds the projection of revenues established in the duly approved rate, such insufficiency or excess shall be evaluated and addressed by means of a periodic review of such charges in accordance with the rate structure approved by the Energy Commission. In the event that the revenues collected at the end of the annual rate cycle of the Authority fail to reach, or exceed the actual costs of the CILT and the subsidies, contributions, public lighting, rural electrification program, and public irrigation system, the Authority may include such adjustment in the following rate year; provided, that it submits to the Commission, within forty-five (45) days after the effectiveness of said adjustment, information that shows the need for the adjustment and that the lack of revenues was not due to reasons attributable to the Authority whose collection policies are consistent with industry standards. The Commission shall evaluate the information, and if it determines that the lack of revenues was due to reasons attributable to the inefficiency of the Authority’s billing or collection processes for being inconsistent with industry standards, it shall order the Authority to render such adjustment ineffective and credit to its customers any amount collected on such account during the applicable period. The Authority shall not recover an amount higher than the cash equivalent of the cap established for municipalities, unless it shows to the satisfaction of the Commission that such difference is due to reasons attributable to special changes in the cost of fuel or in the demand for energy or to collection deficiencies not attributable to the Authority’s inefficiencies.
If there are outstanding debts with the municipalities on account of the CILT’s energy consumption savings reimbursement, as provided in clause (2) of this subsection that the Authority cannot recover through the adjustment mechanism established in this clause, said reimbursement shall be payable to the municipalities from the administrative and operational savings that the Authority must achieve in accordance with the requirements of §§ 1051 et seq. of this title and §§ 191--217 of this title. Any debt related to the municipalities’ reimbursement shall be satisfied within a term that shall not exceed twelve (12) months counted as of the close of the fiscal year in which the municipality was entitled to receive such reimbursement.
(5) Not later than April 30th of each fiscal year, the Authority shall notify municipalities of the consumption cap applicable to the CILT corresponding to the next fiscal year. Said consumption cap shall be subject to quarterly revisions due to the connection of new load in accordance with this subsection (b). Such revisions shall be made not later than March 31st of the current year in order to be included in the computation of the CILT’s cap of the following fiscal year. The Authority shall submit to the Office of the Commissioner of Municipal Affairs, and the Office of the Clerk of the House of Representatives, and the Office of the Secretary of the Senate, not later than December 31st of each year, a comprehensive report on the consumption of each municipality and the consumption on account of public lighting, subsidies, and contributions and the cost amount thereof, as well as a copy of its financial statements or report to bondholders, stating the revenues actually collected on account of the direct billing to customers to cover the costs of subsidies, the rural electrification program, the public irrigation system, contributions, public lighting, and the CILT. It shall also include a certification in which external auditors of the Authority state the correctness of the computation or reconciliation of the methodology used to determine the maximum consumption cap or CILT for the municipalities. Likewise, it shall also inform the sum of the electric bill or the reimbursement per municipality and the cost of subsidies, public street lighting, and grants, among others. Excess consumption shall be billed by the Authority to the appropriate municipality and such bill shall be paid following the regular debt collection process established by law. Municipalities shall enter into agreements with the Authority as are necessary to settle or payoff their debt within a term that shall not exceed forty-five (45) days, after: (A) the delivery of the bill or (B) having exhausted the billing dispute process provided.
The insufficiency of municipalities whose kilowatt-hour consumption is equal to or higher than the cap thereof shall be entered in the books of the Authority as an account payable to municipalities and account receivables from municipalities, for accounting purposes. Therefore, neither said municipalities shall pay the Authority for such insufficiency nor the Authority pay the municipalities therefor.
(6) The Energy Commission, with the advice of CEPPO, shall adopt, within one hundred eighty (180) days after the approval of this act, the regulations needed to implement the contribution or payment in lieu of taxes mechanism, or CILT, to municipalities as well as other duties set forth in this subsection (b), which regulations shall be effective on and apply from Fiscal Year 2015-2016. The Commission shall notify the entities representing the mayors of the beginning of this regulation process in accordance with the provisions of §§ 2101 et seq. of Title 3, known as the “Uniform Administrative Procedures Act”.
(c) A partial credit shall be granted in the bill of every customer under a residential rate, who is eligible to receive said credit, pursuant to the regulations adopted from time to time by the Authority, and who has a maximum monthly consumption of up to 400 kWh or less; or a maximum bimonthly consumption of 800 kWh or less, which credit would be equal to the amount that, through regulations, the consumer would have had to pay in the corresponding period indicated, as a result of the adjustment for the adjusted fuel price up to a maximum of thirty dollars ($30) per barrel. Provided, That the adjustment for any excess in the cost of fuel above the maximum price adopted per barrel, shall be paid by the customer, in addition to any other charge resulting from the increase in the price of fuel. Provided, further, That those users who are entitled to said credit pursuant to the Authority’s regulations in effect, and who have a maximum monthly consumption of up to 400 kWh, or a maximum bimonthly consumption of up to 800 kWh, shall be entitled to the aforesaid credit up to 400 kWh a month or 800 kWh bimonthly. It being understood that, for purposes of §§ 191—217 of this title, the monthly or bimonthly periods, as the case may be, shall have the number of days of the billing cycles of the Electric Power Authority.
(d) The following electric power consumption credits shall be granted specifically for life-support equipment;
(1) A fifty percent (50%) residential electric power consumption credit specifically attributable to life-support equipment, as determined by a professional authorized to practice medicine in Puerto Rico or by the Department of Health, such as ventilators connected to the tracheostomy tube, air filtration systems, infusion pumps, artificial respirators, artificial kidney machines or any other electrical machines, equipment or appliances needed to preserve the life, regardless of the financial condition of the patients” family unit.
(2) One hundred percent (100%) residential electric power consumption credit specifically attributable to life-support equipment, as determined by a professional authorized to practice medicine in Puerto Rico or by the Department of Health, such as ventilators connected to the tracheostomy tube, air filtration systems, infusion pumps, artificial respirators, artificial kidney machines or any other electrical machines, equipment, or appliances needed to preserve the life, when the financial condition of the patients” family unit is below the poverty line.
(3) A fifty percent (50%) residential electric power consumption credit specifically attributable to equipment needed for the care of persons diagnosed with multiple sclerosis, as determined by a professional authorized to practice medicine in Puerto Rico or by the Department of Health, up to a monthly maximum of 425 kWh, regardless of the financial condition of the patients” family unit.
(4) One hundred percent (100%) residential electric power monthly consumption credit where patients with epidermolysis bullosa, anhidrotic ectodermal dysplasia, or adrenoleukodystrophy reside for up to a maximum of 425 kWh attributable to an air conditioning unit in the patient’s bedroom, up to a maximum of 18 kWh attributable to a food processor, and up to a maximum of 132 kWh attributable to a whirlpool, regardless of the financial condition of the patient’s family unit.
In order to receive the credits provided in this section, the applicant must meet the following requirements:
(1) The electric power service account holder shall file annually with PREPA a certification stating that the patient resides in the housing unit associated with the electric power service account.
(2) To file annually with PREPA a certification issued by a professional authorized to practice medicine in Puerto Rico or by the Department of Health, stating in detail the nature of the applicant’s condition, the need for the electrical life-support equipment, and a list of the equipment or appliances specifically needed to preserve such patient’s life. Said certification may be issued up to ninety (90) days before the filing date thereof.
(3) If claiming that the financial condition of the patient’s family unit is below the poverty line, to annually file with PREPA a certification issued by the Department of the Family stating that the patient’s family unit financial condition is below the poverty line, as such term is defined by the Department of the Family. Said certification may be issued up to ninety (90) days before the filing date thereof.
(4) To have no debt, payment plan, or arrears in the electric power service account with the Electric Power Authority.
The Department of Health shall enter into agreements with the Commonwealth Energy Public Policy Office to establish energy audit programs for the patient’s residence, in order to achieve the most efficient use of electric power in the patient’s residence.
(e) Before granting any subsidy or incentive related to the electric power service, any existing and proposed subsidies or incentives shown in PREPA’s rate paid or to be paid by nonsubsidized customers shall be evaluated. PREPA shall publish on its website any information about the different subsidies, their legal basis, the approximate cost of each one of them for PREPA, and the characteristics of the customer sectors or universe that benefit from each subsidy.
(f) PREPA, with the assistance and collaboration of other entities or public instrumentalities, shall oversee that subsidized customers strictly meet the requirements of the subsidy or subsidies they receive from PREPA, in order to ensure that each subsidy fulfills the social purpose for which they were created. PREPA may enter into interagency agreements with other entities or public instrumentalities to define and ensure their collaboration in overseeing subsidized customers. The benefits of any customer who violates the terms and conditions of the subsidy granted shall be eliminated, after an administrative hearing evidencing the violation committed.
(g) For the purpose of expediting the procurement of funds by the Authority, which shall allow it to attain its corporate purposes, the bonds issued by the Authority and the income derived therefrom are and shall always be exempt from taxation.
History —May 2, 1941, No. 83, p. 684, § 22; Apr. 8, 1942, No. 19, p. 330, § 1; May 14, 1948, No. 205, p. 608, § 1; May 31, 1950, No. 1, p. 1330; June 28, 1973, No. 5, p. 758; June 28, 1974, No. 106, Part 1, p. 349; June 8, 1981, No. 4, p. 76, § 1; July 24, 1989, No. 34, p. 110; July 22, 1992, No. 32, § 1; Aug. 11, 1996, No. 124, § 1; Aug. 23, 1996, No. 164, § 1; July 19, 1998, No. 152, § 1; Dec. 8, 2003, No. 300, § 1; Sept. 7, 2004, No. 255, § 1; Jan. 5, 2006, No. 2, § 1; July 29, 2007, No. 79, § 1, eff. 90 days after July 29, 2007; Dec. 11, 2011, No. 233, § 1; May 27, 2014, No. 57, § 2.10; Feb. 16, 2016, No. 4, § 15; Apr. 7, 2016, No. 22, § 3.17.