2023 Laws of Puerto Rico › TITLE TWENTY-TWO - Public Works (§§ 1 — 1104) › Chapter 11 - Puerto Rico Electric Power Authority (§§ 191 — 240) › § 196a - PREPA Rate Review Process

(a) Review of Proposed Rate.— Every rate proposed by the Authority shall be reviewed by the Energy Commission prior to taking effect, subject to the terms provided in the Puerto Rico Energy Transformation and RELIEF Act, §§ 1051 et seq. of this title, and this section. The rate review process shall ensure that all rates are just and reasonable and consistent with sound fiscal and operational practices that provide for a reliable and adequate service, at the lowest reasonable cost.
(b) Procedure in the Authority.— Before filing a rate review proposal, the Authority shall hold hearings before the Governing Board of the Authority or before any administrative judge or judges or hearing officers designated for such purposes at the request of the Governing Board. When thus designated, the administrative judge or hearing officer shall conduct the hearings in accordance with procedural rules established for such purposes. If applicable, the Authority shall notify the hearing calendar to the public by posting a notice to that effect on the website of the Authority and placing advertisements in the media, within at least fifteen (15) days before the date on which the public hearings are to be held. If public hearings are held, the Authority shall file with the Commission a detailed report on said proceedings, which shall be included in the record of the request for rate review.
When notifying the holding of the public hearings referred to in the preceding paragraph, the Authority shall notify the Independent Consumer Protection Office (ICPO). ICPO shall be in charge of verifying and coordinating with the Authority that a reasonable opportunity for citizen participation is provided in the public hearings on the rate review. As part of said function, ICPO shall ensure that the following criteria are met:
(1) The Authority notified the public of the holding of a public hearing within at least (15) days in advance;
(2) The Authority provided sufficient and easily understandable information to the attendees on the proposed reviews and the basis therefor; and
(3) The attendees are provided with reasonable and sufficient opportunities to ask questions and express their concerns according to the process previously agreed on with the Authority.
No public hearing may be held without an ICPO representative. However, if the position of ICPO Director is vacant, the functions of ICPO at the public hearings provided for in this subsection shall be carried out by the person to whom the Governor delegates temporarily for such purposes. The Authority shall provide the personnel and equipment needed to record the public hearings in their entirety and shall be custodian of all recordings.
ICPO shall prepare detailed minutes of each public hearing and provide the Authority with a copy thereof. The minutes prepared by ICPO shall be part of the file submitted by the Authority to the Energy Commission during the review process of the proposed rate.
The provisions of §§ 261—261e of Title 27, known as the “Uniform Rate Revision and Modification Act”, and the provisions of §§ 2101 et seq. of Title 3, known as the “Uniform Administrative Procedure Act,” shall apply to the Authority’s rate modification and review processes insofar as they are consistent with the provisions and requirements on rate modifications and review established in this section. To the extent the provisions of §§ 261—261e of Title 27, are inconsistent with the provisions of §§ 191—217 of this title, the provisions of §§ 191—217 of this title shall prevail.
(c) Initial rate review.— Rates in effect as of the effective date of the Puerto Rico Energy Transformation and RELIEF Act shall continue in effect until they are reviewed by the Energy Commission in accordance with the provisions of this section and the Puerto Rico Energy Transformation and RELIEF Act. The first rate review process shall end not later than one hundred eighty (180) days after the Commission determines through a resolution that the Authority’s request is complete. During said process, the burden of proof shall lie on the Authority which shall be required to show that such rate is just and reasonable and consistent with sound fiscal and operational practices that provide for a reliable and adequate service, at the lowest reasonable cost. The Authority shall submit all the information requested by the Commission, which shall include but not be limited to, any documents pertaining to:
(1) The efficiency, capacity, and suitability of the facilities and the service;
(2) Direct and indirect costs related to the generation, transmission, and distribution of energy, including stranded costs and costs attributable to the loss of energy due to theft or inefficiency;
(3) Expenditures related to the Authority’s debt repayment;
(4) All charges and costs included under “Fuel Adjustment” as of the effective date of the Energy Transformation and RELIEF Act;
(5) The Authority’s capacity to improve the service provided and its facilities;
(6) The conservation of energy and efficient use of alternative energy resources;
(7) Data related to the effect of special laws, subsidies, and contributions; and
(8) Any other data or information that the Commission deems necessary to evaluate and approve rates.
The Commission shall issue a resolution indicating whether the request is complete or shall require additional information within fifteen (15) days after the request’s filing date.
The Commission shall approve a rate that: (i) is sufficient to guarantee the payment of principal, interest, reserves, and all other requirements of bonds and other financial obligations that have not been defeased as part of the securitization provided in Chapter IV of the Electric Power Authority Revitalization Act and reasonable costs of providing the services of the Authority; (ii) complies with the terms and provisions of the agreements entered into with or in benefit of buyers or holders of any bonds or other financial obligations of the Authority; (iii) covers the costs of the contribution in lieu of taxes and other contributions and subsidies required to the Authority under special laws; (iv) remains in effect during three (3)-year cycles, except for periodic adjustments authorized by the Commission as part of the rate approved, and unless the Commission motu proprio decides to conduct a review; (v) takes into consideration the operational and administrative efficiencies and savings provided in the Creditors” Agreements as reasonably estimated in good faith by the Authority and determined as of the filing date of the proposal with the Commission. As part of every rate proposal, the Authority may propose one or more charges in the rate that show in a transparent manner the amounts to be paid by customers on account of the obligations of the Authority to bondholders and other creditors. Except for the Transition Charge of the securitization structure, which shall be governed by the provisions of Chapter IV of the Electric Power Authority Revitalization Act and § 1054x-1 of this title, the Commission shall review such charges according to the financial obligations of the Authority so that they may be sufficient to guarantee the annual payment of the debts contracted with bondholders.
The Authority shall propose an adjustment charge to recover variable costs in the purchase of fuel and the purchase of energy. Said fuel and energy purchase adjustment charge shall only include costs directly related to the purchase of fuel and energy. Under no circumstances, the repayment of the line of credit (including interest) shall be part of the costs directly related to the purchase of fuel and energy. In addition, the Authority shall propose separately the charges and adjustments corresponding to the costs of subsidies and the contribution in lieu of taxes, net metering credit, and those other charges or credits that, when itemized individually, allow for greater transparency in the bill. Charges corresponding to the costs of subsidies and the contribution in lieu of taxes shall be consistent with the provisions of §§ 212 of this title, known as the “Puerto Rico Electric Power Authority Act”.
The Commission shall approve under the “fuel adjustment” and “energy purchase adjustment” charges only the costs directly related to the purchase of fuel and the purchase of energy, respectively, or that variable portion of the fuel and energy price that is not included in the base rate, as the case may be. No other expense or charge may be denominated nor included as “fuel adjustment” or “energy purchase adjustment”.
Every three (3) years, or more frequently, if the Commission deems it necessary, it shall approve and establish a mitigation plan to ensure that the costs it deems to be inconsistent with industry practices, such as energy theft, account receivables, and losses attributable to the inefficiency of the electrical system are adjusted to the industry’s standards. The Authority shall comply with every mitigation plan approved by the Commission within a term that shall not exceed three (3) years or a shorter term established by the Commission.
The Authority and the Commission shall establish a plan for the implementation of the new transparent bill, as provided in §§ 196a and 196c of this title. However, the Transition Charge of the securitization structure may become effective according to the payment schedule of said transaction and pursuant to the terms thereof, whether as part of the current bill of the Authority or in the new transparent bill in accordance with §§ 196a and 196c of this title.
(d) Rate modification request.— Once the process provided in subsection (c) of this section concludes, the Authority shall file the rate modification request with the Commission for its approval. The request shall state the grounds for the change, the effect of such modification on the revenues and expenditures of the Authority, and any other information needed for the evaluation requested by the Commission by regulations or request. In addition, the Commission may initiate, motu proprio, the rate review process when it is in the best interest of customers. Any rate modification whether to increase or decrease the same shall undergo an evidentiary and a public hearing process to be held by the Commission to determine whether the proposed change is just. The review process shall not exceed one hundred eighty (180) days from the Commission’s determination by resolution that the Authority’s request is complete, unless the Commission extends the review process up to sixty (60) additional days, pursuant to §§ 1051 of this title.
At the Authority’s request, the Commission may approve a rate modification due to emergency circumstances, as provided in §§ 261—261e of Title 27, known as the “Uniform Rate Revision and Modification Act”. These emergency rates shall not be considered temporary rates as defined in §§ 191—217 of this title or in §§ 1051 et seq. of this title, and shall remain in effect while the emergency lasts, but never for a term exceeding one hundred eighty (180) days after their approval. Other provisions of §§ 261—261eof Title 27, and the provisions of §§ 2101 et seq. of Title 3, known as the “Uniform Administrative Procedure Act”, shall apply to rate review and modification processes of the Authority, insofar as they are consistent with the provisions and requirements for rate modification and review established in §§ 191—217 of this title. Insofar as the provisions of §§ 261—261e of Title 27 are inconsistent with the provisions of §§ 191—217 of this title, the provisions §§ 191—217 of this title shall prevail.
(e) Temporary rate.— Within thirty (30) days after the filing of the rate modification request, the Commission may make, motu proprio, or at the request of the Authority, a preliminary evaluation to determine whether a temporary rate should be established. The temporary rate shall be established at the discretion of the Commission. If the Commission establishes a temporary rate, such rate shall take effect sixty (60) days after the date of approval of the temporary rate, unless the Commission determines, at the request of the Authority, that it should take effect earlier, but never within less than thirty (30) days after the approval of the temporary rate. Said temporary rate shall remain in effect during the period of time needed by the Commission to evaluate the rate modification request proposed by the Authority and issue a final order thereon, and up to the date on which the new bill is implemented, which shall not exceed sixty (60) days after the approval of the rate, unless the Commission extends such term for just cause.
(f) Rate modification approval.— If after the public hearing process the Commission determines that the proposed rate change is just and reasonable, it shall issue an order to such purposes and notify the rate change on its website, along with the new rate itemization. The new approved rate shall take effect sixty (60) days after the Commission issues the order, unless the Commission determines, at the request of the Authority, that it shall take effect before sixty (60) days. If the Commission determines that the proposed rate change is unjust or unreasonable, it shall issue a duly grounded order stating so. In such case, the rate modification object of the request shall not proceed and the rate whose modification was sought shall continue in effect. Upon issuing any order after the rate review process, the Commission shall order the Authority to adjust customer’s bills to credit or charge any difference between the temporary rate established by the Commission and the new rate approved as a result of the rate review process. In the event a person ceases to be a customer during the effective term of the temporary rate, the Authority shall be required to issue a refund and shall be entitled to collect any difference between the temporary rate established by the Commission and the new rate approved as a result of the rate review process. In the event a person ceases to be a customer during the effective term of the temporary rate, the Authority shall be required to refund and shall be entitled to collect any difference between the temporary rate established by the Commission and the new rate approved as a result of the rate review process.
(g) Inaction of the Commission.— If the Commission fails to act on a rate review request within thirty (30) days after the filing thereof, the modified rate object of the request shall take effect immediately as a temporary rate, unless the Authority or the requesting certified company requests that a temporary rate should not be established due to the reasons stated in its request. The Commission shall continue the review process and shall issue the corresponding order within the term specified in this section. If the Commission fails to approve or reject within the term of one hundred eighty (180) days after the date on which the Commission notifies its determination by resolution that the request of the Authority is complete, the rate proposed by the Authority or the requesting certified company shall become final, unless the Commission extends such term in accordance with the provisions of subsections (b) and (c) of this section.
(h) An itemization of all the rates approved or modified by the Commission shall be posted on its website.
History —May 2, 1941, No. 83, p. 684, added as § 6A on May 27, 2014, No. 57, § 2.7; Feb. 16, 2016, No. 4, § 9.