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On Tuesday, LUMA Energy’s External Relations Director, José Pérez Vélez, stood by the company’s move to propose a rise of 2.9 cents per kilowatt-hour (kWh) in the utility invoice for the final quarter of 2024, indicating that further increases may follow.
Pérez Vélez explained that the cost for the generation fuel utilized by power plant operator Genera PR during June, July, and August—subject to international market fluctuations—was unexpectedly high.
Recently, the Financial Oversight and Management Board sanctioned an amendment to the agreement between Genera and Puerto Rico Energy LLC, a fuel vendor, increasing its maximum payable amount by nearly $60 million.
The initial contract, which received the oversight board’s approval on October 11, 2023, pertains to the provision of ultra-low sulfur diesel (ULSD) for the power generation facilities in San Juan, Aguirre, Mayagüez, and Cambalache, as well as the gas turbines in Vega Baja, Guayama, Ceiba, and Yabucoa.
As per the original agreement, the supplier provides and delivers ULSD in requested amounts and timelines specified by Genera for the relevant power plants and gas turbines. This contract originally had a maximum payable amount of $452 million, with a validity period extending up to one year from the execution date of November 17, 2023, to November 16, 2024, including a potential one-year extension.
The amendment raises the maximum payable by $58 million to a total of $510 million, without modifying the duration, in light of increased projected fuel consumption.
The Puerto Rico Electric Power Authority (PREPA) confirmed that this uptick is classified as a pass-through expense, having no impact on the budget, and that funds earmarked for the proposed amendment are unrestricted.
This week, LUMA Energy, which manages the electric power transmission and distribution framework, solicited a hike of approximately 2.9 cents per kWh in the electricity bill.
In a report delivered to the Puerto Rico Energy Bureau (PREB) for the quarterly adjustments related to fuel costs and power purchases affecting customer rates, LUMA stated in a press release, “The generation fuel costs incurred by Genera PR during June, July, and August exceeded expectations.”
“These additional expenses, coupled with forecasts for October to December, suggest an expected increase in the factors of roughly 2.9 cents per kilowatt-hour (kWh) on consumer bills,” LUMA noted. “The revised factors for the last quarter of 2024 will undergo review and final decision by the PREB.”
LUMA President & CEO Juan Saca mentioned in a written statement on Monday that in addition to rising fuel costs, “ongoing generation issues continue to drive this increase.”
Saca also highlighted that the rate increase is driven by the island’s reliance on costly fuels such as diesel and bunker fuel, due to insufficient natural gas plant availability. LUMA has previously indicated that it does not control these costs, as it is not accountable for electricity generation.
The adjustments made to the bills solely reflect fuel costs and purchased energy; over 65% of customer bills are allocated to these expenses, according to LUMA.
Almost $4 million in energy aid allocated for low-income households
On the same day, Gov. Pedro Pierluisi Urrutia and Family Secretary Ciení Rodríguez Troche revealed the allocation of $3.9 million to assist low-income families participating in the Temporary Assistance Program for Needy Families with their energy bills.
“This allocation reaffirms our dedication to aiding the most vulnerable families in Puerto Rico,” Pierluisi stated in a written announcement.
This assistance will be dispensed through the Low-Income Home Energy Assistance Program (LIHEAP), managed by the Administration for Socioeconomic Development of Families (ADSEF in Spanish). LIHEAP offers financial support to families living below the poverty threshold to assist with energy payments.
ADSEF Administrator Alberto Fradera Vázquez stated that the fund transfer will occur today and will be reflected in the next energy bill of participants.
