Fiscal board nixes proposed law requiring energy entities to reimburse for damaged appliances

Under a bill rejected by the Financial Oversight and Management Board, the Puerto Rico Electric Power Authority and its administering bodies would be required to grant credits automatically for the full amount of customer claims under $300 plus 10% of the value of the claim to cover customer expenses for claims that meet the submission requirements. For claims greater than $300, PREPA would be required to issue, within 90 days of the bill’s enactment, a regulation establishing a process for addressing such claims.

By The Star Staff

The Financial Oversight and Management Board has forbidden the government from enacting a law mandating the Puerto Rico Electric Power Authority (PREPA), LUMA Energy, and Genera PR to provide credits to customers who claim their appliances or equipment were damaged by power outages or brownouts (voltage drops).

The oversight board said it was aware that House Joint Resolution (HJR) 231 has been approved by both the island Senate and House of Representatives.

“We understand that the Bill will be sent to the Governor for his consideration,” the Board said in a letter dated July 16. “However, the Legislative Assembly did not identify how PREPA would pay for this customer credit without an increase in electricity rates.”

“Further, by mandating a credit program and specific terms of such program, HJR 231 would impair the Puerto Rico Energy Bureau’s (PREB) oversight of PREPA,” the board added.

For those reasons, the bill is inconsistent with the Fiscal Plan for Puerto Rico and the PREPA Fiscal Plan, the oversight board said.

“Accordingly, the Oversight Board urges the Legislature not to send the Bill to the Governor and the Governor not to sign the Bill into law,” the board said.

Under the bill, PREPA and its administering bodies would be required to grant credits automatically for the full amount of customer claims under $300 plus 10% of the value of the claim to cover customer expenses for claims that meet the submission requirements. For claims greater than $300, PREPA would be required to issue, within 90 days of the bill’s enactment, a regulation establishing a process for addressing such claims. Pursuant to the bill, PREPA and its administering bodies would not have discretion to deny claims where the claimant’s submission meets the claim requirements established in the regulation, and would be required to provide reimbursements or credits for such claims in the amounts claimed plus 10%.

“HJR 231 would likely increase expenditures without providing offsetting savings or revenues,” the oversight board said. “The Commonwealth and PREPA budgets do not contemplate the customer reimbursements called for in the Bill, and HJR 231 does not address how these additional costs will be paid for. Any bill that has a negative fiscal impact without corresponding savings or new revenues is not fiscally responsible and, therefore, is inconsistent with the applicable Fiscal Plan and Budget, and violates PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act].”

The oversight board went on to say that the bill would also violate PROMESA.

“The Bill would become law effective immediately upon enactment and would necessitate a reprogramming to pay for the unbudgeted reimbursements,” the board said.