Governor García Padilla Enacts Historic Energy Reform
May 27, 2014 - La Fortaleza – Governor Alejandro García Padilla signed into law a historic bill that will enable the most profound transformation of Puerto Rico’s electricity production since 1941, which will stabilize service rates, make a more transparent operation, and promote renewable energy, efficiency and better quality service.
The Electric Sector Reform of Puerto Rico Act is based on Governor’s Garcia Padilla plan “Light at the end of the road” of 2012. The new law gives the Electric Power Authority (PREPA) a new mandate by amending its enabling act to better respond to the challenges of the 21st century.
The law outlines a new policy and frame of work for PREPA to execute projects that will maximize conservation, efficiency and the use of renewable energy sources thru a clear mandate for the public utility to contribute towards an autonomous and sustainable electric system for the country.
“After today, the Electric Power Authority is legally obligated to meet the challenges of the 21st century while still being owned by the people of Puerto Rico”, highlighted the Governor during the signing of the bill while accompanied by Senate President Eduardo Bhatia and House Speaker Jaime Perelló.
“Thank to the President of the Senate and the House Speaker for their commitment during this process that has enable to have a solid bill that will serve as an instrument to continue lowering the energy rates”, said Garcia Padilla at the Executive Mansion of La Fortaleza, in Old San Juan.
The new law requires, among other things, that:
- PREPA ensures the availability and supply of the electrical service at a rate that is accessible, just and reasonable.
- Electrical tariff has to be based on the real service cost and within performance parameters.
- Transparency and citizen participation will be part of all processes related to the electric service.
- All public institutions, including the three government branches, public corporations and municipalities, shall be responsible for their energy consumption.
- To ensure that the country has a balanced and diverse energy sources that would reduce the dependence of fossil fuel.
- All public subsidy for energy consumption shall be used in an adequate manner in line with the social purpose for which they were created.
Within the next 180 days, according to the law, PREPA will start a tariff review that shall conclude with its approval in six month.
Regarding performance metrics, starting July 1st of 2014 and for the next three years (extendable to four) 60 percent of Puerto Rico’s energy generation from fossil fuels shall be “highly efficient”.
It is further ordered, that PREPA expedite and simplify the procedures for interconnection of solar projects and to ensure maximum integration of renewable generation.
The law also creates the State Energy Public Policy Office (OEPPE by its Spanish acronym) to develop and update, via regulation and within the framework set out in this law, of the energy policy of Puerto Rico, which includes aggressive conservation plans and reduction in power consumption for all public institutions, including the three branches of government, public corporations and municipalities.
Similarly, the new Energy Commission, to be responsible for regulating the electricity industry, including PREPA and other components, is entrusted with the power to monitor and investigate the public company and its subsidiaries as well as adjudicate cases and controversies on matters relating to the electricity industry, including its services and the implementation of energy policy.
Also, the Independent Office of Citizen Protection is created to educate, guide, assist and protect the interests and rights of the clients of PREPA and any other component of the industry.
In addition, the Administration of Energy will be from now on the administrative and operational support of the rest of the regulatory scaffolding to promote efficiency in government management by centralizing administrative support services. The operating budget for this new organization will not affect the government’s General Fund because the money will come from regulatory fees to electric utilities that are under the jurisdiction of the Energy Commission.
"Today we are fulfilling the promise of the government program and energy plan. Today is no longer a promise, a proposal or a draft law for the transformation that we all aspired. With this law, now the Electric Power Authority begins its deepest transformation since it was created 73 years ago; a transformation that takes place while ensuring that it remains in the hands of the people of Puerto Rico. Today, with this law, we create a new regulatory regime that will ensure transparency, efficiency, public interest and citizen participation in the entire energy industry”, said the Governor.