SAN JUAN, Puerto Rico – Puerto Rico's heavily indebted electric company announced Tuesday that it is seeking a more than 20 percent increase in the island's already high power bills, sparking outrage among many who note the agency faces numerous corruption allegations.
The Electric Power Authority said the increase would allow it to keep operating and help boost its dwindling liquidity. Officials said the additional revenue also would let the company restructure its $9 billion debt load, reduce its dependence on petroleum and renovate obsolete infrastructure.
An official not authorized to speak to the media said the power company seeks a 10 percent increase for residential customers effective in August. That would rise to 23 percent over current rates for early 2017. Commercial and industrial businesses would face a 4 to 5 percent increase followed by a 22 to 24 percent permanent increase depending on the size of the company.
Javier Quintana, the power company's executive director, said in a phone interview that the increases, if approved, would generate an additional $628 million a year.
The power company plans to release more details when it presents the plan on Friday to the newly created Energy Commission, which will vote on it.
The proposal has angered many on an island where power bills already have averaged about twice those of the U.S. mainland. Much of the anger centers around possibly giving more money to a public company in which some current and past officials face fraud investigations. Legislators say they will turn the case over to the FBI and the U.S. Attorney's Office following numerous hearings.
Critics say the increase also will scare away potential investors, force more businesses to close and spark an even bigger exodus to the mainland.
Local Rep. Jorge Navarro Suarez, a spokesman for the House Committee on Consumer Affairs, said in a phone interview that Puerto Ricans will be paying the most expensive power in all of the U.S.
"Customers are paying for the negligence of the current and previous administrations," he said. "We can't lift ourselves out of this hole, and this will further sink us."
Quintana called the proposed increases "reasonable" and warned that Puerto Ricans could have been hit with a nearly 70 percent increase if the company had not taken other steps to save money and generate more revenue.
As it is, the Electric Power Authority will miss a $420 million interest payment due in July.
"We don't have the money," he said.
Quintana noted that the money generated by the anticipated increases will help the company issue an anticipated $7 billion in bonds sometime between August and December.
Puerto Rico is mired in a decade-long economic slump and faces a $70 billion public debt load that the governor has said is unpayable and needs restructuring. U.S. legislators are debating a House bill that aims to create a federal control board and allow for some debt restructuring.
The Electric Power Authority is the island's only public agency that has reached a direct agreement with creditors to restructure its debt. The company also has taken other steps to help generate more revenue. It is cracking down on delinquent clients and cutting off power at public housing units whose residents have not agreed to a payment plan. It also temporarily cut off power at a hospital that owed nearly $4 million.
Danica Coto on Twitter: www.twitter.com/danicacoto