May 24, 2016 / 2:50 PM / 4 years ago

Puerto Rico electric utility proposes new rate structure

NEW YORK, May 24 (Reuters) - Puerto Rico Electric Power Authority (PREPA) on Tuesday unveiled a new rate structure as part of a broader debt restructuring plan that proposes a total increase of about 4 cents per kilowatt-hour for customers in a two-step process.

The plan, approved by PREPA’s governing board, will be presented to the U.S. commonwealth’s Energy Commission of Puerto Rico (CEPR) on Friday, the utility said in a statement.

PREPA is proposing a 1.3-cent-per-kilowatt-hour rate increase as the first stage, followed by a 2.99-cent-per-kilowatt-hour increase in the first quarter of 2017.

“The interim rate will help cover the PREPA gap in cash flow to continue operating, while the Commission assesses the application of a rate restructuring in the long term,” Harry Rodriguez, PREPA governing board chairman, said in the statement.

If PREPA did not negotiate a debt restructuring with creditors, the rate increase would have been 11 cents per-kilowatt hour, PREPA spokesperson Jose Echevarria told Reuters.

Creditors absorbed 5.2 cents per kilowatt-hour while PREPA achieved savings of 2.4 cents per kilowatt-hour, in order to bring the total increase down to the 4.3 cents, the utility’s chief restructuring officer, Lisa Donahue, explaned in the statement.

PREPA reached a deal with some of its largest creditors in September to reduce its $9 billion debt load. Creditors are receiving about 85 percent of their existing bond claims.

The new rate structure, should it be approved, is expected to be effective starting in August, PREPA said. (Reporting by Daniel Bases; Editing by Jonathan Oatis)

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