Federal Control Board Sues Puerto Rico Governor Over Net Settlement Law

SAN JUAN, Puerto Rico (AP) — The federal control board that oversees Puerto Rico’s finances filed a lawsuit Friday challenging changes to the island’s net-billing law that compensates households with solar panels for their contribution to the grid, prompting a backlash.

A lawsuit filed against Governor Pedro Pierluisi The goal of the initiative is to protect the independence of the Puerto Rico Energy Office so it “can continue to operate free from political influence,” the board said.

The board said it has no intention of ending net metering, as it is supposedly called, or imposing changes to the net metering program. It noted that if it wins the lawsuit, there would be no changes to the island’s current rooftop solar program.

A spokeswoman for Pierluisi said he was reviewing the lawsuit and would respond shortly.

In April, the board ordered Pierluisi and Puerto Rico authorities to amend or repeal a law that prohibits the energy bureau from making any changes to the net metering program until at least 2031.

The law also requires the power bureau to honor the program’s current terms for the next 20 years, meaning many customers will benefit from those terms until at least 2051, the lawsuit says.

“The government failed to act in a prudent and fiscally responsible manner in passing (the law),” it said.

While most U.S. net settlement programs offer reduced credit amounts, Puerto Rico’s excess energy is settled on a one-for-one basis.

The lawsuit notes that the net settlement terms will affect demand for the utility’s services “because higher net settlement rates will likely encourage more customers to switch to distributed generation.”

The statement said the net metering program also has a direct impact on revenue for the Puerto Rican Electric Power Authority, which is struggling to restructure its operations. over $9 billion in debt because it is in conflict with creditors trying to recover their investments.

Puerto Rico’s Energy Office currently has a draft study available that examines the island’s net metering program and recommends a public hearing. If the office were to decide that changes to the program should be made, it currently cannot implement them until 2031.

A group of federal lawmakers, including U.S. Rep. Raúl Grijalva, opposed the board’s call to repeal or change the law, warning that there was a possibility that “the study’s results could be used to weaken or functionally eliminate net metering in Puerto Rico.”

“Any attempt to limit the economic viability of rooftop solar and battery installations by limiting net billing should be rejected at this critical stage in Puerto Rico’s energy transformation,” Grijalva and others wrote in a May 17 letter to the board.

The Puerto Rican Solar and Storage Association also rejected the board’s decision, saying reducing or eliminating net billing would hurt the most vulnerable. More than 40% of the island’s 3.2 million residents live below the poverty line.

“(The program) is essential for Puerto Rican families to provide them with an incentive to make access to alternative energy affordable,” said Javier Rúa Jovet, the association’s director of public policy.

The lawsuit also demands that the governor provide an estimate of the bill’s impact on government revenues and spending, as well as other matters.

The board stressed on Friday that the repeal of the net settlement law would not change conditions for customers who already have solar panels.

Robert F. Mujica, Jr., the board’s executive director, said in a statement that the energy office was created to “oversee the energy system after years of political mismanagement that bankrupted the Puerto Rico Electric Power Authority and left Puerto Rico with a dilapidated power grid.”

He said renewable energy is key to Puerto Rico’s energy transition and called net metering a “very important tool” to increase the availability and affordability of rooftop solar.

“However, determining what is in the public interest should not be left to special interests,” Mujica said.

Supporters of the bill say net metering makes rooftop solar and other renewable energy sources more affordable for residents of U.S. territories, a crumbling power grid where the average electricity rate is 41% higher than in the continental US.

Rooftop solar installations have skyrocketed since Hurricane Maria hit Puerto Rico as a powerful Category 4 storm in September 2017, devastating the power grid. There were 8,000 rooftop installations at the time, compared with more than 117,000 today, according to the Institute for Energy Economics and Financial Analysis.

According to the US Energy Information Administration, 94% of Puerto Rico’s electricity currently comes from burning fossil fuels.

The US territory is under new rules requiring energy companies to source 40% of their electricity from renewable sources by 2025 and 100% by 2050.

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