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Puerto Rico to Control Water Tariffs Through Preferential Energy Rates

SAN JUAN, Puerto Rico

Puerto Rican Governor Alejandro Garcia Padilla last week proposed setting “preferential energy rates” for the island’s aqueduct and sewage authority, AAA, as a means of controlling water prices.

AAA had proposed a rate increase of $12 USD to prevent financial collapse.

Following a meeting with the Multi-Sector Commission, which analyzed AAA’s rate increase proposal, Garcia Padilla said that preferential energy rates from the Electric Power Authority (AEE) could save AAA $50 million USD per year and cut the rate increase to only $4 USD.

AAA explained that under this proposal, the $4 USD increase would be applied for those consuming 10 cubic meters of water. Those consuming 15 cubic meters would see an increase of $3.31 USD, but major water users such as industries, large developments and large hotels would see significant changes in their rates.

AAA Executive President Alberto Lazaro said the company’s energy costs had increased 150 percent in the past eight years, mostly due to rising oil prices. From 2004 to 2012, AAA’s payments to AEE went from $73 million USD to $183 million USD.

The governor also suggested that he would submit a proposal to the territory’s legislature on the proposal.

However, the island’s political opposition challenged the proposal. José "Pichy" Torres Zamora, general secretary of the Partido Nuevo Progresista (PNO), said the announcement showed “a lack of respect for the people of Puerto Rico.” Zamora claimed that there will be no reductions in proposed rates, and that the governor actually plans to increase water rates by 100 percent by July.

The consumer representative on AEE’s governing board, Juan Rosario, also opposed the proposal, arguing that energy users will pay for the water rate reductions, Vocero reported.

The president of the Union of Electrical and Irrigation Industry Workers (UTIER), Ángel Figueroa Jaramillo, also questioned the measure. He suggested that the problems at AAA could be related to administration, not energy costs.

On May 28, local press reported that Garcia Padilla plans to reshuffle the AAA board. The governor submitted a list of names to the Senate for consideration, among them Manuel Suarez Miranda, Kenneth Rivera Robles and Maricarmen Ramos de Szendrey.

When he took office back in January, Garcia Padilla ordered Secretary of Justice Luis Sánchez Betances to investigate actions taken by the governing boards of both AAA and AEE. The companies allegedly took actions in the months before last year’s general elections that went against public interest by detailing “fictitious water and energy rate reductions” without having the financial resources to pay for them.

AAA’s water rate increase proposal addressed issues such as the company’s debts, bonds, financial rating degradation, infrastructure, need for investment and required environmental works. AAA serves 3.7 million local residents and 5 million tourists per year.

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