Puerto Rico legislator Héctor Ferrer has called on the US Congress to prevent an “illegal tax on private rooftop solar generation” in Puerto Rico.
Ferrer said a proposed per-kWh charge on rooftop solar generation would violate not only Puerto Rico law, but also federal clean energy policies, and possibly the Constitution as well, in a January 24 letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer.
Ferrer noted that the Puerto Rico House and Senate passed a joint resolution last November expressing “the wholehearted rejection” of a proposed Restructuring Support Agreement (RSA) that includes the solar tax.
The RSA is a proposal to settle with the owners of $9 billion in face value of bonds issued by the Puerto Rico utility PREPA. The RSA would add a “transition charge” on PREPA customers’ bills of at least 2.8¢/kWh, rising through 2044 to 4.6¢/kWh, “gravely impacting” all electricity consumers, Ferrer said.
Ferrer highlighted the RSA’s provision that consumers who produce any of their own electricity from a new PV system would be required to pay the new charge not only on power purchased from the grid, but also on their own self-generated power. PV systems that were installed by September 2020 would be exempted, but could lose the exemption under certain conditions.
The RSA’s “solar tax-centric approach is illegal,” said Ferrer, quoting Section 3.4 of the Puerto Rico Energy Public Policy Act (Act 17-2019): “no direct or indirect charge shall be imposed on the generation of renewable energy by consumers.” Ferrer said the proposed RSA also “intrudes upon” the exclusive rate setting jurisdiction of Puerto Rico’s independent energy sector regulator, the Energy Bureau.
The Constitutionality of such solar charges “is also questionable,” Ferrer said, as the RSA would “seek to federally impose a new tax on energy generated by privately owned solar power systems within private property.”
Ferrer said the Puerto Rico Financial Oversight and Management Board (FOMB) announced that it will file the RSA proposal by March 2022 for review by US District Court Judge Laura Taylor Swain, who was appointed under the federal PROMESA law to oversee Puerto Rico’s bankruptcy proceedings. The FOMB was also created by PROMESA.
Earlier this month, Judge Swain certified a settlement plan that reduced the Puerto Rican government’s debt from $22 billion of bonds down to $7.4 billion, according to Bloomberg News.
In testimony for the Solar and Energy Storage Association of Puerto Rico (SESA-PR) at a Puerto Rico Senate Committee hearing this month, SESA-PR Chief Policy Officer Javier Rúa-Jovet said that the “illegal charges” proposed in the RSA “would seriously impact the people of Puerto Rico, particularly those PREPA customers who seek to self-generate all or part of their energy through solar.”
In his letter, Ferrer called on Congress to use its oversight authority over the FOMB, its board members and its executive direction “to ensure that PREPA debt restructuring is aligned with federal, as well as Commonwealth energy policies.”
“As we’ve experienced during the aftermath of Hurricane Maria,” Ferrer said, “access to resilient energy is a matter of life or death for the Puerto Rican people.”
Three days after Ferrer’s letter, on January 27, a reporter asked FOMB’s Executive Director Natalie Jaresko at an FOMB public board meeting about the Puero Rico legislature “passing PREPA’s restructuring bill.” SESA-PR President PJ Wilson later explained in an interview that the reporter was referring to enabling legislation that would repeal Law 17-2019’s prohibition against solar taxes, and make other legislative changes needed for the proposed RSA to move forward. In response to the reporter’s question, Jaresko said, “we look forward to getting that legislative answer in this first half of this calendar year.”
SESA-PR has been advocating against the “solar tax” proposal since 2019, when it partnered with the national solar association SEIA to jointly file a “friend of the court” brief making several legal arguments against the proposal.
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