Puerto Rico solar tax has been defeated


A proposed surcharge on customers with rooftop solar power in Puerto Rico, to fund repayment of the utility PREPA’s debt, is now off the negotiating table, due to actions by the president and the territory’s oversight board.

Puerto Rico’s 100% renewable energy law prohibits solar taxes, and the solar tax proposal would have required a change in that law. Solar trade group SESA-PR has been “fighting like crazy to defend that aspect of the law” in the three years since the solar tax was proposed, said the group’s president PJ Wilson in a webinar with members this week.

After three years of fighting the proposal, victory was achieved.

First, Puerto Rico Governor Pedro Pierluisi said the Government was terminating the PREPA Restructuring Support Agreement that included the tax proposal, exercising the right of each party to terminate the agreement. “Charges to private generation should not be imposed,” Governor Pierluisi said, adding that “there needs to be a considerable reduction” in the amount of PREPA’s debt that bondholders can recover.

SESA-PR had asked the executive branch of government last August “to pull out of the agreement,” said Wilson. “At the time, it seemed like an impossible ask, but we said ‘We’re asking you to do it anyway, since you’re against solar taxes, and it includes solar taxes.'”

The day after the governor’s statement, the Financial Oversight and Management Board for Puerto Rico said in a federal district court filing that it “currently does not anticipate” developing or negotiating a PREPA debt restructuring plan “requiring legislation.” In other words, because solar taxes would require legislation, the debt plan would not include solar taxes. Because legislation would not be needed, the oversight board denied the request of the Puerto Rico legislature to take part in the ongoing mediation that will resolve PREPA’s debt, while inviting the legislature to submit positions or proposals for consideration.

Helping set the stage, SESA-PR had previously “suggested and supported” two different resolutions in the Puerto Rico legislature, Wilson said, ultimately leading to the Puerto Rico House and Senate passing a joint resolution last November, which expressed “the wholehearted rejection,” in the words of Puerto Rico legislator Héctor Ferrer, of a debt restructuring agreement that included a solar tax.

Governor Pierluisi’s statement outlined the Government goals in ongoing talks, including “respect” for the Puerto Rico Energy Bureau’s role in setting electric rates and overseeing compliance with PREPA’s integrated resource plan, protecting PREPA’s pensioners, and complying with “the requirements and public policy objectives’ of Act 17-2019, the Puerto Rico Energy Policy Act, which bans solar taxes.

The nine parties to the ongoing mediation to resolve PREPA’s debt consist of government entities, bondholders, and the union of PREPA workers, whose pension funds are at risk, Wilson said. “We will be as close to that process as we can,” he said, “to remind everyone involved that any deal including solar taxes” would be “strongly opposed by not only SESA but also the united legislature and the governor’s own commitment against solar taxes.”

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