Federal control board sues Puerto Rico’s governor over net metering law

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SAN JUAN, Puerto Rico (AP) — A federal control board overseeing Puerto Rico’s finances filed a lawsuit Friday challenging amendments to the island’s net metering law, which compensates solar-equipped households for their contributions to the grid, triggering a backlash.

The lawsuit filed against Gov. Pedro Pierluisi aims to protect the independence of the Puerto Rico Energy Bureau so it “can continue to operate free from political influence,” the board said.

The board said that it is not seeking to end net metering as alleged, nor impose 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 analyzing the lawsuit and would soon respond to it.

In April, the board had ordered Pierluisi and Puerto Rico’s legislature to amend or repeal the law, which prohibits the energy bureau from making any changes to the net metering program until 2031 at the earliest.

The law also requires the energy bureau to honor the program’s current terms for an additional 20 years, meaning that many customers would continue under those terms until at least 2051, the lawsuit states.

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

While most U.S. net-metering programs offer reduced credits, excess energy in Puerto Rico is credited one-to-one.

The lawsuit noted that the net metering terms would affect demand for the power company’s service, “as higher net metering rates will likely incentivize more customers to switch to distributed generation.”

It said the net metering program also directly affects the revenues of Puerto Rico’s Electric Power Authority, which is struggling to restructure its more than $9 billion debt load as it clashes with creditors seeking to recuperate their investments.

Puerto Rico’s Energy Bureau currently has a draft of a study available that analyzes the island’s net metering program and recommends that a public debate be held. If the bureau were to decide that changes to the program should be made, it is currently barred from implementing them until 2031.

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

“Any attempt to reduce the economic viability of rooftop solar and batteries by paring back net metering should be rejected at this critical stage of Puerto Rico’s energy system transformation,” Grijalva and others wrote in a May 17 letter to the board.

Also rejecting the board’s move was Puerto Rico’s Solar Energy and Storage Association, which said that a reduction or elimination of net metering would affect the most vulnerable. More than 40% of the island’s 3.2 million people live below the poverty rate.

“(The program) is essential for Puerto Rican families to have an incentive that makes access to alternative energy sources cost-effective,” said Javier Rúa Jovet, the association’s public policy director.

In its lawsuit, the board also seeks that the governor submit an estimate of the law’s impact on the government’s revenues and expenditures, among other things.

The board stressed Friday that invalidating the net metering law would not change the terms for customers who already have solar panels.

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

He said renewable energy is key to Puerto Rico’s energy transformation and called net metering “a very important tool” for making rooftop solar more accessible and affordable.

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

Supporters of the law have said that net metering makes rooftop solar and other renewable energy sources more affordable for those in a U.S. territory with a disintegrating power grid where the average electricity rate is 41% higher than the U.S. mainland.

Installation of rooftop solar systems have surged ever since Hurricane Maria hit Puerto Rico as a powerful Category 4 storm in September 2017, razing the electrical grid. At the time, there were 8,000 rooftop installations, compared with more than 117,000 currently, according to the Institute for Energy Economics and Financial Analysis.

Fossil fuels currently generate 94% of Puerto Rico’s electricity, according to the U.S. Energy Information Administration.

The U.S. territory has new laws calling for the power company to obtain 40% of its electricity supply from renewable sources by 2025 and 100% by 2050.

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