PREC issues Restructuring Order approving the Calculation Methodology and Adjustment Mechanism proposed by PREPARC

Notice Concerning Public Hearing on the Integrated Resources Plan for the Puerto Rico Electric Power Authority
June 7, 2016
Notice of the Puerto Rico Electric Power Authority Debt Restructuring
July 7, 2016
Notice Concerning Public Hearing on the Integrated Resources Plan for the Puerto Rico Electric Power Authority
June 7, 2016
Notice of the Puerto Rico Electric Power Authority Debt Restructuring
July 7, 2016

Today the Puerto Rico Energy Commission (“PREC”) issued a Restructuring Order approving the Calculation Methodology and Adjustment Mechanism proposed by the Puerto Rico Electric Power Authority Revitalization Corporation (“PREPARC”) for the establishment of a Transition Charge, pursuant to Act 4-2016, known as the PREPA Revitalization Act. The Restructuring Order issued by the Commission is the result of a 75-day long evaluation period, during which the Commission, along with participating intervenors, were able to gain significant concessions from PREPARC in the benefit of electric service customer as a whole.

The Transition Charge is a mechanism designed to reduce costs for PREPA’s customers by allowing a group of existing PREPA bonds to be refinanced through Restructuring Bonds issued by PREPARC. The new Restructuring Bonds will reflect a 15% reduction in principal (for uninsured bonds), an average interest rate of 5.22% (compared to 5.86% for existing PREPA bonds) and a 5-year moratorium on interest payments.  In exchange, the Transition Charge provides a secure repayment mechanism which reduces uncertainty and increase market confidence in PREPA’s financial condition. This action will reduce PREPA’s capital costs—and therefore the costs that PREPA’s customers would otherwise have to bear—by approximately $867 million.

Although it will appear as a new line item on each customer’s bill, the Transition Charge does not increase any customer’s cost—beyond what the customer would pay if, once the Commission sets new rates in a rate proceeding, all of PREPA’s debt is properly reflected in its rates. Because PREPA’s current rates have not been reviewed since 1989, they do not reflect debt incurred to finance capital investments made after 1989 or provide sufficient funds to finance increasing operational costs, a situation which has contributed to PREPA’s actual financial condition.

The Transition Charge does not recover costs exceeding those that PREPA must recover from its customers; nor does it cause PREPA to incur in additional debt.  It is instead a means of assuring payment of current debt to the Participating Bondholders, in return for their agreement to accept a 15% reduction in the face value of their debt and a lower interest rate. Because PREPA is a government-owned, nonprofit utility, its debt-related costs must be recovered from its customers, unlike investor-owned utilities where a portion of its costs may be absorbed by the utility’s shareholders. 

The Transition Charge identifies a portion of the customer’s total payment (about 12% in the first year) which PREPA must treat differently from the rest of the customer’s payment.  Specifically, PREPA must separate the Transition Charge payments from the rest of its revenues, then transfer those payments to the bondholders without delay.  That is the purpose of the Transition Charge mechanism: to separate the dollars belonging to the Participating Bondholders from PREPA’s general funds, and cause those dollars to be transferred to their rightful owners.

Initially, the Transition Charge will be 3.10¢/kWh.  It will apply to the gross kWh consumption of all PREPA customers (residential, non-residential, governmental), with two exceptions: 

  1. For Fixed Block Public Housing Customers (as provided by Act 22-2016), the Transition Charge will apply only to kWh consumption exceeding their applicable consumption-based block of electricity usage. 
  2. For “grandfathered” net metering customers, the Transition Charge it will apply only to their “net” consumption.

These adjustments protect low-income customers, as well as those existing net-metering customers who made investments in generation based on an expectation that certain PREPA charges would apply to their net consumption only. This, along with a consumption based Transition Charge, which protects energy efficiency and consumption reduction efforts, are some of the main changes achieved by the Commission and intervenors during this proceeding. 

However, Act 4-2016 did not allow the Commission to reject the Petition merely because the Commission believed PREPA could have obtained greater savings from bondholders so as to produce a lower Transition Charge, nor did it require the Corporation to prove that the proposed Transition Charge is as low as possible, or that PREPA obtained the maximum possible savings from its bondholders.

While the Commission’s jurisdiction in this proceeding was limited, Act 57-2014 grants the Commission ample powers and discretion with regards to PREPA’s Petition for New Rates filed May 27, 2016. During said proceeding, the Commission will look for ways to adequately allocate costs among customer classes, promote efficient administrative and operational practices, prevent unnecessary expenses and address the concerns and needs of all industry participants so as to achieve a modern electrical industry in line with overall economic, social and environmental goals. 

Commission Requirements             

While Act 4-2016 limited the Commission’s ability to modify the Corporation’s petition, the Commission did endeavor to require the Corporation to provide continuous reports and other information to produce effective oversight of the Corporation’s operations and ensure adequate public scrutiny. Among them, the Commission required the Corporation to:

  1. Provide, within two (2) days of its issuance, a copy of the final Resolution approved by the Corporation, redlined to show changes from the draft submitted in this proceeding.
  2.  Provide, within two (2) days of its execution, a copy of the Servicer Agreement entered into by the Corporation and PREPA, redlined to show changes from the draft submitted in this proceeding.
  3. If PREPA makes any advance to the Corporation, provide the Commission notice as early as feasible, along with an explanation of the reasons for the advance, the documentation evidencing the Corporation’s obligation to repay PREPA and the deadline for such repayment.   Notify the Commission when repayment has occurred.
  4.  On August 15th of each year, provide an updated stress test.  Each stress test should provide projections of the expected financial condition of PREPA (income statement, balance sheet, cash flow statements, debt service coverage ratio) under the following assumptions:  (a) the continuation of current rates and (b) a reduction of both a 5 percent and a 10 percent of total kWh sales during the next fiscal year.
  5.  By August 15th of each year, for the fiscal year ending the immediately preceding June 30, provide a full report on the fees paid to contractors relating to the Transition Charge, whether the payor is the Corporation or PREPA.  Such report shall state hourly rates, total spending in the prior calendar year and over the life of the contract, and any amendments to the contract. 
  6.  Provide to the Commission, as soon as practicable after the actual terms of the Restructuring Bonds are known by the Corporation, a demonstration that the savings test of Section 35(a)(iii) of the Revitalization Act has been met.[1]
  7.  Identify those persons who will responsible for responding to such requests from the Commission to the Corporation in any investigation under Section 6.25A(j) of Act 57-2014. 
  8.  Include in all contracts between the Corporation and its advisors a clause requiring their cooperation with the Commission in any investigation conducted under Section 6.25A(j) of Act 57-2014.  Confirm that such a clause has been placed into existing contracts.
  9.  Fulfill the following obligations imposed by Section 6.25A of Act 57-2014:

a. Submit a report on the final terms of the bonds, and estimates of Upfront and Ongoing Financing Costs.  Section 6.25A(e)(1)(viii).

b. Submit any successor Servicing Agreement and all servicer reports. Section 6.25A(e)(1)(ix).

c. Submit any reports required by Bond Trustee.  Section 6.25A(e)(1)(x).

d. Submit the annual reports and final report required by Article 6.25A(e)(1)(xi).

e. Provide timely notice of, and data or work papers relating to, any proposed adjustment to the Transition Charge.  Section 6.25A(e)(1)(xii).

10. Provide the names and contact information for those individuals who, on behalf of the Corporation, will be responsible for responding to the Commission’s requests for information. 

For ethical reasons and to maintain the impartiality and purity of this adjudicative process, PREC’s members –President, Agustín Carbó Lugo, Esq., and its two Associate Commissioners, Ángel Rivera de la Cruz, PE and Edison Aviles-Deliz, PE, Esq., PE– will not be making any public statements, judgments or opinions other than those stated on this Press Release.  


The Puerto Rico Energy Commission (PREC) was created by Act 57, also known as: “Act for the Transformation and Energy Relief of Puerto Rico. The Commission will have the power, among other issues, to: regulate energy companies and approve and revise rates or charges charged by such companies for any matter directly or indirectly related to the rendering of electrical services; ensure prices in power purchase agreements, wheeling rates and interconnection charges are fair and reasonable; regulate wheeling of energy; revise and approve minimum technical requirements and additional technical requirements for the interconnection of distributed generators and oversee compliance with the same; and set standards for facilities or plants of generating electric companies to guarantee efficiency and reliability of electric service in accordance with industry best practices and oversee compliance with such standards.  

The Commission is integrated by a president and two associate commissioners. It is located in the World Plaza Building, Muñoz Rivera Ave. 7th Floor, Ste. 702, Hato Rey. The Commission’s website is:


Contact for the press:

Marilyn Vicens

Communications and Press Office Director




Anel M. Alejandro

Communications and Press Officer


787-523- 6403

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Antonio Torres-Miranda is presently an Associate Commissioner for the Energy Bureau of the Puerto Rico Public Service Regulatory Board (Energy Bureau). Previously, Mr. Torres had been the Director of the Legal Advisory Division of the Energy Bureau.

Mr. Torres has a bachelor’s degree in mechanical engineering from the University of Puerto Rico. He also has a master’s degree in engineering management from the Polytechnical University of Puerto Rico. In the 1990’s he passed the exam to be a Certified Energy Manager. He is presently a member of the Puerto Rico Professional College of Engineer and Land Surveyors.

Mr. Torres graduated with honors from the Interamerican University of Puerto Rico where he obtained his Juris Doctor degree. He is presently member of the bar of the Commonwealth of Puerto Rico and is a member of the U.S. District of Puerto Rico Federal bar.

He commenced his engineering work experience with the Department of Defense in a Naval base in Virginia were he designed industrial ventilation systems. He then went to New York to work with Kennetech Energy Management were he first commenced being immersed in the energy sector. He then transferred to Puerto Rico with Kennetech in which he conducted wind studies throughout the island together with U.S. Wind Power. He continued implementation of energy management systems in several industrial companies throughout Puerto Rico until Kennetech joined forces with Enron to develop the first privately owned power plant in Puerto Rico known as EcoElectrica. This 450 MW natural gas power plant included the development of the first LNG terminal in Puerto Rico.

He also worked as a contractor with the Puerto Rico Electric Power Authority in the development of a 42 miles natural gas pipeline.

Before joining the Energy Bureau Mr. Torres developed several natural gas projects in Puerto Rico.

Ferdinand Ramos-Soegaard attained a bachelor’s degree in electrical engineering (BSEE) graduating from the Georgia Institute of Technology in Atlanta, GA in 2000. His degree specialized in power distribution and telecommunications systems.

Mr. Ramos-Soegaard is a licensed professional engineer in the Commonwealth of Puerto Rico and the state of Florida. Throughout his professional carrier Mr. Ramos has been involved in all aspects of the design, construction and maintenance of electrical distribution systems, including high voltage transmission lines and renewable energy interconnections to the Puerto Rico Electric Power Authority subtransmission grid.

Sylvia B. Ugarte Araujo holds a bachelor’s degree in industrial and Systems Engineering from the University of Florida (1998). She studied at the Inter-American University of Puerto Rico School of Law (2004) and then obtained a Master of Laws from the Inter-American University of Puerto Rico (2019). Ms. Ugarte is admitted to the practice of law and notary by the Supreme Court of Puerto Rico (2004), the Federal Court for the District of Puerto Rico, for the First Circuit of Boston (2005), the Court of Appeals of the First Circuit (2005) and the Supreme Court of Texas (2018). She was Director of the Office of Legal Counsel of the Energy Bureau of the Public Service Regulatory Board and the Designated Director of the Office of Legal Counsel of the Public Service Regulatory Board. She has served as Legal Director of the Puerto Rico Infrastructure Financing Authority and has worked with renowned law firms. She has over fifteen (15) years of vast professional experience as a trial attorney with an emphasis on commercial and construction litigation and extensive experience in administrative law. Also, as an industrial engineer she has been a consultant for government agencies in charge of large projects and in private entities.

Lillian Mateo-Santos obtained her Bachelor’s Degree in Business Administration from the University of Puerto Rico, Río Piedras Campus, in 1993 and a Juris Doctor degree from the University of Puerto Rico School of Law in 1996. In 1999, she obtained a degree of Masters of Laws (LLM) in Environmental and Energy of the Tulane University Law School. Before joining the Puerto Rico Energy Bureau, Ms. Mateo-Santos was a member of various law firms. Her private practice was focused on energy, environmental, land use and permitting matters, including administrative law litigation.

On June 5, 2019, Ms. Mateo-Santos was elected 2nd Vice President of the Southeastern Association of Regulatory Utility Commissioners (SEARUC). She is a member of the American Bar Association and is admitted to practice law and notary law in Puerto Rico, and the United States Court of Appeals for the First Circuit.

Edison Avilés-Deliz obtained his Bachelor of Science in Electrical Engineering with specialties in Power and Control Systems (BSEE) Cum Laude from the University of Puerto Rico, Mayagüez Campus in 1991 and a Juris Doctor (JD) also Cum Laude from the University of Puerto Rico School of Law in 1997. In addition, he holds Master degrees with Distinctions in Diplomacy/International Relations/Business (MA) from Norwich University in Vermont and in Energy Law from Vermont Law School (LLM).

Avilés-Deliz is a licensed engineer and member of the College of Engineers and Surveyors of Puerto Rico (CIAPR). He was president of the Disciplinary and Professional Ethics Tribunal of the CIAPR, of the Institute of Electrical Engineers of CIAPR and of the Society of Electrical Engineers of Puerto Rico. He is admitted to practice as a public notary in Puerto Rico and as a lawyer, both in the District Court of Puerto Rico and the Court of Appeals for the First Federal Circuit.

He is a member of Phi Eta Mu Fraternity, the Engineering Honor Society Tau Beta Pi, and the International Studies Honor Society Sigma Iota Rho. He is also a Senior member of the IEEE.

Antonio Torres-Miranda es actualmente Comisionado Asociado del Negociado de Energía de la Junta Reglamentadora de Servicios Públicos de Puerto Rico (Negociado de Energía). Anteriormente, el Sr. Torres había sido Director de la División de Asesoría Legal del Negociado de Energía.

El Sr. Torres tiene un bachillerato en ingeniería mecánica de la Universidad de Puerto Rico. También tiene una maestría en administración de ingeniería de la Universidad Politécnica de Puerto Rico. En la década de 1990 aprobó el examen para ser Gerente de Energía Certificado. Actualmente es miembro del Colegio de Ingenieros y Agrimensores de Puerto Rico.

El Sr. Torres se graduó con honores de la Universidad Interamericana de Puerto Rico donde obtuvo su título de Juris Doctor (JD). Actualmente es miembro del Colegio de Abogados del Estado de Puerto Rico y es miembro del Colegio de Abogados Federal del Distrito de Puerto Rico de los Estados Unidos.

Comenzó su experiencia laboral en ingeniería con el Departamento de Defensa en una base naval en Virginia donde diseñó sistemas de ventilación industrial. Luego se fue a Nueva York para trabajar con Kennetech Energy Management, donde comenzó a sumergirse en el sector energético. Luego se transfirió a Puerto Rico con Kennetech, donde realizó estudios eólicos en toda la isla U.S. Wind Power. Continuó con la implementación de sistemas de administración de energía en varias empresas industriales en todo Puerto Rico hasta que Kennetech unió fuerzas con Enron para desarrollar la primera planta de energía de propiedad privada en Puerto Rico conocida como EcoEléctrica. Esta planta de energía de gas natural de 450 MW incluyó el desarrollo de la primera terminal de GNL en Puerto Rico.

También trabajó como contratista con la Autoridad de Energía Eléctrica de Puerto Rico en el desarrollo de una tubería de gas natural de 42 millas.

Antes de unirse al Negociado de Energía, el Sr. Torres desarrolló varios proyectos de gas natural en Puerto Rico.

La Lcda. Sylvia B. Ugarte Araujo posee un Bachillerato en Ingeniería Industrial y de Sistemas de la Universidad de la Florida (1998). Estudió en la Escuela de Derecho de la Universidad Interamericana de Puerto Rico (2004) y luego obtuvo una Maestría en Derecho de la Universidad Interamericana de Puerto Rico (2019). La Lcda. Ugarte está admitida a la práctica de la abogacía y la notaría por el Tribunal Supremo de Puerto Rico (2004), al Tribunal Federal, Distrito de Puerto Rico, al Primer Circuito Federal de Boston (2005), al Tribunal de Apelaciones del Primer Circuito (2005) y al Tribunal Supremo de la jurisdicción del estado de Texas (2018). Fue Directora de la Oficina de Asesoramiento Legal del Negociado de Energía de la Junta Reglamentadora de Servicio Público y la Directora Designada de la Oficina de Asesoramiento Legal de la Junta Reglamentadora de Servicio Público. Ha ejercido como Directora Legal de la Autoridad para el Financiamiento de la Infraestructura de Puerto Rico y ha trabajado con bufetes de abogado de renombre. Tiene sobre quince (15) años de vasta experiencia profesional como abogada litigante con énfasis en litigio comercial y construcción y una amplia experiencia en derecho administrativo. Así también, como ingeniera industrial ha sido consultora para agencias gubernamentales encargadas de proyectos de envergadura y en entidades privadas.

Ferdinand A. Ramos-Soegaard obtuvo su Bachillerato en Ciencias en Ingeniería Eléctrica (BSEE, por sus siglas en inglés) del Georgia Institute of Technology en Atlanta, GA en el 2000, con especialidad en sistemas de distribución de potencia y telecomunicaciones.

Ramos-Soegaard es ingeniero licenciado en el Estado Libre Asociado de Puerto Rico y en el Estado de Florida. A través de su carrera profesional, Ramos-Soegaard ha estado envuelto en todos los aspectos del diseño, construcción y mantenimiento de sistemas de distribución eléctrica, incluyendo líneas de transmisión de alto voltaje e interconexiones de sistemas de energía renovable a la red de subtransmisión de la Autoridad de Energía Eléctrica de Puerto Rico.

Lillian Mateo-Santos obtuvo su Bachillerato en Administración de Empresas de la Universidad de Puerto Rico, Recinto de Río Piedras en 1993 y el grado de Juris Doctor de la Facultad de Derecho de la Universidad de Puerto Rico en 1996. En 1999 obtuvo una Maestría en Derecho (LLM) en Ambiental y Energía de la Facultad de Derecho de la Universidad de Tulane. Antes de formar parte del Negociado de Energía de Puerto Rico, la Lic. Mateo-Santos fue miembro de varios bufetes de abogados. Su práctica privada se enfocó en asuntos de energía, ambiental, uso de terrenos y permisos, incluyendo litigación de derecho administrativo.

El 5 de junio de 2019, la Lic. Mateo-Santos fue elegida 2nda Vice Presidenta del Southern Association of Regulatory Utility Commissioners (SEARUC). Es miembro de la American Bar Association y está admitida para ejercer como abogado y notario público en Puerto Rico, y en el Tribunal de Apelaciones para el Primer Circuito Federal.

Edison Avilés-Deliz obtuvo su bachillerato Cum Laude en Ingeniería Eléctrica con especialidades en Sistemas de Controles y Potencia (BSEE) de la Universidad de Puerto Rico, Recinto de Mayagüez en 1991 y un Juris Doctor (JD) también Cum Laude de la Facultad de Derecho de la Universidad de Puerto Rico en 1997. Además, ostenta maestrías con Distinciones en Diplomacia/Relaciones Internacionales/Negocios (MA) de la Universidad de Norwich en Vermont y en Derecho en Energía de la Universidad de Derecho de Vermont (LLM).

Avilés-Deliz es ingeniero licenciado y miembro del Colegio de Ingenieros y Agrimensores de Puerto Rico (CIAPR). Fue presidente del Tribunal Disciplinario y de Ética Profesional del CIAPR, del Instituto de Ingenieros Electricistas del CIAPR y de la Sociedad de Ingenieros Electricistas de Puerto Rico. Está admitido para ejercer como notario público en Puerto Rico y como abogado, tanto en el Tribunal de Distrito de Puerto Rico como el Tribunal de Apelaciones para el Primer Circuito Federal.

Pertenece a la fraternidad Phi Eta Mu, a la Sociedad de Honor de Ingeniería Tau Beta Pi, a la Sociedad de Honor de Estudios Internacionales Sigma Iota Rho. También es miembro senior de la IEEE.