Puerto Rico Governor Alejandro Garcia Padilla pledged to decrease the island’s energy costs, which are double those on the U.S. mainland.
While Puerto Rico Electric Power Authority has been able to cut its expense since he took office in January 2013, “we need to reduce even more,” Garcia Padilla said in a Bloomberg Television interview in San Juan that was broadcast today. The push on power costs is one step the governor is proposing to turn around the U.S. territory’s economy, which has struggled to grow since 2006.
The biggest U.S. public-power utility by customers and revenue is seeking to lower its costs by cutting its use of oil and relying more on natural gas and renewable energy. The average cost per kilowatt hour in Puerto Rico is 24 cents to 25 cents, compared with 12 cents on the mainland, according to Moody’s Investors Service.
Lawmakers last month passed a bill that establishes an independent board that will review changes to Prepa’s rates. The authority’s $9 billion of debt was downgraded to junk in February by two of the three largest credit-rating firms as it struggles to pay bills. Prepa took $100 million from its capital budget last month to purchase fuel.
The commonwealth also had its credit grades dropped to speculative grade this year. Debt of the island’s issuers is tax-free in all 50 U.S. states.