Frequently Asked Questions
Puerto Rico Act 10 of 2024
- What is Act 10?
- Does the Oversight Board oppose net metering and renewable energy?
- Why is the Oversight Board opposed to Act 10?
- What is the Puerto Rico Energy Bureau?
- What is net metering?
- Why is the Energy Bureau’s independence important?
- Who sponsored Act 10?
- What has the Oversight Board done to support renewable energy?
- What would happen if Act 10 were invalidated or repealed?
- Why did the Oversight Board think it was so important for the Energy Bureau to complete its study on net metering and be free to take action based on the results?
- Households with rooftop solar invested a significant amount of money. Would those investments be at risk if Act 10 would go away?
- Why has the Oversight Board filed a lawsuit against the Government of Puerto Rico related to Act 10?
What is Act 10?
Act 10 was enacted by the Puerto Rico Government in January 2024. Act 10 amends Act 114-2007 (which established Puerto Rico’s Net Metering Program) and prevents Puerto Rico’s independent energy regulator, the Puerto Rico Energy Bureau, from preparing a study required to evaluate the impact of current net metering and energy distribution program until at least 2031.
That means Act 10 undermines the Energy Bureau’s ability to regulate the Puerto Rico energy sector.
Act 10 reflects a concerning departure from the Government’s policy and the Fiscal Plans’ requirement regarding the need for PREPA to be managed by an independent, experienced regulator.
This type of political interference in the management of PREPA is one of the causes of its current challenges, which is precisely why the Government created the Energy Bureau and why the Fiscal Plans mandate PREPA be regulated by an independent regulator.
Invalidating Act 10 would not change the current net metering program. The terms of those PREPA customers who already installed solar panels won’t change if the court invalidates Act 10, and new customers would continue to be able to join the program.
Does the Oversight Board oppose net metering and renewable energy?
No. Renewable energy is a key element of Puerto Rico’s energy transformation, and net metering is a very important tool for making solar more accessible and affordable. That is why the Oversight Board supports net metering, and renewable energy in general. It is the future for Puerto Rico.
Act 17-2019 requires Puerto Rico to reach 100% renewables by the year 2050. This is something the Oversight Board agrees we must do and something the Oversight Board is strongly defending in court against PREPA bondholders who do not think that renewable goal is possible. We will continue to defend Puerto Rico’s 100% renewable goal.
The Oversight Board has been doing its part to achieve Puerto Rico’s renewable energy goals. PREPA had for years stalled the installation of rooftop solar panels. Now, total interconnected systems have increased by close to 120,000 homes. Contrary to what some lobbyists would like the public to believe, the Oversight Board never proposed to end net metering and would not support such a proposal. Rooftop solar will continue. Puerto Rico needs it. The Oversight Board supports it.
Why is the Oversight Board opposed to Act 10?
One of the most important elements needed to secure Puerto Rico’s energy transformation and provide the people with more reliable electricity is an independent regulator that determines the rules and the rates. The Puerto Rico Legislature understood that, and in 2019 transformed the Puerto Rico Energy Commission into the Puerto Rico Energy Bureau as an independent regulator under the same law that established the Island’s renewable energy goals.
Act 10 undermines the Energy Bureau’s ability to regulate the Puerto Rico energy sector, because, once again, critically important rulemaking and regulatory authority is removed from the Energy Bureau.
Political interference in the energy system is one reason for PREPA’s current challenges. For decades, decisions were made based on politics, not facts and data. It ended badly. PREPA ended up in bankruptcy and the people ended up with a dilapidated and unreliable energy grid.
We must not go back to the policies of the past that failed the people of Puerto Rico, where politics and not sound energy policy dictated PREPA’s operations.
Act 10 is a step in the wrong direction.
Invalidating Act 10 would not change the current net metering program. The terms of those PREPA customers who already installed solar panels won’t change if the court invalidates Act 10, and new customers would continue to be able to join the program.
What is the Puerto Rico Energy Bureau?
The Puerto Rico Energy Bureau is Puerto Rico’s independent energy regulator.
Act 57 of 2014 created the Energy Bureau (then known as the Puerto Rico Energy Commission) to oversee PREPA and ensure execution and implementation of sound policies regarding electric power in Puerto Rico.
The Energy Bureau is also tasked with implementing regulations and pursuing regulatory actions to guarantee the capacity, reliability, safety, efficiency, and reasonability of electricity rates in Puerto Rico.
The Fiscal Plans and Act 17 require that the Energy Bureau be able to operate independently and free from any direct or indirect political influence or interference.
What is net metering?
Net metering can be an effective way to encourage households to invest in green energy.
The net metering program in Puerto Rico, established in 2007 by Act 114, allows customers with rooftop solar to feed some of the electricity they do not need for their own electricity consumption back into the grid.
The energy each customer exports to the electrical grid is credited against the cost of the electricity the customer purchases from PREPA when the energy generated from their systems is not sufficient to meet household needs, for example at night or on cloudy days.
As such, these customers only pay for the net electricity they consume from PREPA.
Why is the Energy Bureau’s independence important?
Only a truly independent regulator is an effective regulator.
The Puerto Rico Energy Bureau oversees Puerto Rico’s energy system, including PREPA, Luma Energy, and Genera PR, based on facts and data, not politics and special interest influences.
For decades before the existence of the Energy Bureau, decisions at PREPA were made based on politics, not data. It is one of the reasons why PREPA is bankrupt today.
Most U.S. states have independent energy regulators to promote data and fact-based decision making and avoid political interference.
Who sponsored Act 10?
Act 10 was passed by the Legislative Assembly without any public hearings. According to the bill that became Act 10, it was drafted and submitted at the request of an advocacy group. It is supported by the rooftop solar industry trade organization.
The cornerstone of an effective energy sector is a politically independent regulator. The Puerto Rico Energy Bureau should be able to do its work free from political pressure or special interests’ influence.
Political interference in the energy system is one reason for PREPA’s current problems. For decades, decisions were made based on politics, not facts and data. It ended badly. PREPA ended up in bankruptcy and the people ended up with a dilapidated and unreliable energy grid. We must not go back to the policies of the past that failed the people of Puerto Rico.
What has the Oversight Board done to support renewable energy?
The Fiscal Plan for PREPA, certified by the Oversight Board, fully reflects and incorporates the renewable energy goals of Act 17.
The Oversight Board supports affordable large scale green energy and approved contracts to create solar farms.
PREPA had for years stalled the installation of rooftop solar panels. Since the transfer of the grid to a private operator required under Act 17 and the Fiscal Plan, rooftop solar took off. More than 120,000 roofs in Puerto Rico have solar panels, one of the highest rates of rooftop solar installations in the nation relative to the population. Solar panels are installed on close to 4,000 rooftops in Puerto Rico every month.
Both rooftop solar and large-scale solar is moving forward with the Oversight Board’s support.
What would happen if Act 10 were invalidated or repealed?
Nothing would happen to the current net metering program or to the terms of those PREPA customers who already installed solar panels. New customers would continue to be able to join the program.
This would only change if the Puerto Rico Energy Bureau were to determine that changes should be made based on the results of its independent study and input from the public.
The Energy Bureau should be able to determine electricity rates and net metering terms, based on facts, not politics or pressure from special interests and the profit motives of individual business groups.
Why did the Oversight Board think it was so important for the Energy Bureau to complete its study on net metering and be free to take action based on the results?
The transition to renewable energy is critical for Puerto Rico, but it must be done thoughtfully. There must be space for an honest dialogue based on facts and data. The path forward with renewables is complex and tradeoffs and benefits must be evaluated and assessed.
The Puerto Rico Energy Bureau commissioned a report to look at Puerto Rico’s current new metering policy. A draft of this study is now done and available to all. It doesn’t propose to end net metering. It lays out the facts and raises questions to which we must find answers together so the Energy Bureau can make the right decision and ensure that net metering remains a viable program. It recommends that the first step be a public debate of the report.
The right decision might be to keep the current net metering policy. The Energy Bureau, the independent regulator, is the proper entity to make that decision based on facts and public input. Act 10, however, precludes Puerto Rico Energy Bureau from doing so.
Households with rooftop solar invested a significant amount of money. Would those investments be at risk if Act 10 would go away?
No. Customers who already have solar panels installed would keep the same benefits for 20 years from the date of their net metering contracts. That’s the current law under Act 114-2007 and Act 17-2019, even without Act 10.
There are approximately 120,000 households with rooftop solar. Those solar installations and their net metering benefits are protected.
Anyone who says anything different is using scare tactics and misinformation to drive a specific agenda and we should all be very cautious when that happens.
Renewable energy, including solar energy, is a key element of Puerto Rico’s energy transformation. That is why the Oversight Board continues to support rooftop solar.
Why has the Oversight Board filed a lawsuit against the Government of Puerto Rico related to Act 10?
The PREPA Fiscal Plan defines the transformation of Puerto Rico’s energy system to provide more reliable and cleaner energy based on the goals of Act 17. An independent regulator is a very important element of this transformation. But Act 10 interferes with Puerto Rico Energy Bureau’s autonomy and that is why Act 10 violates the Fiscal Plan.
The Oversight Board raised these concerns several times with the Legislative Assembly and the Governor, and asked the Government to repeal the law to restore Puerto Rico Energy Bureau’s full statutory oversight over Puerto Rico’s energy system.
The Government never challenged the validity of the Oversight Board’s concerns but did not act.
The system has only just begun to recover from decades of political mismanagement that left the people of Puerto Rico with a failing electric grid. Puerto Rico must not fall back to the practices that failed in the past. That is why the Oversight Board had no choice but to ask the U.S. District Court to invalidate Act 10.
To be clear, the Oversight Board did not file its lawsuit to end net metering; it filed its lawsuit to remove the corrosive and dangerous politically motivated restrictions on the Energy Bureau.
Invalidating Act 10 would not change the current net metering program. The terms of those PREPA customers who already installed solar panels won’t change if the court invalidates Act 10, and new customers would continue to be able to join the program.