Puerto Rico Approves Record Electric Rate Amid Grid Woes
The increase, driven by rising costs and demand, adds to the financial strain on residents while the island's power infrastructure remains fragile.
A record electric rate took effect Thursday in Puerto Rico, where persistent power outages underscore the ongoing struggles with the U.S. territory’s deteriorating power grid. The new rate is expected to increase the monthly bill for a residential customer consuming 800 kilowatt-hours by approximately 18%, from $229 to $271, according to the Puerto Rico Energy Bureau, which authorized the hike.
The rate, set at 33.86 cents per kWh, will remain in place until at least December 31. This increase surpasses the average residential rate of 18.3 cents per kWh on the U.S. mainland, according to the U.S. Energy Information Administration. More than 40% of Puerto Rico's 3.2 million residents live in poverty, and the rising electricity costs exacerbate an already high cost of living.
Luma Energy, responsible for the transmission and distribution of power, had sought an increase of over six cents per kWh. The company stated the additional revenue would not be profit but would cover increased operational costs. These costs are attributed to higher energy consumption during summer, rising global oil prices influenced by the conflict in the Middle East, increased use of customer batteries, and reliance on more expensive fuel sources when power plants underperform.
This rate adjustment occurs nearly a decade after Hurricane Maria devastated Puerto Rico's power grid in 2017. The grid's vulnerability was compounded by decades of underinvestment and deferred maintenance even before the storm.
Recent events have highlighted the grid's fragility. A substation fire last week left over 200,000 customers without power, marking the latest in a series of widespread outages. The Energy Bureau approved an increase of 5.28 cents per kWh, opting to mitigate the financial impact on consumers. The bureau also decided not to pass on a $17.6 million cost associated with alleged failures by New Fortress Energy to supply fuel between June and August.
New Fortress Energy is a supplier of natural gas to Puerto Rico’s north coast power plants. Currently, these plants are using diesel fuel, a more expensive alternative, because a natural gas delivery vessel has been held up from entering San Juan Bay for two weeks due to its size, a matter currently in litigation. The Energy Bureau is also investigating approximately $19 million that Luma reported paying for gas quantities that Genera PR, the power generation operator, may not have needed or been able to receive.
The rate increase coincides with efforts by Puerto Rico Governor Jenniffer González's administration to terminate Luma's contract, a move currently entangled in court battles. Luma and Genera PR were awarded contracts as Puerto Rico’s state-owned Electric Power Authority grappled with restructuring over $9 billion in debt.
In 2024, petroleum comprised 63% of the island's energy consumption, with natural gas at 31%, coal at 5%, and renewables at 1%, according to U.S. Energy Information Administration data.