NOTICE TO CLIENTS AND FRIENDS: FOMB’s April 10 Letter addressing Article 4 of PREPA’s Net Metering Program
On April 10, 2024, the Puerto Rico Financial Oversight Management Board (FOMB) addressed inconsistencies in Act 10-2024 (Act 10), which modifies Act 114-2007, also known as the Puerto Rico Net Metering Program Act, under PROMESA. Act 10 prohibits the Puerto Rico Energy Bureau (PREB) from altering the current net metering policy until 2031, conflicting with the PREPA Fiscal Plan. FOMB contends that this delay challenges PREB’s independence, violating PROMESA § 108(a)(1) and impeding the Oversight Board’s authority over fiscal plans. Below, a comprehensive summary of the main takeaways of FOMB’s letter and Resolution:
FOMB Letter
- The Governor’s Section 204(a)1 submission for Act 10 is deemed inadequate as it lacks a compliant formal estimate and certification as required by PROMESA.
- The Submission consists only of Act 10 and two attachments, failing to provide a detailed fiscal impact analysis or certification statement from the estimating agencies. Consequently, the Submission does not meet §204(a)’s formal estimate requirement. Additionally, the certification statement provided by AAFAF is flawed and insufficient, as it does not meet the necessary criteria outlined in PROMESA.
- FOMB urges against the implementation of Act 10 and advises the Government to repeal or amend it promptly, allowing PREB to continue its assessment and necessary changes to the net metering program.
- The Government is requested to confirm its intentions by April 15, 2024, and if not compliant, to provide the necessary information and materials by April 19, 2024.
Resolution dated April 5th, 2024
- The FOMB’s Resolution underscores Act 10’s encroachment on PREB’s autonomy and its misalignment with the PREPA Fiscal Plan, citing violations of PROMESA’s objectives and the Fiscal It directs the Government to refrain from enforcing Act 10, urging its repeal or amendment due to violations of PROMESA § 108(a)(1)-(2), with FOMB authorizing legal action, per §104(k), to safeguard Puerto Rico’s financial stability.
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1 Section 204(a) of PROMESA requires the Governor of Puerto Rico to submit any new law to the Oversight Board for review within seven business days of the law’s enactment. The Governor’s submission must include a formal estimate of the impact, if any, that the new law will have on expenditures and revenues. This estimate must be prepared by an appropriate entity of the Government of Puerto Rico with expertise in budgets and financial management. The same government entity must also certify whether the law under review is or is not significantly inconsistent with the applicable certified fiscal plan. PROMESA Section 204(a)(2) outlines this process in detail.
This Notice to Clients and Friends has been prepared for information purposes only and is not intended, and should not be relied upon, as legal advice. To further discuss or obtain additional information about the Energy Bureau’s Net Metering Program, Act 114-2007, please contact us at your convenience.
| Eidalia González | Eduardo Tamargo-Motroni | Eugene Scott |
