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A group of electricity consumers in Puerto Rico has asked the federal bankruptcy court that oversees the Puerto Rico Electric Power Authority’s (PREPA) debt restructuring to lift a stay that has blocked their proposed class‑action lawsuit. The lawsuit challenges a pension surcharge that has been added to the island’s electricity bills. The petitioners, four consumers who represent more than 1.5 million residential and commercial customers, filed a “Renewed Motion for Lift of Stay” on November 5. They seek to allow the case to proceed in Puerto Rico state courts. The surcharge, which began on September 1 2025, was made permanent for a three‑year period by an order from the Puerto Rico Energy Bureau (PREB) issued on April 15 of this year. According to the filing, consumers have already paid over $200 million through the surcharge, which is projected to generate about $307 million annually—roughly $25.6 million per month. The petitioners argue that the fee is an unconstitutional tax because customers receive no electricity service in exchange for the payments. They contend that the money is diverted to PREPA’s retirement system rather than to current utility operations. The petitioners cite findings by PREB that require PREPA to transfer the collected revenues to a separate pension system and that PREPA does not control how those funds are spent. They also claim that the surcharge is being used to pay legacy debt obligations that should instead be addressed through PREPA’s ongoing bankruptcy restructuring. The petitioners maintain that the Financial Oversight and Management Board cannot create legal authority for the charge simply by including pension‑funding assumptions in its fiscal plans. The motion follows an earlier setback. The bankruptcy court denied a prior request for relief from the automatic stay on March 24. The consumers appealed that decision, and the appeal remains pending before the U.S. Court of Appeals for the First Circuit. In the new filing, the petitioners argue that allowing Puerto Rico courts to decide the legality of the surcharge would not interfere with PREPA’s restructuring process. They say the case is well developed and could resolve important legal questions that PREB has declined to answer, including whether pension obligations should be treated as current operating expenses or as pre‑petition debt subject to restructuring. The petitioners contend that ratepayers continue to suffer harm as long as the surcharge remains in effect and request that the court permit the state‑court litigation to proceed to a final judgment. They argue that doing so would promote judicial efficiency and provide a definitive ruling on whether Puerto Rico electricity customers can legally be required to fund PREPA’s pension system through their monthly bills. Article source: San Juan Daily Star | Image credit: San Juan Daily Star
A group of electricity consumers in Puerto Rico has asked the federal bankruptcy court that oversees the Puerto Rico Electric Power Authority’s (PREPA) debt restructuring to lift a stay that has blocked their proposed class‑action lawsuit. The lawsuit challenges a pension surcharge that has been added to the island’s electricity bills. The petitioners, four consumers who represent more than 1.5 million residential and commercial customers, filed a “Renewed Motion for Lift of Stay” on November 5. They seek to allow the case to proceed in Puerto Rico state courts. The surcharge, which began on September 1 2025, was made permanent for a three‑year period by an order from the Puerto Rico Energy Bureau (PREB) issued on April 15 of this year. According to the filing, consumers have already paid over $200 million through the surcharge, which is projected to generate about $307 million annually—roughly $25.6 million per month. The petitioners argue that the fee is an unconstitutional tax because customers receive no electricity service in exchange for the payments. They contend that the money is diverted to PREPA’s retirement system rather than to current utility operations. The petitioners cite findings by PREB that require PREPA to transfer the collected revenues to a separate pension system and that PREPA does not control how those funds are spent. They also claim that the surcharge is being used to pay legacy debt obligations that should instead be addressed through PREPA’s ongoing bankruptcy restructuring. The petitioners maintain that the Financial Oversight and Management Board cannot create legal authority for the charge simply by including pension‑funding assumptions in its fiscal plans. The motion follows an earlier setback. The bankruptcy court denied a prior request for relief from the automatic stay on March 24. The consumers appealed that decision, and the appeal remains pending before the U.S. Court of Appeals for the First Circuit. In the new filing, the petitioners argue that allowing Puerto Rico courts to decide the legality of the surcharge would not interfere with PREPA’s restructuring process. They say the case is well developed and could resolve important legal questions that PREB has declined to answer, including whether pension obligations should be treated as current operating expenses or as pre‑petition debt subject to restructuring. The petitioners contend that ratepayers continue to suffer harm as long as the surcharge remains in effect and request that the court permit the state‑court litigation to proceed to a final judgment. They argue that doing so would promote judicial efficiency and provide a definitive ruling on whether Puerto Rico electricity customers can legally be required to fund PREPA’s pension system through their monthly bills.
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