(MENAFN- Live Mint) SAN JUAN, Puerto Rico (AP) - Puerto Rico is holding key hearings on fee increase requests from private power companies that, if approved, could see the U.S. territory's average residential bill rise by at least 40% on an island with a high poverty rate and soaring cost of living.

Residents are balking as private power company officials overseeing the generation, transmission and distribution of power in Puerto Rico insist that additional funding is needed to modernize a crumbling grid that Hurricane Maria razed in 2017.

The hearings, which do not include public input, began in mid-November and are scheduled to continue through late December. They are being held by Puerto Rico's Energy Bureau, which would decide whether to authorize the proposed increases.

In total, the proposed new charges would raise a bill's base rate from $4 per month to more than $40, according to the Solar and Energy Storage Association of Puerto Rico and Solar United Neighbors.

“The larger issue here is the impact on low-income people... on elderly people,” P.J. Wilson, SESA's president, said in a phone interview Tuesday.

One of the proposals from Luma, the company that oversees transmission and distribution of power on the island, calls for the residential fixed charge to increase from about $4 per month to $15 starting in January.

“This request from Luma represents... an unjustified economic blow to households and families on the island,” said Javier Rúa-Jovet, SESA's public policy director.

He said in a phone interview that there is currently no analysis justifying that request.

Meanwhile, Wilson warned there are other repercussions related to recent requests for additional fixed charges.“It makes the financial case to go solar worse, and worse and worse,” he said.

Puerto Rico, which once aimed to reach a 100% renewable energy system by 2050, has been distancing itself from that goal under the administration of Gov. Jenniffer González, a supporter of U.S. President Donald Trump.

Proponents say the island should embrace renewable resources given the damage that Hurricane Maria inflicted eight years ago, leaving some people without power for up to a year.

Chronic outages persist, with massive blackouts hitting Puerto Rico during Easter week this year and New Year's Eve last year.

The island of 3.2 million inhabitants has a more than 40% poverty rate, and people remain angry over the ongoing outages, the damage these have caused to electrical appliances and the proposed power bill increases, one of which could see Puerto Rico's electricity rate rise to 33 cents per kWh.

In the U.S. mainland, the average electricity rate is 17 cents per kWh, according to the U.S. Energy Information Administration.

Puerto Rico's governor has promised to terminate the government's contract with Luma. Chief of Staff Francisco Domenech told reporters Tuesday that the legal process to do so will start before the end of the year.

“Lowering power costs: priority number one,” he said.

Domenech said the government has been talking to and negotiating with companies based in the U.S. mainland that could replace Luma but he declined to provide details.

He noted that even if the contract is canceled, Luma would have to keep providing service for a year.“It's not like Luma is leaving tomorrow,” he said.

Luma was contracted in June 2021 by Puerto Rico's Electric Power Authority, which is struggling to restructure its more than $9 billion debt. Bitter negotiations are ongoing, and experts warn that Puerto Ricans will likely see yet another increase in their power bills to pay off that debt if a deal is not reached with bondholders.

Puerto Rico's grid was already shaky before Hurricane Maria hit, given a decades-long lack of investment and maintenance.

Luma has said that the Electric Power Authority's shaky finances have prevented access to credit and financing options and forced it to divert money from planned improvements to emergencies, including unplanned outages. Luma also noted that the lack of access to financing has forced the company to pay all grid investments in full each year - instead of over several years as is standard.

Luma has also stressed that it would not financially benefit from the proposed rate increase, saying the funding would be used to improve and strengthen the grid.

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