Fiscal board asks gov’t to fix discrepancies in PREPA’s budget
By The Star Staff
The Financial Oversight and Management Board has identified inconsistencies in the certified budget for the bankrupt Puerto Rico Electric Power Authority (PREPA) that could potentially result in a deficit by the end of fiscal year (FY) 2022.
The inconsistencies were found during a preliminary review of PREPA’s latest Budget-to-Actuals report, submitted on Aug. 22, the oversight board said in a letter published late last week. PREPA has been in bankruptcy since 2017 to restructure some $9 billion in debt, and later this month it is supposed to present its debt adjustment plan.
“The reported Total Operating and Maintenance Expenses reflect an overspend of $0.95 billion year-to-date (YTD) for Q4- FY2022,” the oversight board said. “However, such overspend was driven by Total Fuel and Purchased Power and is assumed to be reconciled through the Puerto Rico Energy Bureau’s quarterly reconciliation process for fuel and purchased power riders.”
Disregarding Fuel and Purchased Power costs, due to its pass-through and lagging reconciliation nature, the Total Operating and Maintenance Expenses reflect an $11 million underspend, the board said.
The oversight board also found that expenditures, including salaries, show an $8 million underspend for the latest quarter. The Salaries and Wages item reflects an overspend of $7 million that appears to account for the budgeted amount of $6 million that does not appear to be obligated or disbursed from the Temporary Operating Positions, operating positions, and security personnel line items.
The marginal benefits expense, which is meant to exclude healthcare, pension and Christmas bonus as established in the FY 2022 Certified Budget, reflects an overspend of $14 million, while there are no funds obligated or disbursed for budgeted amounts allocated for pension benefits and healthcare expense.
Regarding expenditures, the oversight board said non-labor and other operating expenses for GenCo, as PREPA’s generation operation is called, show a $2 million overspend for the fourth quarter. The area of Materials and Supplies reflect an overspend of $8 million while Security, Utilities and Rents, Professional and Technical Outsourced Services, and Other Miscellaneous Expenses show an accumulated underspend for the same amount.
The reported Non-Labor/Other Operating Expenses for HoldCo, another PREPA division, show a $4 million underspend. Nonetheless, there was an $8 million overspend in Utilities and Rents, while Professional and Technical Outsourced Services, Other Miscellaneous Expenses, PREPA Restructuring & Title III, and Financial Oversight and Management Board Advisor Costs allocated to PREPA reflect an accumulated underspend for the same amount.
The oversight board asked PREPA to submit a revised version of the report by Sept. 21.