Fiscal board continues operations despite losing 5 members

U.S. District Judge Laura Taylor Swain

By The Star Staff

The judge overseeing the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy case ordered the Financial Oversight and Management Board late last week to file a report on Aug. 25 explaining how the recent dismissal of five of its seven members will impact matters before the court.

Judge Laura Taylor Swain on Friday suspended deadlines related to the bondholders’ motion for an expense claim on its $8.5 billion debt pending a report from the oversight board. The board, meanwhile, has continued its operations normally despite the recent firings.

“In light of recent reports concerning the membership of the Financial Oversight and Management Board for Puerto Rico, the deadlines set at the July omnibus hearing with respect to the PREPA Bondholders’ Motion and Memorandum of Law for Allowance of Administrative Expense Claim -- specifically, the August 18, 2025 deadline to exchange position papers with the PREPA Bondholders and the August 25, 2025 deadline to file a status report with the Court with respect thereto — are hereby suspended pending further order of the Court,” the judge said.

Despite having only two members, the oversight board has been working and even approved an extension to Aug. 14 of Genera’s contract with NF Energía for fuel supply to temporary generators at the Palo Seco and San Juan power plants.

The original contract, which was approved with observations by the oversight board on July 17, stems from an exigency declared by Genera PR, the operator of PREPA’s legacy power plants, on July 16 due to an emergency need for the provision of liquified natural gas (LNG).

Genera indicated that the exigency was prompted by delays in the request-for-proposal process for a provider of LNG, the current reserve margin, the risk posed by the hurricane season, and the need for immediate action to alleviate and/or avoid serious harm, financial or otherwise. The original contract has the same terms and conditions as the previous contract for the provision of LNG, which expired on July 11 of this year.

It contemplates the purchase of British thermal units of LNG at a price determined by the formula (1-0.27) x diesel price/5.8. It has a maximum payable amount of $9,792,800 and a term from its date of execution of July 17 to July 25 at 5 p.m.

The first amendment to the contract, which was approved with observations by the oversight board on July 25, increased the maximum payable amount by $6.5 million to $16.2 million and extended the term to Aug. 1 at 5 p.m. The second amendment to the contract, which was approved with observations by the oversight board on Aug. 1, increased the maximum payable amount by $6.4 million to $22.7 million, and extended the term to Aug. 8. The proposed amendment, which constitutes the third amendment to the contract, increases the maximum payable amount by $5.5 million to $28.2 million and extends the term to Aug. 14 at 5 p.m.