Fiscal board: PREPA request for $200 million lacks financial data
By The Star Staff
The Financial Oversight and Management Board gave the Puerto Rico Electric Power Authority (PREPA) until Jan. 11, 2023 to present financial information in order to evaluate a request to include $200 million as additional available revenue in the utility’s fiscal year (FY) 2023 budget that went into effect July 1, according to a letter.
The Dec. 27 letter sent by oversight board general counsel Jaime A. El Koury to PREPA Executive Director Josué Colón Ortiz was in response to a Dec. 8 letter in which PREPA requested that the FY 2023 PREPA budget be amended and recertified to reflect $200 million in nonrecurring and unbudgeted Federal Emergency Management Agency (FEMA) reimbursement funds as additional available revenue.
The letter notes that before the oversight board can determine it necessary or appropriate to set forth a budget amendment schedule, it needs additional information from PREPA.
The oversight board requested an updated budget-to-actual (B2A) report for the most recent quarter of FY 2023, confirmation on whether PREPA intends to use the $200 million in FEMA reimbursement funds to initiate projects that will later also be reimbursed by FEMA, and a complete and detailed description of the source of the funds for the reimbursements.
The oversight board noted that during discussions with PREPA, utility officials mentioned that they might request to increase the budget by some $140 million, as opposed to $200 million. The board asked for an explanation of the inconsistency between the two amounts and why an additional $60 million is needed.
In a separate Dec. 27 letter, the oversight board gave PREPA until Jan. 15, 2023 to correct inconsistencies identified in the implementation reports that the utility submitted for each of the four months of FY 2023 that measure the level of compliance with the fiscal plan.
According to the second letter, sent by El Koury to Colón Ortiz, the 2022 certified fiscal plan for PREPA requires the utility to report on its progress in implementing financial and operational initiatives outlined in the certified fiscal plan.
The letter notes that the accuracy and reliability of PREPA’s reporting is essential to providing transparency, measuring progress and compliance with the certified fiscal plan, and most importantly to achieving the safe, reliable, affordable, resilient and modern electrical grid that the people of Puerto Rico deserve.
The implementation reports, as submitted by PREPA, are noncompliant with the certified fiscal plan, the letter says, because they misstate the baseline target dates for initiatives and milestones outlined in the certified fiscal plan, replacing the original baseline dates with amended dates reflective of existing delays and other changes.
The implementation reports submitted for the first four months of FY 2023 incorrectly reflect a baseline finish date of Sept. 9, 2021. PREPA is required to update the baseline finish date in the implementation reports to mirror the certified fiscal plan, the letter states.
“Additionally, since PREPA indicates that the renewable generation and storage RFP [request for proposals] process is ‘delayed,’ please provide an update on the status of the 18 power purchase and operating agreements approved and describe the main drivers that keep delaying the full execution of tranche 1,” the oversight board says in the letter.
“To achieve Puerto Rico’s energy system transformation, a change in PREPA’s historical roles and responsibilities and their reassignment through multiple entities is imperative,” the letter continues. “As such, PREPA’s vertically integrated operations are to be disaggregated into separate generation and transmission & distribution functions. The milestone baseline finish dates included in the implementation reports submitted in August, September, October, and November are different from the ones included in the certified fiscal plan.”
The oversight board then “hereby requests that PREPA address and correct all inconsistencies highlighted above in the implementation report due on January 15, 2023,” reads the letter.