Gov’t says it will seek funds to ease impact of PREPA’s debt adjustment plan
By The Star Staff
Representatives of the Multisectoral Meeting against the third amended Puerto Rico Electric Power Authority (PREPA) debt adjustment plan met over the weekend with La Fortaleza officials to express concerns about its impact.
The group, composed of religious, commercial, industrial, professional, union, environmental, community, educational, cultural and pension organizations, insisted that the proposal comes at a terrible time.
They noted that people are suffering due to poor electrical service, with frequent blackouts and voltage fluctuations and a high and volatile rate, while some 12,000 PREPA retirees and their families live in the uncertainty of not knowing the fate of their primary source of income, given that the PREPA Employee Retirement System became insolvent in April of this year. Residents, industries and businesses cannot afford the rate hikes proposed under the plan, the groups said.
According to the spokespersons of the Multisectoral Board, government representatives promised to seek funds to guarantee the payment of current pensions, minimize the impact of rate hikes, and work to avoid further increases in the electricity bill.
Likewise, they agreed to meet again in the coming weeks to analyze the most recent data from the PREPA Employee Retirement System and thus continue exploring concrete alternatives for protecting pensions and reducing the impact on the cost of electricity.
“We finally got the attention of La Fortaleza to address the uncertainty about the future of our pensions,” said Johnny Rodríguez, president of the PREPA Retirees Association. “We are in the best position to continue discussing this matter with the joint purpose of looking for alternatives to guarantee the payment of current and future pensions, also seeking to avoid further increases in the utility bill. It remains to be seen what action the executive branch will take to resolve this matter.”
Condominium Owners Association President Marimar Pérez-Riera noted that “we hope that this meeting will be the starting point for collaboration between the Multisectoral Board and the governor’s team to reach an agreement to restructure PREPA’s debt that is sustainable for the residents and the community and the economy of Puerto Rico, and to do what is fair and necessary for our PREPA pensioners.”
The meeting occurred as a result of an open letter that the Multisectoral Board, with more than 60 organizations, sent to the governor warning that the new debt deal, which proposes increases in the power rate over the next 35 years to pay PREPA bondholders, prioritizes the payment of an unsecured debt above the needs of the electrical system, current and future pensions and the economic development of the island.
The meeting, which took place at La Fortaleza, was attended by La Fortaleza Chief of Staff Noelía García, Assistant La Fortaleza Chief of Staff Carlos Yamín, Assistant Secretary for Energy Affairs Francisco Berríos Portela and PREPA Governing Board Chairman Nelson Pérez.
Also present beside Rodríguez, the PREPA Retirees Association president, and Pérez-Riera of the Condominium Owners Association were Clinical Laboratories Association President Wilson López, PREPA Employee Retirement System President José Rivera Rivera, and Cathy Kunkel of the Institute of Energy Economics and Financial Analysis.
The Financial Oversight and Management Board for Puerto Rico presented its third amendment to the debt adjustment plan for the bankrupt power utility in August of this year. The latest proposal seeks to reduce PREPA’s bond debt from $8.3 billion to $2.3 billion, representing a 72% reduction. However, critics say the burden of the payments still falls directly on consumers through increases in their electricity bills.
According to the plan, consumers will pay for the bonded debt until 2059; that is, over the next 35 years. The interest of the bonds could reach up to just over 7%, a high rate that weakens PREPA’s finances, critics say. Although the new bonds are for around $2.3 billion, Puerto Rico would actually pay more than double that, or $5.15 billion, when adding in interest payments, they say.
PREPA has been in bankruptcy since 2017 to restructure some $9 billion in debt.