By The Star Staff
The island government remains firm in seeking the most significant possible reduction in the Puerto Rico Electric Power Authority’s (PREPA) debt and defending the Puerto Rico Energy Bureau’s (PREB) jurisdiction in deciding consumer rates, the governor said Monday, the first day of hearings in which a federal judge must rule on confirming PREPA’s debt adjustment plan.
At this juncture, the plan can not be changed, but merely accepted or rejected.
“What we want in the government is the greatest possible reduction in the debt of the Electric Power Authority, and for the jurisdiction and legal mandate that the Puerto Rico Energy Bureau has to establish the rates we pay to be respected. That is the government’s position,” Gov. Pedro Pierluisi Urrtutia said. “I remind you that years ago this began with Lisa Donahue’s proposal that … we have a 15% cut in the debt. From there, we moved on to a 30% restructuring plan that I rejected as governor and now what is presented before the court is seeking a 75% reduction in the bond debt issued by PREPA, which means that we have improved a lot.”
U.S. District Judge Laura Taylor Swain as the presiding judge in PREPA’s Title III bankruptcy case, will have the final word.
“I have consistently said that it should be up to the [Energy] Bureau and not to Judge Swain, much less the [Financial] Oversight [and Management] Board, to determine the form and manner in which PREPA fulfills its payment\,” the governor added.
On Dec. 16, 2022, the oversight board filed its proposed plan of adjustment to restructure more than $10 billion of debt and other claims against PREPA. In June of last year, the oversight board announced that it would amend the plan of adjustment to reduce the debt to some $2.5 billion, following a ruling by the U.S. District Court for the District of Puerto Rico.
PREPA bondholders Golden Tree Asset Management and Syncora Guarantee, along with others, are objecting to the plan, which has the support of fuel line lenders, the Unsecured Creditors Committee and National Public Finance. The opposing bondholders are requesting the appointment of a receiver. They have also said the oversight board has engaged in manipulation to garner support for the plan.
Besides interfering with the PREB’s determination on rates, the debt adjustment plan would preempt sections of the Puerto Rico Electric Power Authority Act, the Puerto Rico Labor Relations Act, the Puerto Rico Net Metering Program Act, the Puerto Rico Transformation and Energy RELIEF Act, the Puerto Rico Electric Power Authority Revitalization Act, the Puerto Rico Energy Public Policy Act, the Puerto Rico Debt Responsibility Act, and a law that guarantees the payment of pension benefits to retirees on the island and establishes a new defined contribution plan for public servants. The preemption of selected provisions of those laws is either permanent or until the repayment of debt issued in the plan of adjustment is finalized.
Margaret Dale, a lawyer with Proskauer, which represents the oversight board, said the amount to be paid in electricity should not be more than 6% of a household’s budget, taking into account a median income of $25,520 per year and the proposed legacy charge that would be added to electricity customers’ bills. The opposing bondholders have said PREPA can pay more, but not how much more.