By The Star Staff
Individuals and businesses have come out against the Puerto Rico Electric Power Authority’s (PREPA) debt adjustment plan, citing the impact it will have on their finances if it is confirmed.
In March, the Title III bankruptcy court will hold a hearing to determine whether or not to confirm the debt adjustment plan that would restructure PREPA’s $9 billion debt. Individuals, businesses and creditors are objecting to the plan.
The Cooperative Movement, represented by the League of Cooperatives, in a motion last week said it generates 3,457 direct jobs and more than 5,000 indirect and induced jobs. Savings and credit cooperatives impact 33% of all families in Puerto Rico and have 1 million clients that constitute about 48% of the legal age population of Puerto Rico, the league said.
In 2022, cooperatives captured savings of $10.6 billion and granted $6.2 billion in loans.
“Anything that affects the economic viability of the sector has the enormous potential to create a dislocation in the well-being of a considerable sector of our population,” the League of Cooperatives said. “We had estimated that the (Fourth) Amended Title III Plan of Adjustment would have meant that cooperative members would pay between $231.7 million and $347.5 million more for electricity. Adjusting those numbers for the currently proposed Legacy Charge, we estimate that the current plan will result in total bills between $216.6 million and $325 million for our members.”
“But even if a considerable number of cooperative members are exempted from the charge, they will still be severely impacted as member-owners of cooperatives,” the league added. “The Legacy Charge will make the entire production chain of services more expensive.”
The proposed legacy charge would be collected to ensure sufficient cash flow required for PREPA’s debt service on certain new bonds to be issued under the plan.
Although the actual plan reduces the fixed charge on certain commercial (GSP 212) customers from $800 to $50, it increases the volumetric charge from $0.0145 to $0.0236 per kilowatt-hours (kWh). It also imposes new payments to the bondholders for legal and administrative fees. Altogether, those fees increase the cost of the plan of adjustment by an additional $500 million to $1 billion, the league said.
Selectos Supermarket, which also presented an objection, said the legacy charge can represent a monthly increase of between $1,700 and $2,300 in the electricity bill of many supermarkets in the food industry such as Selectos.
“The Plan of Adjustment will affect Puerto Rico’s economy and ratepayers, such as Selectos,” the supermarket chain said. “Therefore, PREPA will not be able to generate enough revenue and comply with its obligations to creditors or to the people of Puerto Rico. Because of this, the Plan of Adjustment is not feasible.”
PV Properties/Windmar Renewable Energy said PREPA’s debt deal has to be much more than a financial plan because it is a major public institution linked to economic development in Puerto Rico.
“As a matter of logical consequence, the Plan at a minimum must consider the fiscal implications to PREPA following the promulgation of the Puerto Rico Energy Public Policy and rejection of any course of action contrary to the public policy and consider the impact on Puerto Rico’s reality, economic, and social,” the firm said.
Several environmental groups such as Comité Diálogo Ambiental Inc., El Puente de Williamsburg Inc., Enlace Latino de Acción Climática, Comité Yabucoeño Pro-Calidad de Vida Inc., Alianza Comunitaria Ambientalista del Sureste Inc., Sierra Club Inc. and its Puerto Rico chapter, Mayagüezanos por la Salud y el Ambiente Inc., Coalición de Organizaciones Anti Incineración Inc., and Amigos del Río Guaynabo Inc., urged the bankruptcy court to reject the plan because it violates energy policies and is unfeasible.
“The plan relies on a Legacy Charge that will render electricity costs on the island even more unaffordable,” the environmental groups said. “Puerto Ricans’ energy burden is already far higher than the burden for the average American. Every single family in Puerto Rico with 0 to 80% of the median income is already energy poor because their “share of wallet” expense of electricity and gas is at or above 6%. The Legacy Charge would force that energy burden past a point of tolerability.”
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