Judge schedules challenge against Genera but suspends PREPA’s confirmation hearing
By The Star Staff
Although the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy confirmation hearing next month has been suspended, the Title III court will hear oral arguments next Wednesday on the lawsuit to stop Genera PR from taking over the operation of PREPA’s thermal power plants.
The court will allocate up to one hour for arguments in connection with the preliminary injunction motion filed a week ago by PREPA’s leading workers’ union, the Electrical Industry and Irrigation Workers Union (UTIER by its Spanish acronym). The hearing will take place in New York City.
UTIER has challenged the Genera PR contract arguing that it violates public policy by creating a private monopoly in power generation. It also filed an injunction to stop the contract from going into effect.
New Fortress Energy subsidiary Genera PR was selected to operate, maintain and eventually decommission PREPA’s aging power-generation assets through a 10-year agreement established via a public-private partnership (P3). The 100-day transition period ends June 30.
Through the P3, Genera PR will receive $22.5 million annually over five years and could receive bonuses or incentives of up to $100 million, pending on whether consumer savings are achieved. The generation units transferred by PREPA to the company produce about 70% of the energy consumed on the island.
The scheduling of the hearing comes as PREPA’s bankruptcy confirmation hearing, which had been scheduled for July 17, was suspended at the Financial Oversight and Management Board’s request as the entity needs to amend the energy utility’s fiscal plan, according to an order issued this week.
The judge did not set a new date for the confirmation hearing in Wednesday’s order.
The oversight board had asked for the hearing and all other dates associated with the bankruptcy to be suspended since it plans to amend the Title III bankruptcy debt plan to be consistent with PREPA’s 2023 fiscal plan, which is due this Friday, June 23.
The oversight board had anticipated earlier this month that it would have to file a new fiscal plan, a situation that did not please U.S. District Judge Laura Taylor Swain, who in the past has threatened to dismiss the bankruptcy.
The oversight board said the delay in filing a new fiscal plan is because of new information it recently received from PREPA, LUMA Energy, Genera PR and their advisers.
Swain, who is overseeing the bankruptcy, had already suspended some of the related deadlines. The oversight board may need to resolicit votes for the new plan and bondholders have indicated that they will need to obtain discovery into any new projections, data and models that the plan relies on.
“The oversight board hopes and expects to move quickly towards confirmation following certification of the 2023 fiscal plan and its identification of necessary amendments to the Title III plan,” the board said in its motion to suspend dates. “In the 28 June status report, the oversight board expects to be able to provide information concerning whether any resolicitations are required, and if so, when a proposed supplemental disclosure statement and full proposed amended plan can be filed, and the path forward towards confirmation.”