Lawmaker: Possible new fee in power bill would pay for pensions
By The Star Staff
Puerto Rico Electric Power Authority (PREPA) customers may see an additional fee in their utility bill that will go toward the payment of pensions, House Treasury Committee Chairman Jesús Santa Rodríguez said Wednesday.
Currently, and after negotiations to restructure PREPA’s $9 billion debt failed in September, the Financial Oversight and Management Board was ordered by the court to engage in a new round of mediation. The oversight board, at the same time, is litigating the legality of PREPA’s bonded debt, estimated at $8.3 billion, and must submit a debt adjustment plan in December.
The information about the new charge to pay pensions was revealed by lawyer Rolando Emmanuelli, Santa Rodríguez said in a televised interview. Emmanuelli could not immediately be reached for comment.
Santa Rodríguez noted that current law requires PREPA to itemize all fees in the utility bill.
“Any debt restructuring, regrettably, will lead to a hike in the utility bill,” he said. “The key is for it to be as low as possible to ensure there is little impact. As energy rates become more expensive, the island is less competitive and the government has fewer revenues.”
The lawmaker said customers who are not connected to the grid because they have solar panels may also have to pay the charge, but he also noted that it all depends on the outcome of the negotiations.
PREPA bondholders, who are owed about $8.3 billion in debt, argued in court this week that PREPA has failed in the collection of revenues that could be used to pay its debt.
PREPA has failed to collect hundreds of millions of dollars in accounts receivable from municipalities, instrumentalities and agencies as required under the Trust Agreement, the bondholders said. It has accumulated a $420 million excess liability for payments made to municipalities in lieu of taxes. And it has an accounts receivable balance of over $200 million from public instrumentalities. In addition, PREPA has failed to raise rates to levels required to ensure revenues sufficient to pay current expenses and debt service, the bondholders say.
PREPA has deposited $148.3 million from the General Fund in the Government Development Bank (GDB) of Puerto Rico, but has not sought the return of those funds to pay bondholders as required under the Trust Agreement, even though GDB has misappropriated PREPA’s monies in violation of the automatic stay, the bondholders added.
Santa Rodríguez also said there may be public hearings in the Legislature following remarks made by Public-Private Partnership Authority Director Fermín Fontanés Gómez to the effect that there is a preferred proponent already identified to manage the utility’s 18 power plants. Rep. Luis Raúl Torres Cruz said putting all plants under a single proponent may be a violation of the law.
Power outages expected due to failure at AES plant
Separately, PREPA officials warned Wednesday afternoon that Unit 1 at the Applied Energy Systems (AES) power plant could not start generation, so both units at the Guayama plant remain out, a situation that could cause outages.
“The AES No. 1 unit went out of service again,” PREPA said on its social networks. “At present both AES units are out of service. This has caused a deficiency of around 500 megawatts in the generation system. If the AES units continue out of service and given the demand forecast, we will not have the generation to meet peak demand. We ask customers to reduce their energy consumption to reduce the number of customers who will see their energy service affected.”
LUMA Energy echoed the call for prudence in energy consumption.
“We understand the frustration these generation-related disruptions pose to our customers, and we are monitoring the situation closely,” the operator of the island’s electric power transmission and distribution system said on social media. “To help minimize the impact of potential service interruptions caused by under-generation, we encourage our customers to conserve energy, especially during peak hours from 6 p.m. to 10 p.m.
Neither PREPA nor LUMA said when full generation capacity would be restored.