Organizations ask Congress to reject paying PREPA bondholders

Johnny Rodríguez, president of the Puerto Rico Electric Power Authority Retirees Association

By The Star Staff

More than 35 organizations from various sectors in Puerto Rico called on Congress on Thursday to reject the full $8.3 billion payment to the Puerto Rico Electric Power Authority (PREPA) bondholders and to support a debt restructuring plan that does not hike electricity rates.

“Imposing an unpayable debt burden, as a group of PREPA bondholders insists, will mean that Puerto Rico remains tied to a dysfunctional and unaffordable electricity system for decades,” stated The Rev. Dr. Lizette Gabriel Montalvo, bishop of the Methodist Church of Puerto Rico, in a written statement.

The letter was addressed to U.S. Rep. Scott Fitzgerald (R-Wisc.), chairman of the House Subcommittee on Administrative State, Regulatory, and Antitrust Reform. Edna Díaz, vice president of the United Retailers Center, noted that the petition seeks to halt a payment plan deemed unviable for the island’s economy.

PREPA Retirees Association President Johnny Rodríguez emphasized that the priority must be to pay the pensions of more than 12,000 beneficiaries who could be left without funds beyond June.

“It is unacceptable to prioritize the demands of bondholders over the families who rely on their pensions as their sole source of income,” he said.

The signatories warned that Puerto Rico’s electricity system is significantly less reliable than that of any state in the United States and that an increase in electricity rates would worsen the economic crisis. The letter advocates for a realistic restructuring that would allow for the rehabilitation of the electrical system without hindering the island’s recovery.

The organizations signing the letter include the PREPA Retirees Association, the United Retailers Center, the Puerto Rico Bar Association, the League of Puerto Rico Cities, Open Spaces, Sierra Club Puerto Rico, and various religious, community, educational and professional organizations.

While the Financial Oversight and Management Board has said Puerto Rico cannot raise rates to pay off its debt, the oversight board proposed a plan in March to restructure PREPA’s legacy debts that would open the door for rate increases to pay the debt.

PREPA has some $8.5 billion in legacy bond debt and has been in federal bankruptcy court since 2017. It also has a pension system that currently is only kept afloat by periodic injections of cash from the commonwealth government. Under the oversight board’s plan, the total pension liability is estimated at $3.5 billion.

The board’s proposed plan includes the issuance of as many as three series of new bonds, totaling as much as $2.54 billion to pay off the legacy bond debt.