Sen. Bernabe to governor: Use LUMA reserves to mitigate energy costs
By John McPhaul
Sen. Rafael Bernabe Riefkohl of the Citizen Victory Movement called on Gov. Pedro Pierluisi Urrutia on Tuesday to use funds from the reserve of the LUMA Energy contract instead of “embezzling” the State Insurance Fund Corp. (SIF) budget to mitigate increases in the cost of electricity.
Speaking out against Senate Bill (SB) 931, Bernabe urged Pierluisi to sign House Bill 1383. He said SB 931 drains SIF resources with the supposed purpose of temporarily mitigating the effect of recent increases in the cost of electricity.
Bernabe also stressed that the “relief” that the transfer of funds would entail would only last three months, while the effect of the reduction in the SIF budget would be disastrous for its operation, adding that SB 931 ignores and contravenes established public policy in Law 17-2019, since it does not advance the transformation of the system so that it operates based on renewable energy sources.
Bernabe also expressed concern regarding the possible additional increase in the cost of electricity once the mediation process for the Puerto Rico Electric Power Authority (PREPA) debt adjustment plan is completed.
“Given the call from different sectors, the governor discarded PREPA’s debt adjustment proposal which, among other provisions, included an increase that would amount to more than 4 cents per kWh [kilowatt-hour], to pay bondholders,” the senator said in a press release. “Any agreement in the mediation process ordered by Judge Taylor Swain must include a substantial reduction in debt and zero increases in the rate to pay bondholders.”
It should be remembered, he said, that PREPA’s debt was issued according to an agreement (known as a Trust Agreement) in which the payment of the bondholders was established after PREPA covered its operating expenses, including payments to the pension systems.
In short, Bernabe said, “it is what is known as unsecured debt, which PREPA could reduce to zero.”
“Any debt adjustment, in addition to substantially reducing it and not including an increase in the rate, must maintain the order of priorities established in the Trust Agreement, putting operating expenses and payments to pension systems first,” he said. “Those provisions are included in House Bill 1383, which has already been approved by both legislative chambers.”
HB 1383 adopts the points indicated as public policy (including the reduction of PREPA’s debt by at least 75%) and mandates that they be adopted by PREPA and the Puerto Rico Energy Bureau, the senator said.