Democratic reps urge fiscal board to reject Puerto Rico power utility agreement
SAN JUAN – Two U.S. Democrats are urging the Puerto Rico’s fiscal oversight board to reject the Electric Power Authority’s (Prepa) restructuring support agreement (RSA), contending that it will lead to higher energy rates for the people.
The request came a day after the U.S. House Natural Resources Committee demanded that the board approve the agreement to restructure Prepa’s $9 billion debt. It also follows various groups’ call, including the Puerto Rico Manufacturers Association and the Coalition for the Private Sector, which urged stopping the RSA, whose terms were renegotiated earlier this year.
Reps. Raúl Grijalva, a Democrat from Ariz., and Nydia Velázquez, a Democrat from New York, made their request in a letter addressed to José Carrión, the board’s chairman. The two lawmakers said Prepa’s RSA includes a securitization of electricity revenues that would benefit the public utility’s creditors, but would put a huge burden on ratepayers.
When Gov. Ricardo Rosselló came to office, he said he would renegotiate the previous Prepa RSA that still had several milestones pending. Under that deal, bondholders agreed to a 15% haircut, or reduction to principal, in exchange for new bonds maturing in 2043 and backed by a special charge on customers’ bills.
In April, Rosselló announced the government had reworked the deal to restructure Prepa’s debt that kept the 15% haircut, but extended the maturities of the new bonds to 2047. The new RSA, the administration says, saves $2.2 billion in debt-servicing costs over the next five years.
This week, Prepa extended a deadline to June 28 to finalize the required documentation and begin the creditor voting process over the “qualifying modification,” as defined by Promesa’s Title VI. The extensions followed a Wall Street Journal report that the deal was on the verge of collapsing because fiscal board members could not reach a consensus over the RSA’s terms.
Prepa’s executive director, Ricardo Ramos, said he had expected the RSA to go through the process of court approval in July. He had previously said Prepa is receiving a lot of pressure from Congress to move the RSA forward.
When asked Wednesday whether the administration was being pressured by members of Congress to finalize the RSA, Elias Sánchez, the government representative to the board, said it hasn’t occurred as far as he knows.