Sunday, March 18, 2018

Unsecured creditor group may intervene in Puerto Rico Energy Commission lawsuit against fiscal board

By on March 13, 2018

SAN JUAN – The U.S. District Court will allow the Official Committee of Unsecured Creditors to intervene in a lawsuit filed by the Puerto Rico Energy Commission (PREC) to stop the island’s Financial Oversight and Management Board (FOMB) from forcing the utility to take actions that are under the commission’s jurisdiction.

The court, however, deferred any decision on whether to allow Puerto Rico’s Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym) to intervene stating it will make a decision without a hearing and relying on legal briefs filed by stakeholders.

PREC sued in U.S. District Court earlier this month, seeking a declaratory judgment and request for injunctive relief against the fiscal board and Prepa. Earlier this week, the Senate passed a bill that would dismantle the commission. It is slated to go to the House of Representatives for consideration.

Unsecured Puerto Rico creditors disclose claims

The utility’s fiscal plan, the energy regulator says, proposes actions that affect Puerto Rico’s electricity policy involving power supply mix, capital and operating expenditures, internal operations, revenue requirements and rate design, “all subjects and actions that lie within the commission’s jurisdiction under the law.”

“Prepa has submitted this Fiscal Plan to FOMB without presenting its substance to the Commission for its review—a review necessary to determine whether the proposed actions are consistent with Commonwealth statutes, as interpreted and applied by the only agency legally authorized to interpret and apply those statutes. FOMB has declined to provide the document to the Commission,” the lawsuit filed by PREC reads.

PREC argues that the fiscal board’s assertion of authority over the public utility is in conflict with its duties under the law to oversee Puerto Rico’s electric power industry.

Energy Commission sues to reassert regulatory power over Puerto Rico electric utility

“Both the assertion and application of that power (as FOMB sees it), and the resulting legal uncertainty, is currently, and will continue to be, harmful to the Commission, PREPA’s electricity customers, existing and future bondholders and the public interest,” the commission says.

The complaint requests the court declare that the fiscal board can neither mandate nor authorize Prepa to take actions that are subject to PREC jurisdiction.

Puerto Rico Energy Commission claims goal is to ‘protect the people’

The Committee of Unsecured Creditors says it has a significant interest in this case because the relief the Energy Commission is seeking would destabilize Congress’ statutory scheme for cases under the Promesa law’s Title III and undermine efforts to put Prepa on the path to fiscal responsibility.

The energy regulator’s claim “that it must preapprove any Fiscal Plan submitted to the Oversight Board necessarily affects these issues therefore, the Committee should be allowed limited intervention in this Adversary Proceeding,” the creditor committee contends.

The court said the creditor group will be allowed to be heard in this adversary proceeding but will not have rights to discovery or examine witnesses.

Regarding Aafaf’s petition to intervene, the court said it will decide without a hearing. Any briefs in opposition to the request to intervene could be filed no later than Tuesday, March 13, and those supporting the intervention have until Wednesday, March 14.