Electrical Workers Union rejects Puerto Rico utility’s restructuring support agreement
Utier president argues rates will rise, pensions will remain unfunded and prosumers would also pay debt charge
SAN JUAN – After the government announced May 3 a restructuring support agreement (RSA) between the Puerto Rico Electric Power Authority (Prepa) and a group of its bondholders to reduce the public corporation’s debt, the president of the Irrigation & Electrical Workers Union (Utier by its Spanish acronym), Ángel Figueroa Jaramillo, expressed his rejection.
“We categorically oppose it and denounce this agreement with the bondholders as disastrous for all Puerto Ricans because the projections to pay the debt are unreal, which will result in an increase in the rate for all energy consumers on the island, whether or not they are connected to Prepa’s system. They made an agreement without taking into consideration the U.S. Census and the study of economist José Alameda, which projects a population decline of about one million residents in the coming years and without keeping in mind those citizens who decide to produce their own energy through renewable sources,” Figueroa denounced in a statement.
The union leader argued that the agreement between the island’s Financial Oversight and Management Board, Aafaf, the Ad Hoc Group of Prepa Bondholders and bond insurer Assured Guaranty Corp. does not restructure the interest owed in the next few years.
“The same interest paid on the current debt, which is double the market [rates], will continue to be paid,” Figueroa said. “This agreement, like the one that was achieved with COFINA [Spanish acronym for Sales Tax Financing Corp.], is bad and will lead our country to even greater economic stagnation and a people to poverty and misery. In this case, they did not even restructure the interest to be paid after the agreement; we will continue to pay the interest on the debt as it is now.”
He also claimed it is projected there will be a charge to consumers who move to renewable energy sources, which he said was an obstacle to the energy transformation needed.
The union president also alleged that the agreement will have an effect on the Prepa employee retirement system because it does not establish an obligation to pay into it.
Considering that today “the Authority is not issuing the payments to the Retirement System debt, knowing it takes precedence over the payment of the debt, imagine what can happen if, in this agreement, the obligation of paying into the Retirement System of all the Electric Power Authority workers is not established,” Figueroa said.
The RSA calls for a transition charge to pay the utility’s legacy debt, $8.3 billion. A settlement charge of 1 cent per kilowatt-hour (kWh) is slated to go into effect in July. Afterward, there will be transition charge to pay debt that starts at 2.768 cents per (kWh) and gradually escalates over the next 24 years until it reaches a maximum of 4.55 cents per kWh.
Christian Sobrino, the executive director of Puerto Rico’s Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym), recently said that individuals who disconnect from Prepa will not incur the debt charge and that those who have solar panels will obtain credit for their generation in their utility bills through the net-metering program. However, because these homes will be connected to Prepa’s transmission and distribution system, he said, they will be paying the transition charge for the utility’s debt.
Although all Prepa subscribers must pay the transition charge, those who join Prepa’s net-metering program before Sept. 30 may be grandfathered in and not pay the debt charge on their self-generated electricity for 20 years.