Judge issues power-purchase agreement procedures for Prepa
Utility looking to lower costs, provide cleaner generation
SAN JUAN – U.S. District Court Judge Laura Taylor Swain has issued a series of procedures for the Puerto Rico Electric Power Authority (Prepa) to assume or reject power-purchase operating agreements.
Prepa, which has been in bankruptcy under Title III of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) since 2017 to restructure its $9 billion debt, filed a request on April 2 for the procedures to the renegotiation of existing power purchase and operation agreements (PPOAs) as part of its restructuring and to afford it the opportunity to provide less expensive and cleaner generation more expeditiously than otherwise possible.
“Prepa has over 60 PPOAs. The Assumption Procedures will help streamline the assumption process by avoiding the cost of a standalone motion to assume each PPOA individually, while affording parties-in-interest their due process rights with respect to notice and the opportunity to be heard in the event of objections,” the power utility said.
In a ruling Monday, Judge Swain granted the request, informing Prepa that it is authorized, but not required, to assume PPOAs in accordance with certain assumption procedures.
Prepa must first obtain the consent or approval of the island’s financial oversight board and, to the extent required, the consent and approval of the Puerto Rico Energy Bureau of Prepa’s assumption of any PPOA, the judge said.
Upon receiving the necessary approvals, Prepa must file with the court a written notice of its intent to assume any PPOA, and serve an “Assumption Notice” via overnight delivery service and by electronic mail to parties in interest, including the U.S. Trustee and the indenture trustees as well as lenders. Anyone objecting the assumption of the PPOA has 15 days to object it. Then both parties will have 10 days to meet and confer.
If no one objects, an assumption order will be issued that will be put in effect seven days after the notice was filed.