Oversight Board Certifies 2020 Fiscal Plans for Prepa, Prasa and Highway Authority
SAN JUAN – The Financial Oversight and Management Board for Puerto Rico certified Monday the 2020 Fiscal Plan for the Puerto Rico Electric Power Authority (Prepa), the Puerto Rico Highway and Transportation Authority (HTA), and the Puerto Rico Aqueduct & Sewer Authority (Prasa).
The three Fiscal Plans “are roadmaps to a better quality of life in Puerto Rico and more safety and continuity during hurricanes, during earthquakes, during droughts, and every day,” the board said
“Electricity, roads, and water are essential for every resident, and neglect of those essential elements has negatively affected everyday life in Puerto Rico for years, if not decades,” said the board’s executive director, Natalie Jaresko. “All three elements require major improvements, all three areas need substantial new investments to reflect the needs of the people and businesses of Puerto Rico today, and all three authorities need to ensure that their finances are stable. To succeed in these goals, all three entities need to make major changes to the way they do business.”
The board gave the following brief explanations about the agencies and their certified fiscal plans.
Puerto Rico’s electricity needs to become more reliable, more affordable, and cleaner. The PREPA Fiscal Plan is the road map for a complete transformation of Puerto Rico’s power system. The Fiscal Plan requires a five-step transformation, and the first two steps are completed: The creation of a strong independent regulator with the Puerto Rico Electricity Board and the agreement earlier this month with Luma Energy to manage Puerto Rico’s grid.
PREPA now needs to focus on the transformation of energy generation. Key initiatives include upgrading power generation to include more renewable sources of energy and transition to private operators. PREPA needs private capital and expertise to develop a modern, flexible, and efficient generation system that will make electricity more affordable and put Puerto Rico on a path to 100% renewable power by 2050. In addition, PREPA needs to ensure the maximum federal funding for PREPA’s recovery and modernization, and the restructuring of PRRPA’s debt and pension liabilities.
Puerto Rico’s roads are in disrepair. HTA needs to improve road maintenance and improve the transit system. Only 4% of Puerto Rico’s highways are in good condition, and the San Juan metropolitan area is the 25th most congested city in the U.S.
The HTA Fiscal Plan is the roadmap to improve and maintain the road system and repair the damage done by disasters and neglect so Puerto Rico’s residents can travel safely.
The Oversight Board and HTA worked together to develop a dashboard that will allow the people of Puerto Rico to see the status of road construction and repair. The dashboard will provide ongoing visibility into the status of improvement projects and includes a feature for public feedback.
The HTA Fiscal Plan requires the entity to establish an independent board with experienced and knowledgeable directors, and requires six measures to improve revenue, including increases in toll fine collections, tolls, introduction of congestion pricing, and four measures to cut expenses, including reducing pension and employee healthcare costs. HTA’s existing legacy debt is not sustainable and requires significant adjustment under Title III of PROMESA.
The people of Puerto Rico depend on clean and reliable water. In Puerto Rico, too much of PRASA’s water is lost because of repeated water main breaks, faulty meters, and other deficiencies. Up to 60% of water is lost before it reaches homes. Puerto Rico’s water is safe to drink, but water quality reports indicate troubling trends for health-based violations, such as nitrates and chlorine-based disinfection byproducts.
The PRASA Fiscal Plan is the road map to sustainability. It requires the implementation of 11 fiscal measures, including ongoing modest rate increases, reduction of water loss and use of chemicals.