Puerto Rico Energy Issues Discussed in US House Hearing
Several energy-related issues affecting Puerto Rico, as well as challenges ahead in tackling some of these, were discussed at the latest congressional hearing on the commonwealth’s affairs, held Tuesday by the U.S. House Energy & Mineral Resources Subcommittee.
Issues regarding the troubled Puerto Rico Electric Power Authority (Prepa) were extensively discussed, along with the high energy bills island residents and businesses face. Also pointed out was the urgent need to modernize the energy infrastructure on the island, an aspect in which private sector players should play a significant role, some of the participants noted.
And although subcommittee Chairman Doug Lamborn (R., Co.) stressed at the beginning of Tuesday’s hearing that the Chapter 9 federal bankruptcy topic — and the Puerto Rico government’s push to secure from Congress access to the statute — was not going to be subject of the hearing, some participants took the opportunity to bring it to the discussion.
For instance, Prepa Chief Restructuring Officer Lisa Donahue, who testified at the hearing, noted how securing access to a bankruptcy regime, namely Chapter
9, could allow the utility to complete its restructuring process with its creditors. Making Chapter 9 applicable to Prepa would allow the utility to bring holdout creditors onboard the restructuring deal it recently struck with holders of 70% of its $9 billion debt.
In addition to Donahue, witnesses at the hearing included: Josen Rossi, president of the Puerto Rico Institute of Competitiveness & Sustainability and chairman of AIREKO; Jorge San Miguel, chair of Environmental Law, Energy & Land Use at law firm Ferraiuoli; Jaime Sanabria, co-president & general manager for finance & administration at EcoEléctrica; and Puerto Rico Manufacturers Association Chairman Carlos Rivera.
“The high cost of energy for households and businesses is an obstacle for economic development and promotes outmigration, so [potential federal] legislation could include disposition to make energy in the territory cheaper,” said Resident Commissioner Pedro Pierluisi, who was invited to act as ranking member of the subcommittee’s hearing.
Pierluisi recommended several initiatives, both locally and at the federal level, that could help in lowering energy costs on the island, while recognized there is broad consensus in Puerto Rico over the need to bring private sector players to invest in capital improvement projects that would improve the overall energy service.
“It is necessary to draw the federal forum’s attention to Prepa’s situation, and that it becomes a priority for the U.S. Department of Energy,” said Monday Senate President Eduardo Bhatia, who attended the hearing.
The lower chamber’s energy subcommittee would be holding another Puerto Rico-related hearing on Jan. 26, “to discuss the possibility of creating a financial oversight board for the island,” Bloomberg reported citing a spokesman for Democrats on the panel.
The commonwealth government is banking on congressional action, particularly over Chapter 9 access, during the first semester of the new year, as it
tries to avoid additional defaults amid a debt-service schedule that becomes steeper during the summer. The commonwealth faces more than $1.5 billion in
payments July 1, the first day of fiscal 2017. House Speaker Paul Ryan (R.,Wis.) is banking on delivering a solution to the Puerto Rico issue before the end of March.
While other congressional committees are expected to follow suit in scheduling hearings to address the island’s fiscal and economic crisis, no other has been confirmed as of this writing.
Online: Watch the hearing on YouTube