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Puerto Rico fiscal agency wants energy regulator action moved to federal court

By on March 14, 2018

SAN JUAN – Puerto Rico’s Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym) on Wednesday sought to remove a civil action filed by the Puerto Rico Energy Commission (PREC) from the Puerto Rico Superior Court and have it transferred to federal court because it presents challenges to the authority of the island’s Financial Oversight and Management Board.

PREC filed its civil action in the local court March 5, the day after it had filed a complaint against the fiscal oversight board and the Puerto Rico Electric Power Authority (Prepa) in federal court to reassess its jurisdiction over the public utility.

The local court civil action against Prepa seeks to compel the power company to comply with two orders issued by PREC. The first, as reported by Caribbean Business, was an order issued in November in which the energy regulator told Prepa to include a clause in contracts stating these cannot go into effect until the utility receives its authorization.

PREC also asked Prepa to stipulate in the contracts that if the commission determines or has sufficient grounds to believe the service is not being provided properly, the work must be halted. To justify the order, PREC at the time told Prepa that it had found instances of wasteful spending by the utility in its contracts, including some renewable energy contracts.

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The second order PREC wanted to force Prepa to obey as part of the local civil action was a mandate to turn over the fiscal plan.

In seeking the civil action’s transfer to federal court, Aafaf says that in addition to violating Puerto Rico law, the orders directly “invade” the authority of the oversight board over fiscal and budgetary matters relating to Prepa under the Promesa law and “infringe upon the authority granted” by Act 2 of 2017 to Aafaf as the “exclusive representative of the Governor on behalf of the Commonwealth in the creation, execution, supervision and oversight of any Fiscal Plan pursuant to Promesa.”

Aafaf previously removed certain civil actions pertaining to PREC rate orders, which were the subject of judicial review, to the federal court including a lawsuit filed by the Instituto de Conservación y Competitividad Económica de Puerto Rico.

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Besides filing the civil action in superior court, PREC filed a verified adversary complaint in federal court against the fiscal board and Prepa, seeking preliminary and permanent injunctive relief to prevent the utility from obeying certain fiscal board actions.

On March 5, PREC also entered an order demanding that Prepa submit to it a draft of the fiscal plan it had previously submitted to the fiscal board.

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