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Puerto Rico power utility chief assures restructuring agreement will be reached soon

By on April 25, 2019

Says it will address attempts to have Prepa put into receivership

SAN JUAN – Puerto Rico Electric Power Authority (Prepa) Director José Ortiz assured Thursday that the utility’s restructuring support agreement with creditors will not only be a reality soon but will address attempts to have the corporation put into receivership.

On Wednesday, Judge Laura Taylor Swain granted a one-week extension to allow for negotiations on the restructuring of the utility’s $9 billion debt to move forward. A lawyer for National Public Finance Guarantee Corp., Robert Barrison, insisted the judge should order a reciever for Prepa instead of granting more extensions.

“All Prepa bondholders need question answered,” he said, adding that it was urgent to rid Prepa of mismanagement.

Lawyers for the island’s Financial Oversight and Mangement Board rejected the request, contending that the RSA could take no longer than week.

Ortiz said the debate over putting Prepa into receivership will be dealt with in the RSA.

“It will make clear that the Authority and the government are handling energy matters correctly with legislation and laws and with the execution. For a long time, many promises were made about the energy system but today you are seeing action,” he said.

The utility chief listed as accomplishments the contract of the transformation of units 5 and 6 of the San Juan powerplant to use natural gas, the first in the northern region; the refurbishing of plants in Mayagüez; and the upcoming contract involving battery storage.

“The creditors are seeing that a receiver at this time at the agency will be an interruption,” he said.

Prepa workers’ Irrigation & Electrical Workers Union has asked the court for the appointment of a private sector inspector general as a compromise between the opposing views on a receiver.

“Frankly, I don’t understand it. Either you are pregnant or not but there is no such thing as being a little pregnant,” Ortiz said.

Prepa’s head also said the agreement will be far better than the previous one negotiated by the utility’s former chief restructuring officer, Lisa Donahue of Alix Partners, which was rejected by the fiscal board in 2017 amid concerns about the impact on rates.

In that agreement, Prepa bondholders agreed to a 15% haircut. The board concluded that lowering electricity rates to spur economic growth was more important than the utility’s credit, and that the utility needed to be privatized for the rates to go down.

“This agreement will be beneficial to the people of Puerto Rico and you will see it in numbers soon,” Ortiz said.

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