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US House to hold Hearing Tuesday on Puerto Rico Energy Challenges

By on January 11, 2016

SAN JUAN – Gov. Alejandro García Padilla was not invited to participate in the oversight hearing on Puerto Rico’s energy issues to be held Tuesday, Jan. 12, by the U.S. House Energy & Mineral Resources Subcommittee, Public Affairs Secretary Jesús Manuel Ortiz said Monday when asked by Caribbean Business.

The latest congressional hearing, which would center on the “energy challenges and opportunities facing Puerto Rico,” is expected the first of two hearings to be held this month by the lower chamber’s energy subcommittee relating to the commonwealth. On Jan. 26, it plans to meet again “to discuss the possibility of creating a financial oversight board for the island, according to Adam Sarvana, a spokesman for Democrats on the panel,” Bloomberg reports.

“There is a real crisis that if it isn’t addressed, it will continue to get worse. Our call to Congress continues to be the same since Day 1; we need a mechanism to restructure our debts in an orderly manner. Whether this hearing will contribute to this effort, remains to be seen. We hope it does,” Ortiz said Monday.  

Among those to participate in the invitation-only hearing are Resident Commissioner Pedro Pierluisi and Puerto Rico Electric Power Authority (Prepa) Chief Restructuring Officer Lisa Donahue. Pierluisi confirmed last week he had been invited to take part in the hearing even though he is not a member of the subcommittee.

Meanwhile, in addition to Donahue, other witnesses are Josen Rossi, president of the Puerto Rico Institute of Competitiveness & Sustainability and chairman of AIREKO; Jorge San Miguel, chair, Environmental Law, Energy & Land Use at Ferraiuoli LLC; Jaime L Sanabria Hernández, co-president and general manager for finance & administration at EcoEléctrica; and Puerto Rico Manufacturers Association Chairman Carlos Rivera Vélez.

Senate President Eduardo Bhatia told reporters on Monday he would be attending the hearing, although he won’t be testifying. House Speaker Jaime Perelló is also expected to travel to Washington, D.C., and attend the hearing. The Puerto Rico Legislature reconvened Jan. 11 for its only regular session of the year, with the Prepa Revitalization Act — legislation that materializes the restructuring agreement recently struck between the utility and its main creditor constituencies — awaiting in the pipeline.

“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,” Bhatia stated.

The subcommittee, chaired by Rep. Doug Lamborn (R., Co.), is expected to begin the Jan. 12 hearing at 10 a.m. Eastern, or 11 a.m. locally. 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.

“In the hearing, I hope to be able to question the witnesses, who have not yet been publicly announced. I also want to thank the subcommittee, which has welcomed my recommendations on potential witnesses,” Pierluisi stated Tuesday. After noting the high cost of electricity Puerto Rico’s residents and businesses face, the resident commissioner wants to address possible ways to reduce the island’s energy costs and oil dependency. “It is also clear that the Puerto Rico Electric Power Authority must be reformed and its infrastructure — both plants and transmission lines — should be much more cost-efficient.”

The commonwealth government is set to resume this month its lobbying efforts in Capitol Hill, which aim to secure access to Chapter 9 of the U.S. Bankruptcy Code, which would allow Puerto Rico to restructure more than $20 billion of debt held by its public corporations. The island’s total public debt towers at more than $70 billion, in addition to roughly $40 billion in liabilities under its severely underfunded pension funds.

Several Puerto Rico-related bills, including those seeking access to Chapter 9, failed to secure passage before Congress left for the holiday break. House Speaker Paul Ryan (R.,Wis.) has said the lower chamber would move on the Puerto Rico issue once it reconvenes in January, in a bid to have a final solution before the end of March.  

Although meeting most of the more than $850 million due Jan. 4 in debt-service payments across several credits, the commonwealth defaulted on $36 million corresponding to the Infrastructure Financing Authority (Prifa) — the second time Puerto Rico has done so during fiscal year 2016, after failing to meet debt obligations under the Public Financing Corp.

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.

Photo: Gov. Alejandro García Padilla testifies at the Senate Judiciary Committee Hearing held Dec. 1.

Online: Watch the hearing

Photo: The Longworth House Office Building in Washington, D.C.

By Luis J. Valentín

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