UTIER Holds Protests at Investment Summit, Argues Prepa will Increase Rates
SAN JUAN – When asked about the lack of protesters at the Puerto Rico Convention Center, where the 2016 Puerto Rico Investment Summit is taking place, the president of the Irrigation & Electrical Workers Union (Utier by its Spanish acronym), Ángel Figueroa Jaramillo said, “There are more than yesterday.”
Still, he expected attendance to pick up as the day went by and when the protest was to move to the Capitol, where the House of Representatives is to approve the so-called “revitalization” bill of the Puerto Rico Electric Power Authority (Prepa).
The Senate approved the bill Wednesday by a narrow margin of two votes, with various legislators of the Popular Democratic Party, the majority party in that body, opposed it. The New Progressive Party and the Puerto Rican Independence Party also opposed the bill.
For Figueroa Jaramillo, the bill serves the local electric industry on a silver platter to bondholders. He called attention to the fact that the bill provides for a debt increase of $2.4 billion, with a bond emission “to be paid by citizens with an increase in rates.”
The bill creates a new authority that will assume the debt and is tasked with its payment, according to complex specifications of the bill. Figueroa Jaramillo said the approval of the legislation may be prevented if “we keep discussing what is wrong with it.”
“If we fell into the crisis by going into debt, it is inconceivable for more debt to be approved,” he said.
He also criticized that the billing model for citizens remains the same, even though it includes a breakdown of what they are being billed for. Even worse, he said, what consumers are currently charged has as priority keeping Prepa in operation, but when the bill is approved the priority will be to pay the debt to bondholders “and what is left goes into [Prepa’s] operations.”
Figueroa Jaramillo believes that when these operations become strapped for cash, bondholders could request a reduction in employee benefits such as retirement and health plans, as well as an increase in rates.
“It is a well-planned game so bondholders are moved out of the spotlight as the ones who caused the problems. There are many amendments to the bill that are left without effect because the agreement with the bondholders picks them up,” he said, as attendance at the protest increased and leaders of other labor groups, such as Néstor Soto and Pedro Irene Maymí joined in.
The Utier president said the agreement with the bondholders in the legislation is much more restrictive than the bill itself.
“For example, in the original bill, the government, Prepa and citizens were considered guarantors or collateral for the debt. That was eliminated, but it is included in the agreement,” keeping that clause valid.
Figueroa Jaramillo said it means that if a person stops paying their power bill, Prepa can put a lien on the consumer’s property until the debt is paid.
He insisted that a fee spread out among Prepa’s customers could be less costly for the utility and and the customers themselves, than issuing more debt with interest rates that are hard to pay. It would be a corporate self-financing mechanism, “instead of perpetuating the debt.”
This fee, imposed for a determined timeframe for specific projects, would be used for capital improvements and infrastructure. He said that companies similar to Prepa in the mainland U.S. have used this mechanism. With the apportionment “you go pay with cash and no interests have to be paid for 20 or 30 years.”