Lawmaker: Fiscal board’s ‘abusive’ frugality has PREPA pensions hanging by a thread

By JOHN McPHAUL jpmcphaul@gmail.com

Rep. José “Cheito” Rivera Madera said Monday that “[t]he pensions of Puerto Rico Electric Power Authority (PREPA) retirees are hanging abusively by a fine thread” following the refusal of the Financial Oversight and Management Board to approve the budget increase requested by the public utility to fulfill its responsibilities, among which is the payment of pensions to its retirees.

According to a motion presented by the public corporation before the Puerto Rico Energy Bureau (PREB), an entity that must finally approve budgetary adjustments at PREPA, the oversight board only approved an allocation of $65 million, which Rivera Madera said would barely cover pension benefits until June.

The veteran Popular Democratic Party legislator said in a press release that the decision of the oversight board rests on what he described as “defective appreciation and application,” because, he said, the law that regulates the processes of the public corporation establishes the payment of obligatory commitments, such as pensions, as essential.

“The current Trust Agreement itself (agreement in good faith between the parties), and with which the board, the bondholders and the PREB have to work, establishes as public policy a specific order for the fulfillment of their fiduciary responsibilities,” Rivera Madera said. “This agreement that governs PREPA bonds establishes a range in the cascade of payments based on an order, where bondholders occupy the third place and the priority has to be, in the first instance, on the operation of electric power through the payment of salaries of employees and compliance with the [rules governing the] pensions of retirees.”

He warned that if the oversight board decides to disregard the existing agreements, thus challenging their validity, “it would throw even its previous decisions and agreements overboard.”

“No one will then be able to rely on any agreement or contract with our government and [public] corporations because they can be unilaterally repealed,” Rivera Madera said.

“With this erroneous assessment, the [oversight board] gives the impression of jeopardizing the pensions of PREPA retirees,” he said. “The level of anxiety caused by this situation -- to them and their families -- is inhumane and borders on abuse, which says a lot about the abusive way in which the Board interprets the laws, regulations and agreements existing prior to this imposed process, where the economic interests of vultures are defended above the welfare of retirees and workers.”