Comerío mayor urges Legislature to reject fiscal board’s debt plan for PREPA

By THE STAR STAFF

Comerío Mayor Josían Santiago, a top leader in the Popular Democratic Party, urged the island Legislature on Monday to stop the Puerto Rico Electric Power Authority’s (PREPA) debt adjustment plan proposed by the Financial Oversight and Management Board that establishes an average $19 charge for some residential customers.

Gov. Pedro Pierluisi Urrutia, as well as the New Progressive Party delegation, have also come out against possible rate hikes resulting from the latest version of the debt adjustment plan.

As previously reported by the STAR, last Thursday the oversight board filed a “First Amended Title III Plan of Adjustment” for PREPA, accompanied by the “Amended Disclosure Statement.”

The plan proposes to cut PREPA’s more than $10 billion of debt and other claims by almost half, to about $5.68 billion. A so-called legacy charge for certain customers not currently benefiting from subsidized electricity rates would be, on average, about $19 a month. The PREPA legacy charge, which will be used to pay bondholders, would exclude qualifying low-income residential customers from a connection fee and kilowatt-hour (kWh) charge for up to 500 kWh per month. For non-subsidized residential customers, the proposed PREPA legacy charge would be a flat $13 per month connection fee, and 75 cents per kWh for up to 500 kWh per month of electricity provided by PREPA, and 3 cents per kWh for electricity above 500 kWh per month.

For commercial, industrial and government customers, the proposed PREPA legacy charge would entail a connection fee of $16.25 for small business customers, $20 per month for smaller industrial companies, and $1,800 per month for large businesses proportional to their current rate. They would pay between 97 cents and 3 cents per kWh per month for electricity provided by PREPA.

The new plan and amended disclosure statement also reflect the terms of the oversight board’s settlement with National Public Finance Guarantee Corp., add two new classes of claims, and incorporate a number of new or revised exhibits regarding PREPA’s proposed legacy charge and other components of its plan.

Santiago noted that his municipality has the island’s largest population living below the poverty line, and the announcement of an almost $20 increase is painful and unfair for this population.

“Comerío is part of the regions that have an economic lag in the country,” he said. “We have the largest amount of population below the poverty line, so you can imagine the announcement that is made that at least they will have an additional charge of almost $20 on the energy bill.”

“A sign that things have been done here, by the two main parties, we have to admit it, leaders who have made bad decisions … that have led us to a very regrettable decision … that the people have to pay the consequences is very painful, very unfair,” the mayor said. “You have to review the laws; what they are saying is that since that is the law you have to comply with the law. Well, the law was made and can be replaced with another law.”

The oversight board has said it would be up to the Puerto Rico Energy Bureau to determine the rates.

Tomás Torres Placa, the consumer representative on the PREPA governing board, said in a radio interview that consumers could end up paying more than $19 because if a person uses 600 megawatts of power, he or she will pay the $19 plus the $13 connection charge.

He noted that some 600,000 customers will not be paying the legacy charge as long as they don’t use more than 500 kilowatts of energy, but the rest of the customers will pay.

National PFGC settlement

Regarding the settlement with National Public Finance Guarantee Corp. of some $1 billion in debt, National appears as two classes of bondholders in the debt deal. The documents note that National has agreed to receive 71.65% of its $836.1 million in debt as Series B bonds that would be issued once PREPA’s bankruptcy is confirmed. It has also agreed to take 20% in Series B bonds to satisfy a reimbursement claim whose amount has yet to be determined.