Governor urges PREPA creditors to accept debt cut proposed by fiscal board

By THE STAR STAFF

Gov. Pedro Pierluisi Urrutia on Thursday recommended that the creditors of the Puerto Rico Electric Power Authority (PREPA) accept the 50% debt cut proposed by the Financial Oversight and Management Board in the utility’s adjustment plan, because otherwise “they are not going to collect much.”

“Because if what they do is cause an economic debacle, tremendously affecting the Electric Power Authority, then they won’t [collect] much,” the governor said in response to questions from the press.

Pierluisi also recommended that creditors look for another type of bonds with which they can receive greater profits.

“If they want to recover more, they should focus on having an instrument of incremental value, such as another type of bond that depends on the income generated by the Authority through both LUMA and Genera PR,” he said. “It will depend on the performance of the Authority, but they must accept the cut proposed by the [oversight] board, because otherwise it does not make sense.”

The governor’s remarks were made at a Manufacturers Association event.

Regarding the oversight board’s insistence on establishing additional charges on the electricity bill to pay the debt to PREPA’s creditors and retirees, Pierluisi insisted that those proposals are ill-timed and it is not up to the federal entity created under the Puerto Rico Oversight, Management and

Economic Stability Act to establish them, either.

“Regarding the electricity rate, what I have consistently said is that it is the Energy Bureau that ultimately approves the budget for the Authority. It is the one that can review the electricity rate, it is the one who adjusts what is paid on the electricity bill quarterly, it is the one who establishes the base charge,” the governor said. “It is the Bureau that at the time, after seeing the savings that Genera PR achieves and seeing the financial statements of the Authority, is going to determine if it is necessary to make an adjustment in the electricity rate. It seems to me ill-timed to be talking about there going to be an increase and even saying how much that increase will be.”