Puerto Rico formally emerged from bankruptcy last year, but nearly $10 billion in debt from the island’s power company remains unresolved.
According to one report, the federal oversight board that manages Puerto Rico’s finances has reached an agreement with bondholders that own part of the debt that will lead to an 80% reduction in the amount of the debt. news release Friday.
This is the latest attempt by the Financial Supervisory Commission to end the long-running process of debt restructuring for the Power Corporation. Largest U.S. Public Corporation When it was declared bankrupt in 2017.
After months of negotiations, the board has put forward a third debt restructuring plan that cuts the utility’s debt to $2.5 billion, excluding pension obligations.
Board chairman David Skeel said the plan would provide a “fair recovery” for creditors without creating an “economic burden on the people of Puerto Rico.”
This proposed plan will allow the utility to “continue to be a sustainable utility, continue to make significant investments, provide reliable energy, and support Puerto Rico’s economic growth and financial stability.” “to complete the transformation of our energy system,” Skir said in a statement.
The plan will require the approval of a federal bankruptcy judge before it becomes effective.
If approved, it could contribute to higher electricity bills for Puerto Ricans. Puerto Ricans already pay almost twice as much as their mainland customers for unreliable power.
The debt restructuring plan includes a “legacy charge” borne by consumers.
If “Legacy Charge” is Approved Puerto Rico Energy AuthorityThe Electricity Commission, an independent body that regulates energy policy, said in a news release that electricity customers would face a 5% increase in overall electricity bills.
On average, housing costs increase by nearly $9 a month and commercial costs increase by $35.
About 1.4 million customers may not be able to pay the new tariffs if their monthly consumption is less than 425 kWh, the commission said.
The average Puerto Rican family about 200 kilowatt hours per month. According to the U.S. Energy Information Administration, average monthly electricity consumption for U.S. residential customers is approximately 886 kilowatt-hours.
Electricity consumers on the island have already been subject to at least seven price hikes in the past year.
The public utility Puerto Rico’s Power Authority declared bankruptcy in 2017, along with a dozen local governments and an Obama-era ProMesa-era civil service retirement plan created specifically to compensate for Puerto Rico’s exclusion. from bankruptcy law. it is, fEderal Financial Oversight Board To help with debt restructuring in federal court.
The result was the largest local bankruptcy in US history.
A few months later, Hurricane Maria hit Puerto Rico, destroying the power grid and causing the world’s second-longest blackout.
Most of the approximately 3,000 people who died in the aftermath of Maria died due to power shortages and the resulting interruptions in medical and other services.
The grid has not yet been permanently rebuilt, so the patched-up grid still works, causing blackouts and brownouts when people least expect it.
Majority Some of Puerto Rico’s government agency debt has already been restructuredExcludes those of electric power companies.
“We expect the bulk of the book to be finished, not just the chapter on America’s largest public sector bankruptcy,” said the board’s executive director, Robert Mujica, at a meeting with reporters.
