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It is to be expected that this third plan manages to solve and normalize the payment regime, so that the new plans for modernization and diversification of the Puerto Rican electrical infrastructure can move forward with stability and without setbacks.
The Government of Puerto Rico has responded with a new plan to the extension agreed by its creditors to reduce the debt of the Puerto Rico Electric Power Authority (PREPA). This is the third plan to be implemented, with the aim of ensuring that debt repayment does not continue to substantially raise the price of electricity in the Caribbean country.
The plan was designed by the Fiscal Oversight Board, and seeks to reduce 80 percent of this $10 billion debt.
"This third amended plan is a real breakthrough", stated the chairman of the Fiscal Oversight Board. This plan has been supported by the creditors, who, after extensive negotiations, have collaborated to prevent the bankruptcy of the Puerto Rican institution.
“This plan will provide creditors with a fair recovery given the difficult circumstances in which the Puerto Rico Electric Power Authority finds itself, but without overburdening the people of Puerto Rico.”
El gobernador Pedro Pierluisi insistió que cualquier cargo en la tarifa de energía eléctrica le corresponderá aprobarla al Negociado de Energía, luego de que la Junta de Control Fiscal presentara su tercer Plan de Ajuste de la Deuda de la Autoridad de Energía Eléctrica. pic.twitter.com/x5wzGtuu6d
— Red Informativa de Puerto Rico (@redinfopr) August 26, 2023
The tweet reads, "Pedro Pierluisi insisted that any charge in the electric energy rate will have to be approved by the Energy Bureau, after the Fiscal Control Board presented its third Debt Adjustment Plan for the Puerto Rico Electric Power Authority."
A significant group of creditors, which holds 40% of the Puerto Rico Electric Power Authority's unsecured bonds, is represented by BlackRock Financial Management LLC, Franklin Adviser and Whitebox Advisor LP.
This third payment plan also amends the previous agreement with the bond insurer National Public Finance Guarantee Corp. According to the chairman of the board, this plan responds to the need for PREPA to continue to be a public company that is also profitable and sustainable, given that its role is essential for the transformation of the Puerto Rican energy system.
Forty-three percent of the creditors who supported this structuring plan have two options for resolution of their payments. One will be to receive a base recovery of 44.4 percent as allowed by the court, or in a second case restitution of 12 percent of their claim filed at the time PREPA entered bankruptcy proceedings under Title 3 of PROMESA.
The plan also includes the definition of vulnerable consumers who will be protected from the current cost and future increase of electric service. They will be those who have low salaries and comply with tariff requirements and a volumetric charge of 425 kilowatt-hours per month. These could represent about 1.4 million subscribers, as long as their consumption remains below 425 kwh per month.
The problems with the generation and distribution of electricity in Puerto Rico have been experiencing a sustained crisis since 2016. Outages due to generation deficit, voltage fluctuations and inefficient and conflicting communication with consumers.
It is to be expected that this third plan manages to solve and normalize the payment regime, so that the new plans for modernization and diversification of the Puerto Rican electrical infrastructure can move forward with stability and without setbacks.
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