SAN JUAN, Puerto Rico – Puerto Rico’s governor submitted a long-awaited bill Wednesday to restructure the island’s heavily indebted public power company as legislators rush to debate multiple measures to help keep the U.S. territory financially afloat.
The measure was sent to lawmakers less than a day after the Electric Power Authority obtained a brief extension to finalize a deal with creditors and bondholders on restructuring part of its $9 billion debt.
Many Puerto Ricans thought the bill would reveal details of an anticipated increase in power bills, but the measure says the proposed rate structure would not be revealed until restructuring bonds are issued. Power bills in Puerto Rico are on average twice that of the U.S. mainland and an increase would represent another burden for islanders recently hits with new taxes and tax increases.
Gov. Alejandro Garcia Padilla’s administration said it has lowered energy costs through artificial means in recent years, but those measures are not enough. It noted the power company faces a $1 billion shortfall this fiscal year.
“The Authority faces obligations that it cannot meet,” according to the bill, which says approval is needed to finalize the utility’s deal with bondholders and creditors.
There is currently no law that allows Puerto Rico or its agencies to file for bankruptcy.
The bill also would allow the power company to improve collection of overdue bills, invest $2.4 billion in renovations and enter into public-private partnerships.
In September, the Electric Power Authority reached a deal with fuel line lenders to restructure about $700 million in expired debt and a separate agreement with some creditors to reduce principal owed in exchange for new securities. The utility is still in discussions regarding a separate restructuring deal with several monoline bond insurers that have not extended their forbearance agreement but have not sued.
Javier Quintana, the power company’s executive director, urged legislators to approve the measure.
“We need all interested parties to unite so we can share the burden of this social and economic responsibility,” he said.
Some legislators questioned whether there is enough time to debate the 159-page bill before Nov. 12, the last day to approve bills.
“It’s a very complete proposal, but it clearly arrives photo-finish,” Jaime Perello, president of the island’s House of Representatives, told reporters. “We need to give bondholders assurance … but we have to approve something that we will honour.”
Legislators are currently debating other bills aimed at helping pull the island out of a nearly decade-long economic crisis, including a measure that would create an independent fiscal control board.
The island’s government has repeatedly warned it is running out of money, and officials are discussing a possible reduced work week that could affect 30,000 public employees.
The administration of President Barack Obama told Congress last month that Puerto Rico’s economic problems could turn into a humanitarian crisis if lawmakers do not create a new territorial bankruptcy regime. The island is struggling with $72 billion in public debt that the governor has said is unpayable and needs restructuring.
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