The Oversight Hearing on the PREPA Restructuring Support Agreement, explained
On Wednesday, March 22, the US House Committee on Natural Resources Subcommittee on Indian, Insular, and Alaska Native Affairs came together for an oversight hearing about the status of the Puerto Rico Electric Power Authority (PREPA).
PREPA is the main power provider for the territory, and is a public company, with many positions appointed by the governor historically. For example, the Governing Board of the company had seven of nine seats appointed by the administration in the past. In addition, the company holds around $8.9 billion in debt. Both of these issues, debt and politicization, have recently been taken on in the form of a Restructuring Support Agreement (RSA). The RSA, put in place by the former Garcia Padilla government took steps to handle debt through structural reform. The Governing Board was made independent by the former administration, and was handling negotiations of the RSA with creditors, until Rossello was elected.
The RSA aims to restructure the company, shifting them away from government control, allowing them to become more efficient, and therefore more effectively handle its debt. In addition, it will allow investment in upgrades to the infrastructure, as it relies heavily on fossil fuels, and uses old plants and transportation methods.
Under the new Rossello administration, discussions about the RSA have moved back towards the government, and the future of the agreement is unclear. Governor Rossello hopes to negotiate a better deal for the company, which creditors are not opposed to. They have said, however, that any major changes to the plan will not be accepted.
There were many people in attendance at the hearing, including Governor Rossello, representatives from the PREPA Governing Board, and other Puerto Rican government offices, as well as representatives from some of the creditors. All in attendance stated that they would be willing to hold a meeting to negotiate the future of the plan.
PREPA has a payment of $455 million due on July 1, and without RSA help, is expected to default, which would lead to possible interruptions in services to residents. The RSA is set to expire on March 31, if it cannot be finalized or extended.