Oversight Board drafts and approves FY19 budgets

by Nov 13, 2018Puerto Rico0 comments

As of September 30, the Financial Oversight and Management Board for Puerto Rico has approved the fiscal year budget for 2019 for PREPA and other island utilities. Quoted as saying that a strong independent regulator is key “for injecting confidence, stability, and predictability into Puerto Rico’s energy market,” the Puerto Rican Energy Bureau (PREB) will be receiving $7.6 million in the upcoming budget appropriations. This budget also includes the resolution to improve the organizational structure for a better and stronger workflow. However, there are concerns with the rate change that came from the Puerto Rican Electric Power Authority (PREPA) and how it is not in line with current regulations and funding mechanisms.

The Oversight Board has deemed the rate decreases as a loss and not in line with the financial goals for investors. This lead to the proposal being sent back, and further investigation into the matter is pending. The rate decrease could help the citizens who may be struggling and would lower their monthly bills, however, this would lead to a decrease in the revenue seen by the companies and would potentially impact the rebuilding and strengthening of the islands’ infrastructure.

Initially, the budget was concerning to the board because it did not appear to be in line with projected goals for financial security, but other budgets were being approved and the FOMB did not seem too worried. There were budgets approved for municipalities across the islands, and the $33.7 million budget increase was approved on September 30, 2018. Following that announcement on October 4, was the announcement that rates were to be lowered, and immediately  FOMB responded issuing a letter that declared that they were “initiating the process set forth in Section 202(a) of PROMESA” and requested documentation of the change and projected consequences to be furnished by October 9.