Puerto Rico Board Will Amend Power Utility’s Debt-Cutting Plan

(Bloomberg) -- Puerto Rico’s financial oversight board is amending its plan to reduce $9 billion of Electric Power Authority debt to reflect steeper-than-expected declines in energy consumption.

The federally appointed oversight board notified the court of its intent to alter the restructuring plan after receiving new data from Prepa, as the utility’s known, and Luma Energy, which operates the power grid, according to a document filed Saturday with the court. The debt plan would cut Prepa’s obligations down to $5.68 billion.

The changes may delay a scheduled confirmation hearing next month on the restructuring plan. It also signals the oversight board may reduce its $5.68 billion proposal of new utility debt, an amount that bondholders have already said is too low.

Prepa has been in bankruptcy for almost six years and is the main supplier of electricity on the island.

New data show that energy consumption is declining more than anticipated, Martin Bienenstock, a lawyer for the oversight board, said earlier this month during a court hearing. The board and its financial advisers are reviewing “whether the new load information changes projections for the future that would impact debt sustainability,” Bienenstock said during the hearing.

The oversight board was unable to certify Prepa’s multiyear financial plan by Friday because of the new data, but plans to approve it by June 23, according to Saturday’s court filing. That fiscal framework helps to identify how much the utility can repay over time.

©2023 Bloomberg L.P.