By The Star Staff
The Puerto Rico Electric Power Authority (PREPA) told the Puerto Rico Energy Bureau (PREB) on Wednesday that it could not reallocate money from an item in the budget to address the pension funding crisis.
PREPA said it could not submit a proposal to the PREB to reallocate the funds because of the limited size and rigid structure of the HoldCo budget and the utility’s significant operational responsibilities.
The response was made to a PREB request to make a proposal to reallocate funds after PREPA on Nov. 15 advised the PREB that it did not have money to pay pensions.
The utility requires about $24 million each month to pay some 10,098 retirees and 2,438 spouses. PREPA said the total HoldCo budget for fiscal year 2025 is $34.217 million, which is only 3.29% of the combined budget of HoldCo, GridCo, GenCo and HydroCo. PREPA said it would barely cover a single month’s pension obligation.
The discussion came out during a hearing on the question of increasing rates for Puerto Rico ratepayers. This month the PREB opened an investigation into the liquidity crisis facing Puerto Rico’s electrical system with the possibility of imposing an emergency rate increase -- while PREPA remains in bankruptcy and without enough cash resources.
The investigation was triggered by private grid operator LUMA Energy stating in a filing with the PREB in October that PREPA had failed to fund certain operating accounts for LUMA at even two-thirds of their required amounts.
Failure to fund any of these accounts to at least two-thirds of the required funding level constitutes an event of default under LUMA’s contract and gives LUMA the right to terminate the contract -- a right that LUMA has not yet exercised.
PREPA responded that there is little it can do, emphasizing that to straighten the issue out they need to collect more money and receive overdue payments from the U.S. Federal Emergency Management Agency (FEMA). LUMA is responsible for collecting that revenue, PREPA noted.
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