Sending Office: Honorable Raul M. Grijalva
Urge the Legislative Assembly of Puerto Rico to Oppose an Insufficient Debt Restructuring Agreement
Cosigners (7): Rep. Velázquez, Rep. Soto, Rep. García, Rep. Lewis, Sen. Menéndez, Sen. Sanders, Sen. Gillibrand
Please join us in signing letters to the Speaker of the House of Representatives of Puerto Rico and the President of the Senate of Puerto Rico urging them to oppose a new debt restructuring agreement for the Puerto Rico Electric Power Authority
The Institute for Energy Economics and Financial Analysis (IEEFA) estimates that under the terms of
the agreement, the residents of Puerto Rico will pay more than $23 billion in additional rates over the next 48 years above current levels, plus hundreds of millions of dollars to cover administrative expenses. Also, the deal would ensure that the first priority
use of every rate dollar that comes into PREPA goes towards paying off the debt rather than improving the Puerto Rican power system.
Puerto Ricans are still recovering from the devastating impacts of Hurricane Maria. The agreement would add insult to injury while also destabilizing the Island’s efforts to grow its economy, decentralize its electricity system, and move towards
a renewable energy future.
The new PREPA debt restructuring agreement is not a good transaction for Puerto Rico. We encourage our colleagues to sign onto our letter to help Puerto Ricans get a better deal.
If you have any questions or wish to sign on to the letters, please contact Auburn.Bell@mail.house.gov or by phone at x5-6065.
Raúl M. Grijalva
Member of Congress
Honorable Carlos Méndez Núñez
House of Representatives of Puerto Rico El Capitolio, Cámara de Representantes PO Box 9022228
San Juan, P.R. 00902-2228
Dear Speaker Núñez:
We write to urge you to join us in opposing the Restructuring Support Agreement (RSA) reached on May 3, 2019 between the Puerto Rico Electric Power Authority (“PREPA”), the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”),
the Financial Oversight and Management Board for Puerto Rico (“FOMB”), the Ad Hoc Group of PREPA Bondholders, and Assured Guaranty Corp. for the restructuring of $8 billion of legacy debt issued by PREPA. In addition, we respectfully request that you defend
the implementation of the affordability and renewable energy goals included in the Puerto Rico Energy Public Policy Act of 2019.
National and local policy experts agree that the new PREPA RSA is excessively generous to creditors. First, while fiscal policy experts recommend reducing Puerto Rico’s overall debt by approximately 80 percent, the RSA generates a reduction
in the principal of the existing PREPA bonds of only 22.5 percent. Second, the legacy debt charge that will be added to the amount
billed to PREPA’s customers will be higher under the new RSA than under the RSA dated July 30, 2018. It is unacceptable that after 10 months of additional negotiations to reach a sustainable debt restructuring agreement for PREPA, the residents
of Puerto Rico end up with an insufficient reduction in principal and paying higher legacy debt charges in their monthly electricity bill.
Moreover, the new RSA conflicts with the Puerto Rico Energy Public Policy Act. The law – passed by the current members of the Puerto Rico legislature and signed into law by Gov.
Ricardo Rosselló – establishes that:
The energy public policy has the mission to achieve the following initial objectives:
16) Establish the necessary elements to achieve the People of Puerto Rico’s aspiration to have a new Electric System with
rates lower than 20 c/kWh, and clean, modern, and reliable energy that serves as a foundation for the
sustainable economic development of the Island. (emphasis added)
PREPA’s customers pay approximately 22 c/kWh and the legacy debt charges in the new RSA would increase prices by up to 21 percent. It is highly unlikely PREPA will be able to completely offset the legacy debt charges included in the new RSA.
Contrary to the Puerto Rico Energy Public Policy Act, the new RSA would cause considerably higher electricity rates for decades to come.
The new PREPA RSA also conflicts with Puerto Rico’s goal to grow its economy. The Puerto
Rico Energy Public Policy Act recognizes that Puerto Rico’s future economic growth depends on achieving affordable energy. Higher electricity rates are detrimental to the local economy, causing businesses to operate with reduced profit margins,
leaving them less able to expand and hire new employees. The new RSA will accelerate the outmigration of businesses and residents, depleting what is left of Puerto Rico’s economic foundation.
Additionally, the new RSA directly goes against Puerto Rico’s new energy policy of moving towards a more decentralized system and the generation of energy using renewable sources. The Puerto Rico Energy Public Policy Act stipulates that the
development of microgrids is an essential component for a decentralized and reliable system that incorporates new technologies and sources of renewable energy. However, the debt restructuring deal requires customers that generate their own electricity to
be subject to the legacy debt charge, unless they are completely and permanently disconnected from the electric system. The new RSA discourages customers to transition to distributed renewable generation.
For the foregoing reasons, we respectfully request that you join us in opposing the new PREPA RSA and defend the implementation of the affordability and renewable energy goals included in the Puerto Rico Energy Public Policy Act.
RAÚL M. GRIJALVA NYDIA M. VELÁZQUEZ
Member of Congress Member of Congress
ROBERT MENÉNDEZ DARREN SOTO
United States Senator Member of Congress
JESÚS G. “CHUY” GARCÍA JOHN LEWIS
Member of Congress Member of Congress
BERNARD SANDERS KIRSTEN GILLIBRAND
United States Senator United States Senator
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