The primary union at the Puerto Rico Electric Power Authority has sued to overturn a law that was passed as part of the authority's restructuring agreement with creditors.
The Union of Electrical Industry and Irrigation Workers (UTIER)
In the suit the union claims the law limits the rights of PREPA workers to access justice, violates constitutional protections prohibiting impairments of contractual relations and laws guaranteeing equal protection of the laws.
In addition the suit claims that the new law undermines the authority's pension system, which has an actuarial debt of $1.7 billion.
Along with the union, union president Ángel Figueroa Jaramillo, and member of the state council of the union and vice president of the retirement system of PREPA employees José Rivera Rivera are the plaintiffs.
The defendants are PREPA, the Corporation for the Revitalization of the Puerto Rico Electric Power Authority, the Puerto Rico Energy Commission, Puerto Rico Chief Financial Officer Melba Acosta Febo, Puerto Rico Treasurer Juan Zaragoza G-mez, Puerto Rico Secretary of State Víctor Suárez Meléndez, and Puerto Rico Justice Secretary César Miranda Rodríguez.
The pension system is one of the authority's "creditors," the suit claims. Since the system was excluded from any discussions that led to the Jan. 27 agreement that paved the way for the electrical sector law, the authority's agreements with its creditors ware invalid, the union claims.
The new electrical sector law threatens the payments for the PREPA workers' retirement benefits, the union states.
PREPA, the Puerto Rico Energy Commission, and the Ad Hoc Group for PREPA bondholders declined to comment on the suit.
According to Gov. García Padilla, the electrical sector law "paves the way for over $2 billion in capital investments to our current electricity infrastructure, significantly reduces its debt stock, modernizes operations, de-politicizes [PREPA] governance, improves client service efforts, and promotes a safer work environment for our public employees."
PREPA owes about $8.4 billion in bond debt. Any restructuring or monetary default on the debt would be the largest default in United States municipal bond history.
