The Puerto Rico Electric Power Authority's financial performance was worse than expected in July and August.
The financial results came as the authority was trying to corral the third of three groups of creditors into making a restructuring deal on its debt. In September it succeeded with a group of forbearing bondholders and the holders of its lines of credit. It is still trying to reach agreement with bond insurers.
According to the August PREPA financial statement posted this month on the authority's web site, the authority's net positions declined by 93% more than expected in July and August. Instead of sliding $29.5 million, it went down $56.9 million. The authority's two month total revenue totaled $611 million.
Both revenues and expenses were less than projections in the period, but the former declined more than the latter. Revenues were down $207 million from budgeted levels or 25.3%. Expenses were $182.8 million below budget or 21.4%.
A chief cause of the declines in both revenues and expenses was the decline in oil prices compared to projections. PREPA generates most of its electricity from burning oil. When oil prices go down, the authority's expenses to buy the oil goes down. However, it is legally obliged to also adjust its electrical rates down as oil prices go down and this rate adjustment caused most of the revenue decline.
The August report showed that electrical use in July and August was down 0.4% and by 1.8% in the last 12 months.
PREPA has other financial challenges. It has $1.747 billion in accounts payable, of which $1.479 billion are current liabilities. It has 83 sale days of accounts receivables.
As of Aug. 31, the authority had to manage $11.087 billion in total liabilities, of which $8.422 billion was bond or note debt. It is handicapped by a negative $1.636 billion net position.
The August report did have at least one piece of good news, as the authority's total cash and cash equivalents rose to $372 million on Aug. 31 from $360 million on June 30.
