The cash balance of the Puerto Rico Electric Power Authority declined 54% from June 30 to Sept. 30.
PREPA reported that its total cash and cash equivalents declined to $62.8 million on Sept. 30 from $137.3 million in June 30, according to PREPA's September report.
The decline comes in the aftermath of PREPA's forbearance agreement with its creditors in August and after it indicated in late October that it intended to restructure its obligations with all classes of stakeholders.
The report's other measures were mixed. In the first three months of the fiscal year the number of electricity kilowatt-hours billed declined 1.5%. Revenue was up 0.6%. Total expenses were running 0.9% above budget.
While PREPA had expected an $11.1 million decline in net position in September, the actual decline was $16.9 million.
The September report also showed that Puerto Rico government entities are far worse customers than general clients. Whereas collections were 65.3% of sales for the government, they were 99.4% for the general clients.
On Tuesday FTI Capital Advisors issued a report making recommendations to PREPA on how to deal with its problems with accounts receivables. PREPA's forbearance agreement with its bondholders mandated that a consultant look into billing, these receivables, and the authority's contributions in lieu of taxes to Puerto Rico's municipalities, and make recommendations for changes.
The authority currently has $1.7 billion in accounts receivables. Of this $932 million comes from general clients and $758 million comes from government clients.
FTI found several positives about PREPA's customer service and approach to collections. Among these were that the authority had positive results from its negotiations with wholesale clients and that it had reduced the number of days bills could be late before the authority would turn off service to general clients.
FTI found that the portion of general client accounts receivable over 120 days due had gone from 15% in April 2012 to 40% in August 2014.
For general clients, FTI recommended PREPA hire a firm to do collections from inactive accounts. PREPA should also alert customers to changes in collections practices, implement reporting to credit bureaus for delinquent accounts, offer amnesty programs for late fees and interest, and increase reconnect fees.
Among other suggestions, cutoff of service should be automated and PREPA should designate a manager to lead a continuous improvement project for collections.
FTI noted that other public corporations owe PREPA $212 million. Those that owe PREPA the most are the ports authority, which owes PREPA $41 million, the Puerto Rico Aqueduct and Sewer Authority, which owes $29 million, and the train system, which owes $21 million.
FTI recommended PREPA cut off service of the public corporations' noncritical meters. PREPA should also use the central government to mediate payment plan discussions with those corporations that have been unwilling to engage with PREPA.
Puerto Rico government agencies owe PREPA $76 million. FTI recommended that PREPA should follow a process to bring agencies' lack of payment to the Office of Management and Budget. The authority already has a formal process to do this but frequently does not follow it in practice.
The municipalities currently owe PREPA $420 million. Since this accounts receivable is tied up with the money PREPA owes the municipalities each year in the form of contributions in lieu of taxes, FTI chose not to make any recommendations on this issue.
In other Puerto Rico news, on Friday the Government Development Bank for Puerto Rico posted a liquidity report showing that the bank's total liquidity rose to $1.7 billion on Oct. 31 from $1.4 billion on Sept. 30.
