The Puerto Rico Energy Commission approved a mechanism to help restructure the debt of the Puerto Rico Electric Power Authority.
The commission on Tuesday gave its blessing to the calculation methodology and adjustment mechanism for a customer charge to support the planned PREPA Revitalization Corp. (PREPARC).
PREPA's creditors have negotiated a deal with it that would, among other things, include the establishment of PREPARC to restructure the debt. The new bonds will have a 15% reduction in principal, an average interest rate of 5.22% (down from 5.86% for existing PREPA debt), and a five year moratorium on interest payments.
The commission approved a "Transition Charge" that will be a separate line item on customer's bill to pay off PREPA's debt. The initial charge will be 3.1 cents per kilowatt hour.
The commission also OK'd the process for reviewing and recalculating the charge in the future. The commission is still reviewing PREPA's petition for new rates, which it filed on May 27.
The approval is another step in the effort by PREPA and its creditors to restructure its operations and roughly $8.4 billion debt.
