Puerto Rico's legislature is a week or two away from passing energy reform legislation despite the fact that the power authority facing a midnight Jan. 22 deadline.
The Puerto Rico Electric Power Authority has been in an open financial crisis for about 18 months. Since at least September 2014 it has been negotiating with its creditors for new terms on its debt. As of June PREPA had a total of $9.4 billion in debt, of which $8.4 billion was outstanding bonds.
In late December PREPA reached an agreement with bond insurers Assured Guaranty and National Public Finance Guarantee. This was fed into a revised Restructuring Support Agreement, which in earlier forms had been reached with the authority's forbearing bondholders and lines of credit holders.
This revised agreement indicated that the authority had until midnight on Friday to meet two deadlines. PREPA was to reach an agreement with Syncora Guarantee on the authority debt it guaranteed and Syncora's future role with the authority. The authority was to work with Puerto Rico's government to adopt major energy sector reforms.
The latter required and still requires Puerto Rico's Senate and House of Representatives to pass an energy reform bill. According to a source in the Senate, leading legislators, authority representatives, and leaders from the government of Puerto Rico Gov. Alejandro García Padilla are working behind closed doors to come up with such a bill.
The original bill did too little to address the authority's own problems, the Senate source said. The legislature should pass an energy reform bill in either the last week of January or the first week of February, she said.
On early Friday afternoon, an authority spokesman declined to comment about Friday's looming deadline. A source close to the forbearing bondholders said an announcement would be made shortly.
