[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H. Con. Res. 55 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. CON. RES. 55
Recognizing the need for a sustainable, economically viable, and fair
debt restructuring plan for the Puerto Rico Electric Power Authority.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 30, 2023
Ms. Velazquez (for herself and Mr. Espaillat) submitted the following
concurrent resolution; which was referred to the Committee on Natural
Resources
_______________________________________________________________________
CONCURRENT RESOLUTION
Recognizing the need for a sustainable, economically viable, and fair
debt restructuring plan for the Puerto Rico Electric Power Authority.
Whereas the electrical system of Puerto Rico has been fragile and suffered from
a lack of investment for years, since well before Hurricane Maria
destroyed the system in 2017;
Whereas, despite local and Federal efforts to rebuild the electrical grid of
Puerto Rico, that electrical grid remains extremely fragile and
vulnerable;
Whereas, in September 2022, category-1 Hurricane Fiona triggered an island-wide
blackout for 1,500,000 customers;
Whereas the population of Puerto Rico, the median household income of which is
less than \1/2\ of that of the population of the poorest State, pays
among the highest electric rates in the United States;
Whereas the transition to renewable energy is key to reducing electric rates in
Puerto Rico by eliminating dependence on imported, price-volatile fossil
fuels, which constitute up to 60 percent of the budget of the Puerto
Rico Electric Power Authority (referred to in this preamble as the
``PREPA''), but currently only 3 percent of the energy on the island of
Puerto Rico comes from clean sources;
Whereas, between 1974 and 2016, the PREPA made numerous bond issuances pursuant
to the Trust Agreement between the Puerto Rico Water Resources Authority
and First National City Bank dated January 1, 1974, reaching
$8,300,000,000 in outstanding bond debt;
Whereas the PREPA is considered to have the largest debt of all public entities
in Puerto Rico;
Whereas the retirement system of the PREPA warned that, by April 2023, it would
run out of funds to cover the obligations owed to its nearly 12,000
pension holders, and has yet to articulate a plan that ensures future
monthly payments for retirees;
Whereas, in July 2017, the Financial Oversight and Management Board for Puerto
Rico (referred to in this preamble as the ``FOMB'') filed a petition
pursuant to title III of the Puerto Rico Oversight, Management, and
Economic Stability Act (48 U.S.C. 2161 et seq.), commencing a debt
adjustment proceeding for the PREPA;
Whereas, in 2019, the FOMB negotiated an agreement with bondholders that would
have resulted in a 10- to 16-percent increase over current electric
rates for the following 47 years;
Whereas that agreement was ultimately rejected in 2022 by the local legislature
and Governor of Puerto Rico, who recognized that the agreement was
unaffordable and would impose costs that would undermine the recovery
and future economic growth of Puerto Rico;
Whereas, on December 16, 2022, the FOMB filed a new restructuring plan for the
PREPA that proposes to reduce almost \1/2\ of the debt of the PREPA and
impose a ``legacy charge'' for consumers who do not benefit from
subsidized electric rates;
Whereas that plan was amended on February 9, 2023, advocating for the issuance
of $5,700,000,000 in bonds, or $13,000,000,000 over 35 years with
accrued interest, to partially compensate the creditors of the PREPA,
including bondholders;
Whereas the debt service on the new bonds will be paid off via the ``legacy
charge'', which includes both fixed monthly charges and charges that
depend on the consumption of electricity;
Whereas the estimated ``legacy charge'' for nonexempt, residential customers
would, on average, be around $19 per month;
Whereas the fixed charge would be between $16 and $1,800 per month for
commercial and industrial customers;
Whereas those charges represent an increase in monthly bills for average
residents and small businesses of 12 to 13 percent, on top of rates that
are already double the average price for electricity in the continental
United States;
Whereas, according to estimates by small business representatives in Puerto
Rico, once the increases in energy bills under the current restructuring
plan are enforced, nearly 12,000 small businesses would be forced to
close, a number 3 times higher than in 2020, a year marked by the onset
of the Coronavirus Disease 2019 (COVID-19) pandemic;
Whereas, according to the 2017 testimony of Andrew Wolfe, an economic expert
representing the FOMB, those increases would ``eventually contribute to
a downward economic spiral that would result in Puerto Rico returning to
a path of declining economic activity, which would in turn adversely
impact the demand for electricity and in the end lead to another debt
service payments crisis for PREPA'';
Whereas the FOMB proposes to raise electric rates in Puerto Rico in spite of a
prior economic analysis of the FOMB showing that electric rates in
Puerto Rico are unsustainable at current levels;
Whereas, in 2022, Congress passed the Puerto Rico Recovery Accuracy in
Disclosures Act of 2021 (Public Law 117-82; 48 U.S.C. 2178) to impose
disclosure requirements on all of the advisers and consultants of the
FOMB, closing the loophole in the Puerto Rico Oversight, Management, and
Economic Stability Act (48 U.S.C. 2101 et seq.) that has disadvantaged
the people of Puerto Rico in the debt restructuring process for the
island;
Whereas, in 2022, the Wall Street Journal reported that stakeholders hired to
consult on the bankruptcy proceedings for Puerto Rico initially failed
to disclose connections to companies involved in the PREPA debt
restructuring deal, raising the potential for conflicts of interest;
Whereas the latest restructuring plan for the PREPA filed by the FOMB does not
represent a ``durable solution for Puerto Rico's fiscal and economic
crisis [including] permanent, pro-growth fiscal reforms'', as instructed
by Congress in title VII of the Puerto Rico Oversight, Management, and
Economic Stability Act (48 U.S.C. 2241);
Whereas, in June 2023, the United States District Court for the District of
Puerto Rico suspended the proceedings to evaluate and confirm that
latest restructuring plan; and
Whereas, on June 23, 2023, the FOMB filed a 2023 Certified Fiscal Plan for the
PREPA acknowledging that the latest proposed restructuring plan is not
sustainable, and announced that it would present an amended
restructuring plan for the PREPA by July 14, 2023: Now, therefore, be it
Resolved by the House of Representatives (the Senate concurring),
That Congress--
(1) recognizes that the debt adjustment proceeding for the
Puerto Rico Electric Power Authority (referred to in this
resolution as the ``PREPA'') has been and continues to be of
great interest to Puerto Ricans and to Congress;
(2) recognizes that the continuity of unsustainable
electric rates will result in--
(A) accelerated out-migration from the island of
Puerto Rico; and
(B) business closures and unemployment in Puerto
Rico;
(3) recognizes that the continuity of unsustainable
electric rates will further shrink the demand-base and revenues
of the PREPA, increasing pressure on the electrical system to
cut labor and maintenance costs and inhibiting the
reconstruction of the system and the transition to renewable
energy;
(4) urges the Financial Oversight and Management Board for
Puerto Rico to put forth a restructuring plan for the PREPA
that--
(A) is economically viable for the PREPA, customers
of the PREPA, and PREPA retirees;
(B) allows for the rehabilitation of the electrical
system of Puerto Rico; and
(C) does not impose additional increases to
electric rates for residents, business owners, and
users of the electric grid; and
(5) reaffirms the intent of Congress to create ``durable
solution[s] for Puerto Rico's fiscal and economic crisis''
through the adoption of ``permanent, pro-growth fiscal
reforms'', as stated in title VII of the Puerto Rico Oversight,
Management, and Economic Stability Act (48 U.S.C. 2241).
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