Board certifies PREPA’s 2020 Fiscal Plan: LUMA, debt and 2021 deficit

On June 29, 2020, the Oversight Board certified the 2020 Fiscal Plan for the Puerto Rico Electric Power Authority (PREPA). The PDF again clarifies: it is not a Title III Plan of Adjustment.

It summarizes the legacy hole: as of May 2017, PREPA carried roughly $9 billion in debt obligations; the pension liability “exceeds $4.9 billion, of which $3.8 billion is unfunded” (2019 actuarial study cited). Those loads led to the voluntary Title III petition under PROMESA. After the filing came Irma and María, damage from the magnitude-6.4 earthquake, and COVID-19 on maintenance and collections.

In FY2020 the plan highlights the selection of LUMA Energy, LLC as O&M operator of the transmission and distribution system — P3A announced the selection on June 22 — the natural-gas conversion of San Juan units 5 and 6, and progress on a T&D road map with the revised IRP. It projects a $153 million surplus at FY2020 close (from underspending on vegetation and needed maintenance) and a $132 million deficit in FY2021 “largely due to the operator fee” of the front-end transition, to be paid with cash on hand; the cited cash reserve is about $510 million.

Without restructuring debt or pensions, pre-measure rates are projected between ~27 and 30 ¢/kWh in real dollars for FY2021–FY2025. Unrestructured debt and operator fees are not FEMA reconstruction disbursements. Certifying the fiscal plan does not close the electric bankruptcy.

The plan also flags pending items: improve vegetation and maintenance, modernize T&D, implement the PREB-approved IRP with more renewables, and transfer legacy generation to private operators. Pre-measure rates (without restructuring debt/pension or efficiencies) project ~27–30 ¢/kWh real in FY2021–FY2025; post-measure assumes an illustrative pension reform and operating improvements.

Cousin: none versus PREPA FY21+. Primary: certified FOMB PREPA PDF, June 29, 2020 (AAFAF/docs.pr.gov).