Puerto Rico gained another week to file a proposed rate charge to the islandâ€™s energy commission, a fee that would back debt used to restructure about $9 billion owed by its main electric utility.
Puerto Rico Electric Power Authority creditors agreed to give officials until March 30 to submit their petition to implement a new customer fee, called a securitization charge, according to a statement from the utility. A January agreement between Prepa, as the utilityâ€™s known, bondholders and bond-insurance companies was set to expire on Wednesday unless the energy commission received the rate petition.
The restructuring would be the first step in the commonwealthâ€™s pursuit to cut its $70 billion debt load after Puerto Rico and its agencies borrowed for years to fix budget deficits. The islandâ€™s economy has struggled to grow since 2006 and it has already defaulted on some agency debt. Prepa faces a $1.13 billion payment to investors and lenders on July 1 that it wonâ€™t be able to pay without the creditor agreement.
The commonwealthâ€™s three-member energy commission will have 75 days to weigh in on the new fee once itâ€™s submitted. Prepa needs the proposed securitization to be approved so it can execute its restructuring deal under which investors agreed to take a 15 percent loss by swapping their securities for new bonds. The proposed securitization charge would repay the debt.
Prepa and its creditors agreed to the debt exchange after first signing a contract in August 2014 that kept negotiations out of court. The restructuring will allow Prepa to modernize a system that relies on petroleum to produce electricity.