President Donald Trump dismissed six of seven members of the board overseeing Puerto Rico’s finances in August.
Since then, it’s been a bit of a waiting game to see who gets a say in the board’s next, and biggest, project yet: restructuring the debt owed to the Puerto Rico Electric Power Authority, or PREPA.
“The reality of the electric system, the bad system that Puerto Rico has — all the problems that they had were aggravated after Hurricane Maria,” said El Nuevo Día correspondent José A. Delgado. “So Puerto Rico is really, you know, very scared of what can happen next.”
Delgado reports from Washington, D.C. for the newspaper based in Guaynabo, near San Juan.
Puerto Rico’s financial oversight board was established under the Puerto Rico Oversight, Management, and Economic Stability Act, known as PROMESA, during the Obama administration. In the almost decade since, the board signed a deal to pull Puerto Rico out of bankruptcy, cutting the island’s crushing debt to less than a quarter of what it was in 2016: from $33 billion to $7.4 billion.
“Some people thought that it may take a decade to restore the local government to Puerto Rico, but right now, we don't see an end,” Delgado said. “And there is a lot of preoccupation that the end cannot be as good … because the new board can propose a solution that will harm Puerto Rico more, in terms of the electricity system.”
The board’s last large and looming task is figuring out what to do about PREPA. The island owes billions to energy bondholders, though the total figure ranges depending on who you ask.
The board had proposed a payment plan recouping $2.6 billion to PREPA, but the majority share of bondholders is asking for the full amount, plus interest, to the tune of $12 billion.
“In Puerto Rico, the main fear is that Trump will choose to appoint only board directors who favor the bond holders who were objecting to the agreement and calling for the board members’ removal,” Delgado said.
If Trump appoints board members who are sympathetic to that big financial ask, Delgado said, electric bills for Puerto Rico residents could sky rocket. Politico’s estimate is a 40% hike per kilowatt hour, bringing it to more than $0.32. By comparison, Connecticut, at fifth highest electric rate in the nation as of July of this year, is just under $0.28 per kilowatt hour.
The future board’s make up in question
Three of the former board members, Arthur J. Gonzalez, Andrew G. Biggs and Betty A. Rosa, have filed a lawsuit claiming the president did not have the right to remove them, since they feel the board is a territorial — not federal — entity.
PROMESA does authorize that “the President may remove any member of the Oversight Board only for cause,” but no cause has been given for the firings.
Federal judge María Antongiorgi-Jordán in San Juan was expected to rule on the matter on Wednesday, but has yet to confirm or overturn the decision.
If overturned, it will be up to Trump to decide the new board members, who will then have to be approved by the U.S. Senate, which is majority Republican.
