A thorough and data-packed recent report on the potential impact of Puerto Rico’s PREPA debt restructuring plan proves what should be obvious: electricity prices that are already unaffordable will keep rising for the foreseeable future to pay for outstanding debt. The deal does not work for the people of Puerto Rico, will hurt economic recovery, and won’t solve the energy grid’s debt problems.
The debt deal, known officially as the Restructuring Agreement (RSA), is the solution being proffered by the Financial Oversight and Management Board (FOMB) and the Puerto Rico Electric Power Authority (PREPA). It will go before Puerto Rico’s Legislature in the next session, and the Legislature and Governor will have to make a final decision.
The RSA will add another financial problem to an already heavily burdened population.
In his report, Baruch College sociology professor Héctor Cordero-Guzmán examined the repercussions of the proposed debt deal on electricity prices and household incomes. His findings demonstrate that, if approved, the RSA will have a profound impact on Puerto Rico’s people, with the biggest burden falling on the poorest, hurting the economy and reducing demand for electricity.
It will also undermine PREPA’s ability to secure new funds needed to rebuild the grid.