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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. Con. Res. 12 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  1st Session
S. CON. RES. 12

 Recognizing the need for a sustainable, economically viable, and fair 
 debt restructuring plan for the Puerto Rico Electric Power Authority.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 12, 2023

   Mr. Menendez (for himself and Ms. Warren) submitted the following 
 concurrent resolution; which was referred to the Committee on Energy 
                         and 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 Senate (the House of Representatives 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).
                                 <all>
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