Puerto Rico Electric Utility’s Late Accounts Surge 219% From ’12Michelle Kaske
Puerto Rico’s electric agency, which may undertake the largest debt-restructuring ever in the municipal-bond market, is seeing overdue accounts surge, underscoring the difficulty of repairing the utility’s finances.
The junk-rated U.S. territory’s Electric Power Authority, called Prepa, had a 219 percent jump since 2012 for home and company accounts late at least 120 days, according to a report from an outside consultant.
The power provider stopped reporting delinquent residents and businesses to collection companies in April 2012, according to the report compiled by a subsidiary of FTI Consulting Inc., which is based in West Palm Beach, Florida. Late balances among residents, businesses and government entities rose to $1.75 billion in September, with at least $708.6 million of that tardy by four or more months.
Prepa, the biggest U.S. public power agency by customers and revenue, is set to release a plan in March to restructure its $8.6 billion of debt. A restructuring of that magnitude would surpass the $8 billion of municipal bonds involved in Detroit’s record bankruptcy.
The agency’s board “will continue to support Prepa’s transition, and will work together with management to implement recommendations to improve the efficiency and effectiveness of Prepa’s billing and collection cycle,” Harry Rodriguez, chairman of the board, said in a statement.
The FTI report recommends Prepa adopt an amnesty period for delinquent clients, hire a collection agency for past-due accounts, boost late fees and re-connection charges and push the Office of Management and Budget to ensure government agencies pay on time.
The Education Department is the biggest government laggard, with $41.6 million past due, followed by Puerto Rico’s Ports Authority with $40.8 million, according to the report.