Fiscal board denies gov’t request for $200 million from Emergency

The Financial Oversight and Management Board on Thursday denied the government’s request filed on March 10 for the board’s authorization for the use of no less than $200 million from the Commonwealth’s Emergency Reserve Fund for the Puerto Rico Electric Power Authority (PREPA) to stabilize and mitigate increases in electricity rates because, the board said, granting the request would have negative consequences.

“A one-time cash injection to PREPA to cover increases in fuel costs would only provide a temporary and artificial reduction in the cost of electricity and would not protect customers against the volatility in fuel and energy prices that characterizes the current environment,” the chairman of the oversight board, David Skeel, said in a letter. “In light of projections suggesting that the price of oil will continue to increase over the foreseeable future, the proposed cash injection, while minimizing price increases today, will end up exposing customers to much higher increases in the future (to make up for the lack of increases today) or require the Commonwealth to further use its limited resources to continue injecting cash into PREPA.”… (Excerpt from San Juan Daily Star)