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A federal judge curbed Puerto Rico bondholders’ rights to the electric revenue generated by its public power utility, the last major public corporation in the U.S. territory still in bankruptcy after its other public debts were restructured, WSJ Pro Bankruptcy reported. Judge Laura Taylor Swain ruled on Wednesday that utility bondholders’ collateral rights don’t extend to the current and future revenue of the Puerto Rico Electric Power Authority, known as Prepa. Bondholders were deemed to have a security interest only in certain funds in Prepa’s reserve accounts, which represent a fraction of their claims. Judge Swain said that bondholders have only an unsecured claim to the utility’s future net revenue, or its excess funds after operating expenses are paid. Further proceedings are needed to value that unsecured claim, which covers the future revenue that would have become payable to bondholders over the life of Prepa’s $8.3 billion in municipal debt, according to the decision.

Puerto Rico Oversight Board member Justin Peterson and other observers of the Puerto Rico Electric Power Authority bankruptcy criticized what they said was the board's attack on U.S. revenue bonds in the lien adversary proceeding and called for state attorneys general to intervene, Bond Buyer reported. "The board's actions and arguments in the PREPA lien adversary proceeding are undermining our national revenue bond financing markets," said Peterson. In the PREPA lien adversary proceeding, the board is trying to get bankruptcy Judge Laura Taylor Swain to rule bondholders have a claim to only funds held at PREPA, while bondholders say PREPA pledged its future revenue as security in case it defaulted.

Residential electric bills in Puerto Rico could increase by an average of $19 a month if a federal bankruptcy judge approves a proposal filed Thursday to restructure the staggering debt held by Puerto Rico’s power company, the Associated Press reported. The plan would cut by nearly half the more than $10 billion debt held by the Electric Power Authority — the largest of any government agency — and has the support of at least three major classes of creditors, according to a federal control board that oversees the U.S. territory’s finances and filed the proposal. Board Chairman David Skeel noted that customers are not to blame for the power company’s bankruptcy, and that the legacy charge would be painful for residents and businesses already paying high power bills amid ongoing blackouts, but that there is no way to completely erase the company’s liabilities. Skeel said that almost half of the power company’s 1.4 million residential customers would not pay the additional charge if they consume less than 500 kilowatt hours of electricity a month. In 2021, the average monthly electricity consumption for a U.S. residential customer was about 886 kilowatt hours, according to the U.S. Energy Information Administration.

Puerto Rico Governor Pedro Pierluisi on Monday unveiled a sweeping tax reform proposal that would slash individual and corporate rates and simplify the US territory’s tax code, Bloomberg News reported. Under the proposal, Puerto Rico’s maximum tax rate for individuals would be reduced from 33% to 30%. The marginal corporate tax rate, now 37.5%, would change to between 17% and 33%, depending on the size of the business. Altogether, the plan would save taxpayers about $545.5 million, Pierluisi said in a statement. It comes as the island of 3.2 million people — which saw its population decline 12% from 2010 to 2020 amid hurricanes, earthquakes and power outages — emerges from a historic bankruptcy. The proposal also includes additional tax cuts for seniors and changes to the sales and import tax, known as the IVU, that would make it a simplified sales tax.

Puerto Rico privatized its electricity production on Wednesday, selecting Genera PR to take over the operation and maintenance of state power generation units in the U.S. territory as part of an initial $22.5 million annual contract, the Associated Press reported. The announcement comes as the island struggles to rebuild its crumbling power grid amid chronic power outages blamed in part on what Gov. Pedro Pierluisi called “archaic and unstable” generation units. “I am sure that we are on the right track to give our people the reliable and affordable energy system that they deserve,” he said. Genera PR is a subsidiary of New York-based New Fortress Energy, which works closely with Shell Oil and other oil and gas producers. Genera also will handle contracts related to fuel purchases for the island’s 12 power facilities as part of a 10-year contract with Puerto Rico’s government. “Today is a historic day,” said Secretary of State Omar Marrero, who noted that recent hurricanes have revealed the deterioration and critical state of the island’s power grid. Puerto Rico’s generation units, some of them more than 50 years old, have suffered blackouts at rates five times worse than the industry average in recent years, producing less than half of the power the government had forecast.