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The governing board of the Puerto Rico Electric Power Authority, the public corporation currently in charge of energy generation on the island, approved a contract that brings the U.S. territory one step closer to privatizing power generation, NBCNews.com reported. In a 4-1 vote, board members authorized a contract to an undisclosed private company for the operation, maintenance and forfeiture of power generation units owned by the bankrupt power authority. Tomás Torres Placa, the member representing consumers' interests on the board, was the only dissenting vote. Officials have said they won’t disclose the name of the chosen private company until the contract is officially finalized. Details of the agreement will also not be made public until it is signed by Gov. Pedro Pierluisi and approved by the federal oversight board managing Puerto Rico's finances. Despite this, board President Fernando Gil Enseñat provided a brief overview of the contract in a partially public hearing on Thursday. The chosen company will be contracted for 10 years, Gil Enseñat said, adding that the approved contract has clauses allowing a revision of the terms halfway through.

Puerto Rico announced yesterday that it will start cracking down on those who abuse the U.S. territory’s tax credit system, an opaque and long unregulated sector with claims that average about $270 million a year, the Associated Press reported. Treasury Secretary Francisco Parés said the creation of a new centralized system to administer tax credits related to investments would generate an additional $130 million a year for the government and lead to lower tax breaks for residents on the island of 3.2 million people. For years, Puerto Rico’s government has been unable or unwilling to provide specific numbers related to tax credits awarded, for example, to those who build hotels or invest in the local manufacturing or movie industries. “It’s a system that has not been audited in the least,” Parés said at a news conference. He estimates that 20% of claims are faulty, either because of technical errors tied to the currently outdated system or because people are trying to cheat the system. The crackdown was announced a week after Puerto Rico’s governor increased from $38 million to $100 million the annual limit of tax credits for film projects developed on the island.

Puerto Rico announced on Sunday that it plans to privatize electricity generation, a first for a U.S. territory facing chronic power outages as it struggles to rebuild a crumbling electric grid, the Associated Press reported. The move marks the beginning of the end for Puerto Rico’s Electric Power Authority, a behemoth long accused of corruption, mismanagement and inefficiency that holds some $9 billion in public debt — the largest of any government agency. Many Puerto Ricans already irate and fatigued by power outages were wary of the announcement, given that serious complaints about the length of outages, costly power bills and other issues arose after the island’s government privatized the transmission and distribution of power in June 2021. It was not immediately clear what effect, if any, the privatization would have on unsuccessful efforts so far to restructure the power company’s debt, with the government and some creditors going to court after several rounds of failed mediation talks.

Puerto Rico’s financial oversight board filed a plan to restructure about $9 billion of power utility debt after failing to reach a deal with bondholders, signaling the agency’s five-year bankruptcy will take even longer to resolve, Bloomberg News reported. The federal board is overseeing the island’s finances and the debt proposals for Puerto Rico’s Electric Power Authority, known as Prepa, the main supplier of electricity on the island. The board wants to slash nearly 40% of Prepa’s debt — $8.5 billion in bonds and another $700 million in loans to fuel-line lenders — down to a combined $5.4 billion of new restructured securities, according to the debt adjustment plan submitted to the bankruptcy court Friday night. Court-ordered mediation between the board, insurance companies and an ad hoc group of bondholders has so far failed to produce a consensual repayment plan. At the same time, the parties are litigating whether bondholders are entitled to Prepa’s future revenue or limited to accounts holding about $16 million.

The House on Thursday passed a bill that would allow Puerto Ricans to decide their future governing status, a long-sought goal on the island territory, the Washington Post reported. The vote was 233-to-191, with 16 Republicans breaking ranks and joining Democrats in backing the measure. The legislation would authorize a vote in Puerto Rico to chose whether to become a state, an independent nation, or a country “in free association with the United States.” The island has been a territory since 1898, and residents there were granted citizenship in 1917. The White House signaled its strong support for the bill earlier Thursday, but the measure is unlikely to make it through the Senate, where 60 votes would be required for it to advance, by the end of the year. And prospects for passage in the House next year, with Republicans in control, are significantly diminished.

Luma Energy won approval from Puerto Rico’s financial oversight board for a contract extension to run the island’s government-owned power grid amid criticism that the historically fragile electric system remains unreliable, Bloomberg News reported. The federally-appointed board signed off on continuing with the U.S.-Canadian consortium, even after some lawmakers tried to end the contract and residents protested against high electricity charges and prolonged blackouts. Governor Pedro Pierluisi told El Nuevo Dia on Tuesday that the extension will serve as an alternative to a 15-year, $1.5 billion agreement with Luma that was slated to begin on Thursday. Pierluisi said details on the temporary extension are still being worked out, and in any event it still requires approval from Puerto Rico’s Public-Private Partnership Authority and the board of the island’s Electric Power Authority. Prepa, as the authority is known, is one of the biggest public power utilities in the US, with about 1.5 million customers. It’s been in bankruptcy since 2017 as it seeks to restructure $9 billion of debt. Luma began maintaining and operating Prepa’s electric grid in June 2021 and is tasked with upgrading a system that’s suffered years of neglect and has been battered by hurricanes and earthquakes.

Puerto Rico’s bankrupt public electric utility, which powers most of the island, faces a Dec. 1 deadline to file a debt-cutting proposal to the court, a time limit that could prove a turning point in its five-year workout, Bloomberg News reported. While the commonwealth ended its record bankruptcy in March, Puerto Rico’s Electric Power Authority, called Prepa, is still going through court-ordered mediation with bondholders and insurance companies to reach a new restructuring deal after Governor Pedro Pierluisi earlier this year ripped up a prior accord. Prepa is trying to reduce about $9 billion of debt at the same time that it needs to rehabilitate a fragile and antiquated grid that leaves residents in the dark even during good weather. Luma Energy, a US-Canadian consortium, has been operating the grid since June 2021 under a temporary deal that’s set to expire Nov. 30. Prepa’s been in bankruptcy since 2017 and U.S. District Court Judge Laura Taylor Swain is eager to finish the workout by June. During a Nov. 2 court hearing, Swain signaled that she may be inclined to dismiss the case. Swain warned that if Puerto Rico’s financial oversight board — which is managing Prepa’s bankruptcy — failed to submit a confirmable debt proposal by Dec. 1, “every possible way of reacting to that will be on the table.” Martin Bienenstock, a lawyer for the board, said during the Nov. 2 hearing that it will be possible for the board to file such a proposal by the deadline. Judge Shelley C. Chapman, former US Bankruptcy Judge for the Southern District of New York and lead mediator in the talks, disagreed and said she was concerned about meeting the deadline.

A Canadian-American consortium swept into Puerto Rico last year with promises to transform the island’s antiquated power grid. Many residents welcomed the change, tired of subpar service from a state-run utility that left them in darkness for months after a strong hurricane five years ago. But since the private company, Luma Energy LLC, took charge of the grid in June 2021, power outages on the island have lengthened, the Wall Street Journal reported. Hurricane Fiona, a less-than-ferocious category-1 storm in September, caused an island-wide blackout, and it took more than two weeks before nearly all residents had electricity again. Luma, a joint venture of companies with limited experience in Puerto Rico, has so far spent just a small fraction of the hundreds of millions of dollars it had planned to invest by this time to shape up the decrepit grid. Meanwhile, customers’ rates have increased several times to cover surging costs for oil and natural gas to fuel power generation. Protesters crowded San Juan streets in September, demanding the government cancel Luma’s contract, which reimburses the company for its expenses and provides it with fees that are expected to top $120 million this year. Political support for Luma has weakened, with some legislators who backed the deal calling for changes as Luma’s contract comes up for long-term renewal. Skeptics are questioning Puerto Rico’s decision to end its decades of dependence on a troubled state-run electricity service and outsource the job to a private outside business.