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A federal control board that supervises Puerto Rico’s finances announced a new executive director on Thursday after its last one stepped down in April following a historic debt restructuring for the U.S. territory, the Associated Press reported. Robert Mujica, budget director for New York state, is expected to assume his new role in January. He previously served as chief of staff to the New York state Senate majority leader and was secretary to the state’s Senate finance committee. The U.S. Congress created the board in 2016, a year after Puerto Rico announced that it was unable to pay more than $70 billion of public debt accumulated through decades of mismanagement, corruption and excessive borrowing. In 2017, Puerto Rico filed for the largest municipal bankruptcy in U.S. history. Nearly five years later, a federal judge in January approved a plan to slash the territory’s debt and allow the government to start repaying creditors. Much of the debt has been restructured, but the $9 billion held by Puerto Rico’s power company — the largest debt of any government agency — has yet to be resolved after mediation talks failed. Litigation has since resumed. Mujica, who replaces Natalie Jaresko, will be in charge of a board that is overseeing the bankruptcy-like process and will remain in place until Puerto Rico’s government approves four consecutive balanced budgets.

The U.S. Supreme Court on Monday declined to take up Puerto Rico teachers unions’ appeal to challenge the island’s historic debt and pension restructuring plan, Bloomberg Law reported. The justices’ decision to bypass keeps in place the restructuring plan’s provisions that upend local laws and reduce teacher benefits. The commonwealth’s financial reorganization plan, approved by a federal judge earlier this year, remains free from any further challenge by disaffected teachers who tried to fight cuts to their accrual of pension benefits.

Canceling the landmark contract that put Puerto Rico’s electric grid under private management is “not on the table,” despite calls to revoke the deal by Nov. 30, Fermin Fontanes, the head of the island’s public-private partnerships agency, told WKAQ 580 radio Thursday, Bloomberg News reported. Luma Energy, a US-Canadian consortium, has been operating the fragile and antiquated grid since June 2021, under a temporary deal intended to allow the Puerto Rico Electric Power Authority, or Prepa, resolve its bankruptcy. That contract expires on Nov. 30. Meanwhile, a judge overseeing Prepa’s bankruptcy has given negotiators until Dec. 1 to come up with a plan to restructure some of its $9 billion in debt. Island legislators have seized on the Nov. 30 deadline to demand the cancelation or renegotiation of Luma’s underlying 15-year, $1.5 billion contract, which is also due to kick in on Dec. 1.

Puerto Rico’s financial oversight board says it’s still at odds with creditors of the island’s bankrupt power company over how much businesses and residents can afford to pay for electricity, Bloomberg News reported. An “impasse” over energy tariffs is responsible for a recent collapse in negotiations to restructure Puerto Rico Electric Power Authority’s $9 billion in debt, said Prof. David Skeel, chairman of the federally appointed Financial Oversight and Management Board. “The oversight board has been carefully, carefully analyzing what residents and businesses can afford to pay for electricity,” Skeel said at a public meeting Friday. “Any restructuring is going to be based on that analysis.” The company, called Prepa, and a group of ad hoc bondholders have been locked in court-ordered mediation to reduce debt while also litigating to how much of the utility’s revenue bondholders are entitled. The oversight board, which is managing Prepa’s bankruptcy, has until Dec. 1 to file a new debt restructuring proposal to the court. Skeel called on Friday for a “responsible restructuring” that also addresses the rights of both Puerto Rico’s residents and creditors. Puerto Rico has some of the most expensive and least reliable energy of any U.S. jurisdiction. When Hurricane Fiona clipped the western edge of the island as a Category 1 hurricane last month, it knocked out power to the entire island. Puerto Rico’s private grid operator says it has restored power to 99% of clients — a figure that has been disputed by some mayors and community groups.

A federal judge on Wednesday approved a plan to restructure some $6 billion of debt held by Puerto Rico’s Highways and Transportation Authority as the U.S. territory emerges from bankruptcy, the Associated Press reported. The plan cuts the agency's debt by more than 80% and saves Puerto Rico more than $3 billion in debt service payments, according to Gov. Pedro Pierluisi and a federal control board that oversees the island’s finances. “The plan creates a solid financial foundation to ensure Puerto Rico’s roads and public transportation are maintained and improved,” the board said. It has previously noted that 13% of the island’s highways are in good condition, compared with a median of 84% in the U.S. mainland. Only one government agency on the island has yet to restructure its debt: Puerto Rico’s Electric Power Authority, which holds some $9 billion in debt, the largest of any public agency. U.S. District Judge Laura Taylor-Swain recently ordered a new round of mediation talks to resolve that debt after the previous talks failed. She also allowed the board to go to court to determine how much money bondholders seeking to recover their investments should receive. The debt restructurings come after Puerto Rico’s government announced in 2015 that it was unable to pay its more than $70 billion public debt load. In 2017, it filed for the biggest U.S. municipal bankruptcy in history.

McKinsey & Co., the consulting powerhouse that advises not just Puerto Rico’s government but also the primary contractors and vendors for the island territory’s energy system, is facing scrutiny in the wake of the power grid’s continued dysfunction, WSJ Pro Bankruptcy reported. Since McKinsey was hired as the top consultant to Puerto Rico’s financial-oversight board, which oversees public spending, the firm has helped officials shape efforts to overhaul the territory’s electricity system through a privatization process that resulted in a venture backed by one of McKinsey’s clients winning the lucrative contract to operate the grid. Puerto Rico now faces a major reconstruction of its energy infrastructure after last month’s Hurricane Fiona, another challenge for residents who have endured years of costly, unreliable electricity service. Even before Fiona hit the island, hundreds of demonstrators gathered in the streets of Old San Juan in recent months to protest the frequent blackouts and high costs plaguing consumers. Much of the public anger has centered on Luma Energy LLC, a joint venture half-owned by McKinsey client Quanta Services Inc. that in 2020 won the $1.5 billion grid operation contract. Blackouts in some parts of Puerto Rico have increased since Luma took on the contract, Puerto Rican residents said. In August, the Puerto Rico Energy Bureau found a key metric on reliability “indicates that Luma has yet to realize improvements in reliability in terms of outage durations.” On other metrics, such as customer response times and workplace accidents, the data show improvements under Luma, according to regulatory data.

A federal judge on Wednesday ordered a fresh round of mediation talks aimed at restructuring more than $8 billion in debt held by Puerto Rico’s power company as it struggles to recover from Hurricane Fiona, the Associated Press reported. In addition, U.S. District Court Judge Laura Taylor Swain allowed a federal control board that oversees the island’s finances to go to court to determine how much money bondholders should receive as they seek to recover their investments. The board warned earlier that any expenses linked to debt repayment would be passed along to the power company’s 1.47 million clients. The board also was ordered to file a debt-restructuring plan for the island’s Electric Power Authority by Dec. 1, with a confirmation hearing scheduled for mid-2023. The board praised the ruling in a brief statement, saying it is calculated to get major disputed legal issues resolved in the shortest possible time: “Simultaneous litigation and mediation facilitates resolutions for all constituencies.”

Hurricane Fiona hit southwestern Puerto Rico with 85 mph (140 kph) winds on Sept. 18 and the broad storm unleashed flooding across the island, which still had not recovered from 2017′s Hurricane Maria, a stronger cyclone that slashed across the U.S. territory, obliterating the power grid, which had since been patched but not fully rebuilt, the Associated Press reported. Puerto Rico’s government has said it expects to have a preliminary estimate of the damage Fiona caused in roughly two weeks. As of Sunday, about half of Puerto Rico’s 1.47 million power customers remained in the dark, and 20% of 1.3 million water customers had no service as workers struggled to reach submerged power substations and fix downed lines. Power company officials announced Sunday that 1.1 million to 1.3 million clients could have power by Friday, Sept. 30 but warned those estimates could change. They did not say when the entire island would be energized. “(Fiona) affected our whole infrastructure. We are doing everything we can to fix it,” said Lawrence Kazmierski, senior vice president for Luma, the company that took over the island’s power transmission and distribution more than a year ago. Gas stations, grocery stores and other businesses have temporarily shut down due to lack of fuel for generators. The National Guard first dispatched fuel to hospitals and other critical infrastructure.

A court-appointed mediation team overseeing negotiations between Puerto Rico’s bankruptcy power utility and its creditors wants a new debt restructuring proposal filed within 60 days and a confirmation hearing to be held no later than June, Bloomberg News reported. The mediation team is seeking a new round of debt talks after the Puerto Rico Electric Power Authority and its creditors and a Congressionally appointed financial oversight board last week failed to reach a deal on how to restructure $9 billion of debt. Establishing the deadlines will help the parties negotiate, the mediation team wrote in a court filing Thursday. Prepa, as the utility is known, has been in bankruptcy, also called Title III, since 2017. “The mediation team believes that focusing the mediation parties on a schedule for Prepa’s actual emergence as promptly as practicable from this Title III case provides a critically important context to the mediation,” the team wrote in Thursday’s filing. There had been optimism that Prepa’s bankruptcy would end this year after the commonwealth itself effectively finished its own workout in March. But Governor Pedro Pierluisi terminated Prepa’s prior debt agreement that month and the parties have been unable to strike a new deal since then. The mediation panel wants the court to order the oversight board to hire an additional financial adviser “with extensive experience in financial restructuring,” according to the filing. Citigroup Global Markets Inc. has been serving as the board’s strategic adviser and investment banker in Prepa’s restructuring.

Puerto Rican officials are re-examining a controversial deal to put private operators in charge of electricity service as the island territory’s power system faces another costly reconstruction and renewed fights with investors, WSJ Pro Bankruptcy reported. Hurricane Fiona’s damage to the electrical grid in Puerto Rico puts new pressure on Luma Energy LLC, the private venture hired last year to take over energy distribution from the government’s bankrupt, mismanaged power authority. The storm, which caused an islandwide blackout before even making landfall, comes at a perilous moment for Luma and the public officials who hired it, following a series of earlier outages, price hikes and missteps. Utility brigades were working across Puerto Rico on Monday to respond to Hurricane Fiona, Luma said. However, public support for the venture and its privatization of power service has been flagging for months, while Gov. Pedro Pierluisi and other officials who backed its hiring turn increasingly critical of its performance. Puerto Rico also called off mediated debt-restructuring talks last week with banks and bondholders, sparking a fresh legal battle about the energy system’s $9 billion in debt ahead of likely negotiations between the government and Luma, a joint venture between Quanta Services Inc. and Atco Ltd. Luma’s initial contract term expires in November and has been expected to be extended for another 15 years to give the company time to improve service and bring down costs. Government officials have considered options for seeking concessions from Luma along with an extension and are making contingency plans for the possibility that the contract is canceled early or negotiations for an extension break down.