- A new report finds the Puerto Rico Electric Power Association (PREPA) is owed about $1.75 billion as of the end of September, as accounts receivable have surged in recent years.
- PREPA has over $400 million owed to it from inactive accounts, Bloomberg reports, and this amount increased by approximately $100 million since June 2013. The public power agency has stopped referring delinquent accounts to collections agencies.
- PREPA is preparing a plan to restructure more than $8 billion in debt. By customers and revenue, it is the largest public-power utility in the United States. The restructuring plan, which could be the largest ever in the municipal bond market, is expected to be released in the first quarter of 2015.
A new report prepared by FTI Capital Advisors finds Puerto Rico's power association has massive amounts owed by its customers, in part because PREPA has stopped pursuing debts and has a system in place that values reconnections over unpaid bills.
There are approximately $950 million of general clients’ accounts receivable, with over $500 million of the accounts older than four months, the report found.
"PREPA does not perform credit checks on new accounts nor does it report delinquent accounts to credit bureaus since this process was stopped during the conversion to CC&B (the customer service system) in April 2012," the report said. If the process had remained in place, approximately 145,000 accounts would have been referred to a credit agency, worth about $122 million.
FTI also noted that late fees and reconnect fees are minimal, "and PREPA prioritizes reconnects for customers that have been cut-off, creating disincentives for customers to pay their bills timely."