MBIA Petitions Puerto Rico to Raise Power Rates to Cover Debts

The MBIA Inc. unit that insures Puerto Rico Electric Power Authority bonds against default is urging the island’s energy regulators to boost the utility’s rates to cover its debt bills.

MBIA’s National Public Finance Guarantee Corp., which insures about $1.4 billion of the power provider’s debt, filed a petition with Puerto Rico’s energy commission Thursday asking it to temporarily add at least 4.2 cents per kilowatt hour to the agency’s base electricity rate, according to a copy of the request provided by the panel. It also requested that regulators complete a review of the utility’s fees within four months.

The government-owned utility, known as Prepa, hasn’t raised its base rate since 1989, according to the petition. It’s been negotiating with bondholders, banks and insurance companies for over a year to restructure $8.3 billion of debt that it’s struggling to pay.

A forbearance agreement that keeps those talks out of court expires late Friday. National broke with other creditors and declined to sign on to the pact when it was last extended on Sept. 1.

“National believes such actions are necessary in light of Prepa’s breach of its legal and contractual obligations to raise rates sufficiently to satisfy its debt service payments and operating costs as well as its failure to reach a comprehensive restructuring with all of its creditors,” Greg Diamond, a spokesman for MBIA, said in a statement.

Jose Echevarria, a spokesman in San Juan for Prepa, declined to comment.

Michelle Kaske

MBIA Petitions Puerto Rico to Raise Power Rates to Cover Debts