Federal judge orders mediation to break impasse over Puerto Rico power company debt

San Juan Puerto Rico — A federal judge overseeing a lengthy debt restructuring process to The Puerto Rico Electric Company. ordered all sides into mediation on Wednesday in the latest attempt to break a stalemate that has sparked widespread outrage.

The US territory’s Electric Power Authority has more than $10 billion in debts and other claims (the largest of all state agencies on the island) and Efforts to restructure it in recent years have failed.crippling the island’s ability to attract investors and leaving residents who already pay some of the highest electricity bills in a U.S. jurisdiction in limbo.

“Movement is necessary to resolve this,” District Judge Laura Taylor Swain said during the two-hour hearing in New York. “I need an answer quickly.”

Swain also imposed a two-month stay on litigation and urged all parties to work in good faith and begin immediately to reach a compromise.

“Please keep the people of Puerto Rico in mind as you address this,” he said.

Swain’s decision comes nearly a month after a First Circuit appeals court in Boston reinstated $9 billion in claims brought by bondholders following the power company’s bankruptcy. But a federal control board that oversees Puerto Rico’s finances said the power company has no net income to pay bondholders.

As a result of the June ruling, Swain is tasked with determining how much bondholders could collect. But first, the board and bondholders will enter mediation, and many doubt any outcome.

Shortly before Wednesday’s ruling, Judge Shelley Chapman, the lead mediator, said it was impossible not to feel “immense frustration and disappointment” that a compromise had not been reached. She noted a continued lack of proposals or solutions and urged all parties to take “modest steps.”

“The mediation team has been very aware of the suffering of the Puerto Rican people” as efforts to restructure the power company’s debt languish, he said.

The company’s infrastructure has continued to crumble, with chronic power outages affecting the island ever since. Hurricane Maria devastated the network in September 2017 as a powerful Category 4 storm. The lack of investment and maintenance before the storm also contributed to the deterioration of the network.

“The electric system urgently needs maintenance and billions of dollars of investment, beyond available federal funds, just to provide adequate service. Diverting billions of dollars to pay bondholders will perpetuate a dysfunctional electricity system,” states a letter from dozens of civil society groups in Puerto Rico sent to Swain on Tuesday.

The groups have rejected a proposed debt restructuring plan that calls for another increase in energy bills on an island. whose 23.77 cents per kilowatt hour are 41% higher than the average electricity rate in the United States.

“The higher rates imposed to pay the debt, coupled with unacceptably poor service, will lead to business closures, layoffs, and migration from Puerto Rico, undermining the future of our island,” the letter warned.

A spokeswoman for the board told The Associated Press that the board “will negotiate, as always, in good faith and in the interest of the people of Puerto Rico.”