Congress Ponders Oversight of Puerto Rico Utility Aid

(Bloomberg) -- U.S. lawmakers are considering potential legislation that would give the federal government greater oversight of the money that Congress is allocating to Puerto Rico’s bankrupt electric utility, according to a committee aide.

The House Natural Resources Committee is set to discuss the issue Wednesday during a hearing. The potential legislation contradicts Governor Ricardo Rossello’s assertions that the federal government wants to take over and operate the Puerto Rico Electric Power Authority.

Representative Rob Bishop, the committee’s chairman, said the prospect of the federal government taking over the troubled utility was “ridiculous.”

“Congress isn’t going to take over anything,” Bishop, a Utah Republican, told reporters Wednesday in the U.S. Capitol. “Congress wants Prepa to be functional and provide for the benefit of those people.”

The utility is struggling from years of mismanagement, crippling debt and aging infrastructure that was heavily damaged last year by Hurricane Maria. It received federal aid to help rebuild from the storm.

Rather than a complete federal takeover, some lawmakers want legislation that would have a person or entity oversee money that Washington is allocating to the utility. It would also help overhaul the company to make it less subject to local politics, according to the committee aide, who asked not to be identified.

“There is an obvious problem,” Bishop said. “There has to be a solution. Something has to change.”

Federal lawmakers want Prepa to be able to operate without interference from island officials. Rossello earlier this month asked the utility’s board members to resign unless they reduced a $750,000 salary for an incoming chief executive officer. That candidate ended up quitting before starting the job.

The committee plans to discuss how to depoliticize Prepa, the utility’s path to privatization, the need for an independent regulator and a solution to its $9 billion of debt and $3.6 billion in pension obligations, according to a hearing memorandum.

While the committee invited Rossello to testify Wednesday in D.C., he has said he wouldn’t attend unless the panel apologized for a snide remark made on Twitter last week. The committee’s proposed legislation would hinder Prepa’s transformation, Rossello said in a letter to Bishop.

“My attendance would legitimize a political exercise that was organized for the sole purpose of promoting flawed legislation that would severely hamper our reconstruction,” Rossello wrote. “Puerto Rico faces too many challenges to endure baseless, petty sniping from congressional aides.”

Asked about the tweet, Bishop said “Do I need to apologize? No. Did we pull down the tweet which was sophomoric? Yes and we did that within 15 minutes. That should be good enough.”

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