The Financial Oversight and Management Board asked the federal court overseeing the Puerto Rico Electric Power Authority (PREPA (AEE); PREPA) Title III bankruptcy to reject bondholders’ motions seeking to exclude testimony from two of its main expert witnesses. In filings submitted November 3, the Board defended accounting expert David Plastino and utility expert David Daly.
Plastino calculated PREPA’s net available revenues from July 2017 through June 2025 based on legal assumptions provided by the Board. His analysis found that when PREPA’s historical operational reports are corrected with the final audited balances, the roughly $3.7 billion in net revenues reported for fiscal years 2018 through 2023 would become an estimated $1.1 billion deficit.
Bondholders argue his methods depend on instructions from the Board’s lawyers and deviate from generally accepted accounting principles; the Board counters that what creditors are really challenging is its legal interpretation. Daly, a former Public Service Enterprise Group executive, concluded that about $1.45 billion in expenses between fiscal years 2018 and 2025, not funded with federal money, were necessary to address the electric system’s deterioration.
He reviewed in detail about 74% of those expenses, some $1.08 billion, and determined that even with federal disaster funds the investment was insufficient. The court has not yet ruled on either motion.