00:00The final lady's time has also expired. At this time, the chair recognizes the gentleman from the state of California, Mr. LaMalfa, for five minutes. Mr. LaMalfa.
00:10Thank you, Mr. Chairman. Appreciate it. On a trip I made to Puerto Rico just a few years ago, I had a chance to tour and see quite a few things post-hurricane and such.
00:20And also part of it was the generating system for PREPA down there, and it was sadly pretty antiquated. And I'm just wondering, Mr. Mojica, what is the effort, what is the progress made on modernizing that system from diesel generation to something that's a little more favorable for costs as well as the other effects of that system?
00:43Since the governor took office, she's enacted a new law. The legislature in Puerto Rico enacted a new law which changed, moved from intermediate renewable goals to allow for faster generation and conversions in many of these facilities.
01:02We are, as contracts come to us, we'll be approving contracts. Puerto Rico needs new generation. I think, as you point out, that facility, as well as many others, are over 50 years old.
01:13They don't exist anywhere in the country. You have to make parts when they break. No one has them. And that's part of what's going on. We will approve contracts as long as they're affordable and as long as they make sense for the people of Puerto Rico.
01:26But we need to do those conversions, and we need to do them quickly.
01:30It would sort of seem to me a modernized natural gas plants would be very, very helpful for all aspects. But with that, I'd like to yield time to our chairman of our committee, Mr. Westerman.
01:42Mr. Westerman, you're recognized.
01:44Thank you, Mr. Chairman. Thank you, Mr. LaMalfa. And Mr. Mojica, you, in an answer to a question earlier,
01:52you said that the need for PROMESA came about because of bad policy decisions. What area were those main policy decisions in?
02:01Many of them were around pensions. There were, we, and, and we've changed it since the board's been there.
02:07Well, all the pension systems were completely underfunded. They had not funded the pension systems.
02:11They were in danger of not making payments.
02:13We've moved from a defined benefit program to a defined contribution program, and we now have a path to fully fund those pensions over the next years and creating a reserve.
02:25But a lot of the policy decisions are, they're all around financial management.
02:29Pensions is one of the bigger ones because that created $50 billion in unfunded liabilities.
02:34But it's 16 years of consecutive unbalanced budgets.
02:37Well, it's a good achievement to get the pension system back up.
02:43How much was the energy component in bad policy decisions?
02:50Excuse me, Mr. Chairman. I left the energy part out.
02:52The, and I was focused on the Commonwealth.
02:55The PREPA, there was no investment in PREPA.
02:59It was run by an entity that was governed by political decisions, not what was in the best interest of the system.
03:07The, the generation assets that we're talking about had virtually no investment.
03:12Monies were borrowed, sometimes to pay for other debt that was being borrowed.
03:17Uh, and the result, the system that we have today is a result of the bad policy decisions and the bad management of the PREPA system.
03:25And the, the point I wanted to make is bad energy policy got us into this.
03:31Good energy policy hopefully could help get us out of this.
03:34Uh, and going back earlier, Mr. Austin, what are, what do you see as the main contributing factors prolonging the day, delay in resolving PREPA restructuring?
03:44If you could be, be quick on that.
03:49That's a very tough thing.
03:50It's very complicated.
03:51There are a lot of technical challenges, um, as we've just heard, uh, there's just been, uh, bad management, uh, political interference.
03:59Um, and I think some of the federal funds for reconstruction, um, uh, uh, have been slow to come for various reasons.
04:06I think that the capacity to manage the contracts, uh, that took some time to develop, uh, yeah.
04:13And then just the, there's the technical challenge that a lot of the generations in the south, the demands in the north.
04:19Um, and so, I, I, I kind of get where you're going with that, and that's what I've observed, uh, watching what's, what's going on.
04:29But it was talked about the tax incentives that were in Puerto Rico before, and, you know, if you, if you look, there's been out migration, not only of manufacturing, but of people in Puerto Rico.
04:40We've seen the pharmaceutical industry move, uh, to, to China and other places, and, you know, I, I understand the argument that why should we give a special tax break to Puerto Rico and not to the rest of the, the country, but I think it shows that tax policy can, uh, help with economic development, but before you can have economic development, you have to have energy.
05:03Nobody's going to build any kind of facility, uh, somewhere where they don't have reliable energy.
05:08So, I think it's important that we get the energy issues resolved as quickly as possible so we can start working on the, the next phases.
05:17Uh, appreciate the gentleman yielding, and I yield back.
05:20The gentleman yields back, and the gentleman's time has expired.
05:24At this time, I want to thank our witnesses for your valuable testimony, and also to my colleagues for your questions.
05:31Members of the committee may have some additional questions for the witnesses, and we would ask that you please respond to those in writing.
05:36Under committee rule three, members of the committee must submit those questions to the committee clerk by 5 p.m. on Monday, July 1st, 2025.
05:45The hearing record will be held open for 10 business days for these responses.
05:50Is it.
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