Bailout for Puerto Rico power authority could be a bad deal for other creditors

As Puerto Rico goes through its bankruptcy process, U.S. Rep. Rob Bishop, R-Utah, chairman of the U.S. House Committee on Natural Resources, is putting his thumb on the scale.

He wants the Financial Management and Oversight Board of Puerto Rico to finalize a deal to restructure $9 billion in debt of the Puerto Rico Electric Power Authority (PREPA).

But approving a positive result for this narrow creditor class could prove detrimental to the many other creditors in Puerto Rico's $70 billion bankruptcy, as there's just not enough money to go around. It would also likely yield higher power rates for residents in a territory teetering on financial collapse.

Reuters reported that Bishop called the lack of action "troubling" in a letter he sent to Jose Carrion III, chairman of the oversight board.

Bishop argues the board has no right to review the PREPA debt restructuring agreement because the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), passed and signed into law in 2016 to deal with the territory's mounting debt, includes language to keep such out-of-court settlements outside the scope of the board's powers.