The Puerto Rico House of Representatives narrowly passed an energy sector reform bill, in another step toward adoption of a negotiated debt restructuring deal for the island's electric utility.

The House on Monday passed an amended version of the bill passed last week by the Puerto Rico Senate. The Senate will either have to approve the House version or Senate leaders will have to sit with House leaders in a conference session to reach a consensus version. In the latter case, both bodies would vote on the revised version.

The House voted 26 to 22 in favor. All the opposition members of New Progressive Party voted against the measure except for María de Lourdes Ramos Rivera, who abstained because she works for the Puerto Rico Electric Power Authority Carlos Bianchi Angler-, a member of the governor's Popular Democratic Party, abstained he works for PREPA.

Manuel Natal Albelo was the sole PDP member to vote against the bill. PNP member Ángel Rodríguez Miranda was absent.

"This act will facilitate key aspects of PREPA's comprehensive transformation, including our financial restructuring and attracting investment for modernizing PREPA's operations," said PREPA executive director Javier Quintana Méndez. "Now we can focus on implementing other aspects of our transformation, particularly obtaining consent of remaining creditors who are not yet part of the credit agreement."

PREPA owes about $8.4 billion in bond debt. Any restructuring or monetary default on the debt would be the largest default in United States municipal bond history.

According to Gov. Alejandro García Padilla, the "bill paves the way for over $2 billion in capital investments to our current electricity infrastructure, significantly reduces its debt stock, modernizes operations, de-politicizes [PREPA] governance, improves client service efforts, and promotes a safer work environment for our public employees."

The House amended the Senate bill to remove a provision that would have allowed creditors to seek the property of consumers if PREPA were to default.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.