Joseph Krist
Publisher
PUERTO RICO ELECTRIC
A new electricity rate structure has been approved by the Puerto Rico Energy Bureau (PREB). The new structure includes an increase in the fixed charge—which will initially double from $4 to $8 per month for residential customers and continue to rise in subsequent years—along with a reduction in consumption charges, thus redistributing the cost of the electricity bill.
PREB determined that contributions to the pensions of retirees from the Puerto Rico Electric Power Authority (PREPA) will be included in the base electricity rate starting July 1 and will continue until 2028. The changes come as the electric market has diversified in the wake of Hurricane Maria in 2017. The base rate has not been reviewed since 2017, while labor, parts, and other costs have increased by 30%. Demand has fallen by 17% due to the integration of solar energy.
NYC PENSIONS
The Mamdani administration is looking to reduce the annual pension payments required to keep the City is compliance with the goal of fully funding the City’s pension liability by 2032. Those plans have been in effect since 2013. The higher required payments under that plan reflect the reduction in estimates of annual returns from 8% to 7%. The Mayor hopes any savings derived from a pension funding maneuver will help fund his social appending agenda. He estimates that the move would save some $1 billion.
The city’s total obligation to the five municipal pension systems for existing benefits, through 2032, amounts to $38.9 billion, according to data from the Citizens Budget Commission. Pension funding has long been a strong point supporting the City’s credit. Unlike Chicago, the City has not used pension funding lapses to fund current operating expenses. Like Chicago, it does not control all of its revenues. That puts enormous pressure on the Mayor to control spending. The problem in New York is that this Mayor does not appear able to make real cuts. His initial efforts produced about 15% of the cuts he claimed were easily available.
He is already pulling back from many of his promises. No free buses. He is asking that class size reductions mandated under state law be relaxed. A proposed tax on second homes worth $5 million or more is being considered. The threats of property tax increases and potential reserve withdrawals still overhang negotiations with the State.
All in all, it’s a package of bad tactics if you want to maintain the City’s credit. Chicago shows where the ideological path leads to. That path has consequences.
DATA CENTER VETO
Legislation was passed in the Maine legislature which provided for a moratorium on new data centers in the state until November 2027. The moratorium would have made Maine the first state in the nation to create such a hurdle. Now, the Governor (and US Senate candidate) has vetoed the bill. It isn’t because a moratorium isn’t popular and it isn’t because she is against a moratorium. Her problem is that the law would hold up the development of a data center in her hometown Jay, ME.
She did sign legislation prohibiting data center projects from participating in certain state tax incentive programs. The mill in Jay had been severely damaged by an explosion in 2020. A plan to repurpose the site for a board manufacturing business failed when new tariffs set by the Trump administration drove up the cost of needed equipment.
TEXAS AND ICE
Gov. Greg Abbott of Texas gave the leaders of Houston, Dallas and Austin until Wednesday to amend many of their local policies and law. Those laws restrict cooperation by local law enforcement with ICE. The Governor supports cooperation. He is threatening some $150 million total in public safety funding, including millions dedicated to providing security at World Cup matches this summer.
This month, the Houston City Council passed a new ordinance clarifying when its officers could detain people wanted by immigration agents. The Governor then threatened aid to the city. Mr. Abbott expanded the fight to Dallas and Austin after he said both had policies that also broke a contract with the state requiring the police to cooperate with immigration agents in exchange for funding.
The governor has warned, the state would take back about $110 million in World Cup safety spending and other grants from Houston, $32 million in grants from Dallas (plus the city’s portion of another $55 million for World Cup security in the area, with games being played in Arlington), and more than $2 million from Austin.
CALIFORNIA WATER
The California Supreme Court has denied review of a landmark opinion issued by the Court of Appeal. The Court’s opinion, first issued on December 31, 2025 and finalized with minor modifications when rehearing was denied the next month, unanimously affirmed a trial court decision holding that the State Department of Water Resources (DWR) exceeded its authority when it approved bond resolutions to finance DWR’s proposed Delta tunnel.
In 2020, DWR unsuccessfully sought to validate detailed bond resolutions and pledges to collect revenue from water contractors, which would charge ratepayers for an uncapped amount of additional debt to meant to finance DWR’s proposed Delta tunnel – the Delta Conveyance Project (DCP). The DCP, if built, would divert up to half of the average flow of freshwater from the Sacramento River with massive new intakes near the town of Hood in the Sacramento-San Joaquin Delta, for export chiefly to portions of the South San Joaquin Valley and Southern California.
DRAMA AT THE OPERA
We have documented the ongoing financial problems which are pressuring the credit of the Metropolitan Opera. Now, the Opera has suffered a significant blow to its plans for a cash injection. Saudi Arabia has cited damage to the country’s economy caused by the war in Iran and the blockading of oil passing through the Strait of Hormuz as the reason for cancelling its plans to provide some $200 million to the Opera.
The Saudis were to have provided the Met with as much as $200 million over the next eight years. In return, the Met would hold a residency in Saudi Arabia for three weeks each February at the Royal Diriyah Opera House on the outskirts of Riyadh. With the collapse of the deal, Gelb said, the Met faces a $30 million shortfall that it needs to fill by the end of this fiscal year, on July 31.
A previously announced plan to sell the naming rights to the Metropolitan Opera House was moving ahead. Art in the lobby remains on sale. The Met hopes to strike a residency deal in another location. The Met has a $62 million line of credit that is due in February 2027 and its endowment is now valued at $216 million, down from $340 million in 2022.
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