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The decision by the current governing administration to allocate $110 million to Genera PR, the private operator of the Puerto Rico Electric Power Authority’s (PREPA) legacy power plants, has raised significant concerns in some quarters about the negotiation process behind the allocation and its details, which remain unclear, Senate Minority Leader Luis Javier Hernández Ortiz of the Popular Democratic Party (PDP) said Wednesday.
In response, Hernández Ortiz has formally requested, through the secretary of the island Senate, that the Public-Private Partnerships Authority (P3A), led by its executive director Josué Colón Ortiz, provide detailed and timely information as mandated by Rule 18 of the Senate Regulations. Hernández Ortiz said the request aims to clarify the recent “renegotiation” that the New Progressive Party-led government kept hidden until just days ago.
“The issue of the electrical energy supply in Puerto Rico requires the utmost seriousness and transparency for the citizens,” Hernández Ortiz said. “Therefore, we have asked the Public-Private Partnerships Authority to present a detailed narrative of the process involved in the so-called ‘renegotiation’ of the contract with Genera PR. It is essential for citizens to understand whether this ‘renegotiation’ includes an extension for the supply of gas and to be informed about the generation plants that the company plans to convert to gas as their primary fuel.”
Hernández Ortiz’s filing also requests a copy of the agreement reached with Genera, as well as evidence of the assessments conducted by the P3A to determine that the ‘renegotiation’ will be beneficial for Puerto Rico.
Additionally, the senator has asked for documentation regarding communications that the governor claims to have sent to electric power transmission and distribution system operator LUMA Energy, notifying them of non-compliance with certain contractual clauses.
It is crucial for us to review any communications with LUMA Energy that led to establishing an agreement similar to that reached with Genera PR, as well as any notifications sent to LUMA specifically regarding the contractual provisions that have been violated,” Hernández Ortiz added.
The legislator emphasized that if such communications are not available, the government must provide a certification stating so. “If the government has indeed sent letters to LUMA regarding non-compliance, it must present these documents transparently to the public and, importantly, to the Senate of Puerto Rico,” stated the PDP leader in the upper chamber, who in January introduced Senate Joint Resolution 10 to facilitate the exit of LUMA Energy.
On Feb. 27, Genera and PREPA filed a document with the Puerto Rico Energy Bureau (PREB) agreeing to remove the existing incentive structure. The amendment acknowledges $15.42 million in verified incentives for Genera, covering fiscal year 2024, which is included in a total payment of $110 million.
According to the parties, over the remaining nine years of the contract, the amendment could represent potential cost savings of up to $805.52 million, which would have otherwise been allocated to incentive payments under the current structure. Genera and PREPA emphasized that, under the existing framework, Genera is entitled to performance-based incentives across six categories, totaling up to $100 million annually. Those incentive payments could have amounted to $1 billion, they noted. Genera has agreed to forgo all incentive payments for the entire duration of the contract. In exchange, Genera will receive $110 million, payable in 11 monthly installments of $10 million, with payments scheduled to commence by the end of March, pending approval from the PREB and the Financial Oversight and Management Board for Puerto Rico.
The restructuring eliminates uncertainty in incentive calculations and ensures that 100% of all future operational savings will directly benefit the people of Puerto Rico, rather than being shared with Genera, according to the parties. Therefore, Genera and PREPA have requested that the PREB grant preliminary approval of the proposed amendment, pending final submission for regulatory approval. Required approvals from the PREPA and P3A boards have already been obtained.
