Genera PR to Privatize Energy Generation in Puerto Rico

Jan 25, 2023
4:47 PM

FIle – An electricity meter shortly after it was installed at the Jobos Bay National Research Reserve in Salinas, Puerto Rico, May 3, 2022. Puerto Rico privatized its electricity production on Jan. 25, 2023, selecting Genera PR to take over the operation and maintenance of state power generation units in the U.S. territory as part of an initial $22.5 million annual contract. (AP Photo/Carlos Giusti, File )

SAN JUAN — On Wednesday Gov. Pedro Pierluisi announced that Genera PR will officially take over the remains of the Puerto Rico Electric Power Authority (PREPA) and finish privatizing electrical generation on the archipelago.

The announcement, which was hailed as an “historic day” by Puerto Rico State Secretary Omar Marrero and has reportedly been in the works since 2020, comes as Puerto Rico attempts to rebuild a crumbling and fragile power grid damaged by years of misuse, extreme weather events, and lack of maintenance.

“The Public-Private Alliance we are announcing today between PREPA as owners of generation assets, the business Genera PR as the new operator, and the Alliance for Public-Private Partnerships (P3A) as administrator of the contract, is another great step towards the energy transformation that our people need and deserve,” Gov. Pierluisi said via press release.

As part of a $22.5 million annual contract, Genera PR will be in charge of PREPA’s generation assets for a 10-year term. It is also eligible for up to $100 million a year in incentives. Both payments will reportedly drop as the company closes generation units to make way for clean energy sources.

Genera PR —a subsidiary of New Fortress Energy, which has operated a natural gas facility in Puerto Rico since 2020— will also receive $15 million during its 100-day transition period, likely to come in the middle of 2023.

On top of operating energy assets, Genera will handle fuel purchase contracts for 17 of the archipelago’s generation facilities.

Wes Edens, founder and chief executive officer of New Fortress Energy, said it would be important to save money on fuel purchases while noting that New Fortress Energy has a long list of oil producers and could soon produce its own fuel as well.

In the last couple of years, PREPA generation units have suffered blackouts at a rate five times higher than the industry average. Over the last three years, PREPA’s electrical generation has been below expected at 50 percent.

However, many Puerto Ricans are wary of the announcement given that the privatization of transmission, distribution, and repair of the archipelago’s power grid by LUMA Energy in June 2021 has led to skyrocketing prices of electricity as well as worsening blackouts.

Citizens protested the privatization in Old San Juan at the same time the press conference occurred.

Puerto Rico officials brushed off concerns about even more expensive power bills while noting that Genera PR will receive incentives to produce savings, 50 percent of which will be passed onto customers.

Many critics of the contract between Genera PR and the Puerto Rican government cite the fact that the meeting to choose Genera PR took place secretly. The government had refused to release the contract or even name the company before Wednesday’s announcement—although the name of the company had already been leaked to local news sources.

Tomás Torres-Placa, a member of P3A’s governing board who represents consumers, was the only person to vote against the contract. He cited the lack of citizen participation in the decision as well as the de facto monopoly New Fortress Energy would enjoy as the only provider of electricity on the island.

Citizen’s Victory Movement Rep. José Bernardo Márquez sent a letter to Fermin Fontánes, director of the AAPP, requesting access to public information about PREPA’s privatization process.

“All Puerto Ricans deserve access to clean, trustworthy, and low-cost energy,” Edens said during the announcement. He later added that energy prices in Puerto Rico are “simply too high.”

PREPA is currently in its third round of debt restructuring negotiations after previous attempts failed to reach an agreement. If an agreement is reached this time around, experts expect it to be during the middle of the year at the earliest.

LUMA Energy’s contract was recently granted an indefinite extension until PREPA’s debt restructuring is finished.

Multiple officials cited the move to privatize electrical generation on the island as a means to follow the goal of 100 percent green energy by 2050, as stipulated by law. Puerto Rico is supposed to reach 40 percent clean energy by 2025, but multiple experts have cited that goal as unrealistic at best. Electrical generation from clean energy in Puerto Rico currently hovers around seven percent, most of it coming from privately installed solar energy systems.

After New Fortress Energy began operating on the island, PREPA accused the company of supplying less natural gas than its contract promised, forcing PREPA to use more expensive diesel for its plants. The cost has not been reimbursed.

The Puerto Rico Energy Bureau is currently reviewing the reported contract violation.


Carlos Edill Berríos Polanco is the Caribbean correspondent for Latino Rebels, based in San Juan, Puerto Rico. Twitter: @Vaquero2XL