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Delays with power-generation fleet PPPs said hindering PREPA’s reorganization


Negotiations for a new public-private partnership involving the Puerto Rico Electric Power Authority’s generation fleet will have to wait until the second half of this year, officials have said.

By The Star Staff


Delays in Puerto Rico’s plans to put the power plants of the Puerto Rico Electric Power Authority (PREPA) under private management until the last quarter of this year are impacting the utility’s reorganization.


Public-Private Partnership (P3) Authority Executive Director Fermín Fontanés Gómez has said negotiations for the new P3 will have to wait until the second half of 2022. The call for bids went out in 2020 and officials expected to have a winner by 2021. The government then said an announcement would come during the first quarter of this year, but that did not happen.


The 2021 Fiscal Plan for PREPA calls for the unbundling of the electrical system, from a vertically integrated PREPA monopoly structure into one in which roles and responsibilities are reallocated across multiple entities, to be operated by different parties.


However, a letter from the Financial Oversight and Management Board published Monday shows that delays in the P3 project are impacting PREPA.


“It has been asserted by PREPA that the PREPA Reorganization cannot move forward until the Thermal Generation P3 Service Provider has been selected,” oversight board counsel Jaime El Koury said in a letter to PREPA Executive Director Josué Colón Ortiz inquiring about the reorganization. “Please provide an explanation as to this assertion, as this was a condition precedent to the T&D [transmission & distribution] OMA [operations and management agreement] which was to be executed substantially before a Generation P3 was meant to be completed.”


The oversight board expressed in December its general agreement with the proposed organizational structure into subsidiaries for each entity and the signing of the GenCo- GridCo-HydroCo Operating Agreement (GGHOA), as it meets the unbundling requirements, including the separation of the T&D system and the generation operations into separate and distinct entities.


“Even though PREPA, in its April 2022 post-certification tracker, reported on the status of the different reorganization plan initiatives milestones, several questions remain outstanding,” the board said in a letter to Colón Ortiz. “Moreover, LUMA [Energy, the private operator of the T&D system] indicated in its April 6, 2022 letter to PREPA that there has been no evident and quantifiable progress in the reorganization and transformation of PREPA since December, 2021.”


“Time is of the essence for the PREPA Reorganization to be completed so that the Puerto Rico energy sector can operate smoothly in its optimal condition, and for the full benefits of the T&D OMA to materialize,” El Koury said in the letter. “We thus continue to urge PREPA to execute on its commitment to complete the PREPA Reorganization as soon as feasible.”


The oversight board ordered PREPA to submit a timeline to complete its reorganization milestones.

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