Energy Bureau rejects NFE pressure, upholds September fuel cost order
By THE STAR STAFF
The Puerto Rico Energy Bureau (PREB) declined to modify its Sept. 30 order on fuel cost adjustments after the Puerto Rico Electric Power Authority (PREPA) alerted regulators to a new, unsigned communication from liquefied natural gas (LNG) supplier NFEnergia LLC (NFE) that raised concerns about future natural gas deliveries to the San Juan power plant.
In a resolution issued Sunday, the PREB took notice of PREPA’s “Urgent Motion” but determined that the filing did not justify revising or clarifying the existing order, which set fuel and purchased‑power adjustment factors for the last quarter of 2026 and initiated an investigation into excess gas nominations and supply deficiencies.
The September order documented $74.5 million in excess nomination costs reported since January 2025 -- payments for LNG that PREPA nominated but did not receive or use -- and separately deferred $17.6 million in incremental costs tied to supply shortfalls and the use of more expensive substitute fuels during June through August. Those amounts, the PREB reiterated, remain under examination and are not to be passed on to consumers until responsibility is determined.
PREPA’s motion included an unsigned message attributed to NFE warning of potential impacts on LNG supply unless the PREB reversed or modified its September determinations. Regulators noted that the letter lacked basic contractual formalities -- no signature, no representative identification, and no evidence of proper notice under the Multi‑Site Agreement governing gas deliveries to Units 5 and 6 at San Juan. The PREB also rejected NFE’s claim that regulators participated in negotiating that contract, calling the assertion incorrect.
The PREB characterized NFE’s communication as an improper attempt to condition essential fuel supply on favorable regulatory action, warning that threatening to withhold gas delivery “constitutes a position imprudent and incompatible with the responsibility” of a supplier whose actions directly affect system reliability and consumer costs. Regulators emphasized that they will not allow continuity of fuel supply to be used as leverage.
The filing also included a response from the Third‑Party Procurement Office (3PPO), acting for the Public‑Private Partnerships Authority, which stated that NFE’s conditions “do not arise from the contract” and insisted on continued compliance with delivery obligations.
While acknowledging operational uncertainty, the PREB said PREPA did not identify any specific portion of the September order requiring clarification. The regulator reaffirmed that its directive to retain amounts subject to contractual offsets -- beginning with the $17.6 million deferred -- remains in effect and must be executed only after proper evaluation, not through indiscriminate withholding of payments.
The PREB underscored its statutory authority under Puerto Rico’s energy laws to protect system reliability, oversee fuel procurement costs, and intervene when contractual arrangements threaten service continuity or consumer interests. Although it is not modifying contractual obligations at this time, the regulator signaled it may consider additional measures -- including those affecting contractual relationships -- depending on the results of ongoing investigations.
Regulators also cautioned against portraying LNG deliveries as an automatic consumer benefit, noting that any savings from lower gas prices could be erased if consumers ultimately bear the $92.2 million under review for excess nominations and substitute fuel costs. Determining responsibility for those amounts, the PREB said, is essential before any cost recovery.
The resolution orders PREPA to comply fully with the Sept. 30 directives and warns that violations could result in administrative fines of up to $250,000 per infraction.
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