Energy regulator approves $4 million for Genera environmental compliance work
Rejects additional funding request pending federal aid review
By THE STAR STAFF
The Puerto Rico Energy Bureau (PREB) has authorized $4.015 million for environmental compliance work at two power plants operated by Genera PR while denying, for now, a separate $3.285 million funding request for similar projects, arguing that the company has not adequately demonstrated that federal funding opportunities have been exhausted.
In a resolution issued in Case No. NEPR-MI-2021-0004, the regulator approved amendments to Genera’s fiscal 2027 budget to fund environmental outages at Costa Sur Unit 5 and Palo Seco Unit 4, projects required under a federal consent decree governing emissions compliance at Puerto Rico Electric Power Authority (PREPA) generating facilities. The PREB allocated the money from an unallocated balance remaining from the fiscal 2026 reconciliation amount, emphasizing that the funds are being redirected from existing approved resources and will not result in higher electricity rates.
The ruling stems from Genera’s September 2026 request seeking authorization for up to $7.3 million to conduct four environmental outages required under the 1999 consent decree between PREPA, the U.S. Environmental Protection Agency and the U.S. Department of Justice. The outages involve inspections, maintenance and replacement of equipment used to control emissions at aging power plants. Failure to perform the work could expose PREPA to federal penalties and, in cases of continued noncompliance, potential EPA-ordered shutdowns of generating units.
The PREB concluded that immediate funding was warranted for Costa Sur Unit 5 and Palo Seco Unit 4 because compliance deadlines are approaching and there would not be sufficient time to complete a more extensive review of federal funding alternatives before the work must begin. Costa Sur Unit 5’s compliance window closes in late 2026 or early 2027, while Palo Seco Unit 4 faces an April 2027 deadline.
At the same time, regulators took a skeptical view of Genera’s request for funding related to Palo Seco Unit 3 and San Juan Unit 7, both scheduled for fiscal 2028. The PREB said Genera failed to prove that federal funds are unavailable, noting that the company itself had previously identified environmental outage projects as eligible for federal assistance and had already secured federal funding for similar work at Costa Sur Unit 6, Aguirre Unit 2 and San Juan Unit 9.
The order points to earlier filings in which Genera ranked all of its environmental outage projects as eligible for federal funding. In fact, regulators noted that three comparable projects have already moved from ratepayer-funded requests into federally funded programs, undermining Genera’s argument that the remaining projects lack federal funding options.
The PREB also highlighted evidence that portions of the Palo Seco Unit 3 work may already fall within the scope of a Federal Emergency Management Agency (FEMA) Accelerated Award Strategy project that includes more than $34 million for repairs at Palo Seco Units 3 and 4. That project encompasses repairs to generation units and includes boiler-related work similar to the components Genera seeks to fund through customer-supported budgets.
As a result, regulators denied the fiscal 2028 funding request without prejudice, allowing Genera to refile by April 30, 2027. Any renewed application must include documentation of federal funding applications, responses from federal agencies, the status of relevant FEMA projects, an accounting of available environmental compliance funds already included in approved budgets, and a certification that no federal or other public funding is available for the work.
The PREB further ordered Genera to continue pursuing federal funding for the approved fiscal 2027 projects and directed that any future federal reimbursements be credited back to the fiscal 2026 reconciliation account to prevent what regulators characterized as potential double recovery from both taxpayers and electricity customers.
The decision reflects an increasingly firm stance by the PREB that utilities and system operators must exhaust federal funding opportunities before seeking to pass costs on to ratepayers.
