Energy regulator’s ruling giving Genera PR sole responsibility of emergency units is criticized
By The Star Staff
Although the Puerto Rico Electric Power Authority (PREPA) owns all power plants, the Puerto Rico Energy Bureau (PREB) recently gave Genera PR the exclusive responsibility in all decisions about certain black-start and emergency units procured to stabilize the electric grid.
PREPA and the Puerto Rico Institute for Competitiveness and Sustainable Economy (ICSE-PR), a non-profit group that promotes economic and social reforms, have come out against the PREB’s decision ratified in a July 17 ruling.
PREPA and the ICSE noted that the PREB’s interpretation of the public-private partnership contract awarded to Genera PR to manage and operate PREPA’s power plants is too expansive.
ICSE said that PREB must remember that the public policy behind the public-private partnerships is not an abolition of PREPA’s role in the scheme envisioned for the energy sector. The Legislature has not repealed PREPA’s charter law. Genera-just like LUMA-is merely an agent of PREPA, as per expressly established in the contract.
“The consequence of such a role is that the former (PREPA) can’t exercise faculties in the principal’s exclusive purview of powers,” ICSE said.
On July 6, 2023, Genera PR submitted a document asking for exclusive responsibility for the procurement processes related to the black-start and emergency units. The PREB issued an order giving Genera sole responsibility. PREPA sought a reconsideration but the PREB on July 17 affirmed its ruling.
The PREB said that PREPA’s understanding that Genera is obligated to provide operation and maintenance only to the Legacy Generation Assets, excluding any new generation is misconstrued.
“The Energy Bureau reminds PREPA that the four new Black Start Units are replacing four legacy generation assets (peaking units),” the entity said. These are the Costa Sur GT Unit 1, Costa Sur GT Unit 2; Yabucoa CT Unit 1; and Yabucoa CT Unit 2. “Therefore, to the extent that the referenced Black Start units are merely replacing existing Legacy Generation Assets, contrary to PREPA’s reasoning, these units are considered part of the Legacy Generation Assets,” the PREB said.
The ICSE, however, agreed with PREPA in stating that the PREB and Genera’s contractual interpretation goes beyond the scope of the terms of the contract.
The first indication, ICSE said, is that PREB equates “optimization” with the procurement of resources needed to achieve said optimization, which means that any other responsibility that may not be expressly mentioned in the operation and management contract could be construed as included in its scope since it is a necessary-or even auxiliary-to further the contract’s purpose.
ICSE said that it can’t be logically understood as a delegation to Genera to conduct in its entirety the RFPs for the black start and emergency units.
“Of course, Genera as operator has a certain degree of independence in executing its responsibilities as per the contract-as any other contractor-; however, this does not mean that Genera is the ultimate entity making decisions regarding PREPA’s own generation resources. There is a very clear line between acquisition of resources and the “management, operation, maintenance, repair, restoration, and optimization of resources,” ICSE said.
“The PREB’s interpretation clearly crosses that line. Furthermore, if that were the case, it would mean that Genera could undermine PREPA’s decision-making at every turn. It would produce the absurdity that PREPA has no proprietary faculties derived from its capacity as owner of the generation fleet. PREPA’s legal responsibilities under Law 83-1942 have not disappeared. It has not been eliminated through legislated amendment,” ICSE said.
The PPP contract cannot amend PREPA’s law, ICSE said. “The most worrying aspect of the current proceeding is that it is not understood which of these entities-PREPA or Genera-is the principal and which is the agent. This chapter is a déjà vu of the perpetual novel of PREPA-LUMA. It reproduces precisely the same dilemma as ever: Who is in charge? Therefore, it is seriously beyond appalling the PREB’s claim that Genera is “the sole entity responsible for managing, leading, and deciding on matters pertaining” PREPA’s generation assets,” ICSE said.