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  • Writer's pictureThe San Juan Daily Star

Lawmakers challenge legality of Genera ‘monopoly’ contract

Rep. José Bernardo Márquez Reyes

By The Star Staff

Reps. José Bernardo Márquez Reyes and Luis Raúl Torres Cruz announced on Monday the sending of two investigative referrals on the Genera PR contract, one to the Department of Justice’s Office of Monopolistic Affairs (OAM by its Spanish initials) and another to the Independent Office of Consumer Protection (OIPC), which is attached to the Public Service Regulatory Board.

In the referrals, the legislators request investigative action from both offices on the violations that they impute to the Genera PR LLC contract to antitrust provisions of Law 17 of 2019, known as the “Puerto Rico Energy Public Policy Act.”

“In the case of [transmission and distribution system operator] LUMA [Energy], much of the legislative questions and concerns had to do with the cost-benefit analysis of privatization. That is, whether or not privatization and the leonine terms of the contract were appropriate,” said Márquez, who is the minority leader of the Citizen Victory Movement in the island House of Representatives, in a written statement. “But strictly speaking, there was a recognition of PREPA’s legal power to enter into such a contract. With Genera PR it is very different. There is a legal prohibition here stating that no more than 50 percent of generation assets can be given to a single company, but [the contract] is placing over 70% of the assets in its hands. That is a patent violation of article 1.8 (a) of Law 17 of 2019.”

He noted that specifically, Law 17-2019 provides that “[t]he Puerto Rico Electrical System may not be a vertically integrated monopoly.”

“Nor may a horizontal monopoly be established in the generation function. No electric utility company, by itself, through, or in conjunction with, a subsidiary or affiliate, may control fifty percent (50%) or more of the capacity of generation assets, with the exception of the Authority, and only in the case of legacy generation assets,” the law reads.

PREPA Governing Board Chairman Fernando Gil Enseñat acknowledged in a public hearing in the lower chamber that Genera PR would have control of 70% of the generation assets.

“Specifically, last week the Legislative Committee concluded in a report endorsed by 11 members of the committee that the Genera PR contract is null and void because it is contrary to Law 17. We will be taking additional action on other legal breaches we have identified, but this is a first step on the monopolistic nature of this contract,” said Torres Cruz, who chairs the committee that issued the report on the issue. “It is one thing to monopolize generation by particular governmental and economic visions. But it is another thing to monopolize generation at all costs, and against what the law establishes. We are convinced that both the Office of Monopolistic Affairs and the Independent Office of Consumer Protection have the ministerial duty to intervene.”

The referrals include a legal analysis of the provisions applicable to energy privatization contracts and request that the OAM and OIPC initiate formal investigations into the Genera PR LLC contract, with the purpose of initiating “all corresponding civil and criminal court actions,” including judicial challenge to the contract.

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