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  • Writer's pictureThe San Juan Daily Star

Legislator: Power generation under a single private operator would violate the law

Public-Private Partnership Authority Executive Director Fermín Fontanés Gómez

By The Star Staff

A consortium composed of New Fortress Energy, Peak Energy and Black & Veatch is presumably the preferred proponent for the public-private partnership (P3) that seeks to operate the Puerto Rico Electric Power Authority (PREPA) legacy plants, the STAR has learned.

But a lawmaker said putting all 18 power plants under a single private operator might violate a local law.

PREPA is divided into two entities, one consisting of transmission and distribution (T&D) and the other of its power plants. LUMA Energy operates PREPA’s T&D system as part of a 15-year concession that went into effect in the summer of 2021, following a one-year transition period. LUMA Energy also controls the customer service area.

Meanwhile, PREPA owns and operates the power generation assets, but local laws require that some 18 power plants be put under private management, a process conducted since 2020 by the Public-Private Partnership Authority (P3A).

P3A Executive Director Fermín Fontanés Gómez, at a House budget hearing earlier this week, confirmed the agency already has a preferred proponent to operate PREPA’s generation assets. He did not mention the name of the preferred proponent.

He said that if the P3 committee does not approve the preferred proponent, the agency has the option of going to other proponents that participated in the process.

Independent Rep. Luis Raúl Torres Cruz, who chairs the Economic Development, Planning, Telecommunications, Public-Private Partnerships and Energy Committee, recently told the STAR that Encanto Power LLC was the preferred proponent.

Encanto Power was incorporated in Puerto Rico in 2020. Its authorized representative is Daniel Iturregui. New Fortress, one of the consortium members, has a subsidiary in Puerto Rico called NFEnergia that in 2018 obtained the five-year contract to supply gas to San Juan’s Units 5 and 6 for PREPA.

Torres Cruz said giving control of the power plants to one firm is a violation of Act 120 of 2018, the law that established the processes to put the power utility under private management.

The law says that PREPA’s generation assets “may not be sold or otherwise disposed of or assigned” to a “single contracting party under a partnership contract or a sales contract.” The law also says that “under no circumstances, may the transactions under this law be used to constitute and authorize a monopoly in power generation.”

In that regard, Torres Cruz said, the Legislature instructed P3A board members Eduardo Ferrer Ríos and Liza Ortiz Camacho to oppose the legacy power plants P3.

The Puerto Rico Energy Bureau, meanwhile, recently authorized some $290 million in improvements to the existing plants.

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