New Fortress Energy subsidiary Genera PR to operate power plant fleet
Gov. Pedro Pierluisi
By THE STAR STAFF
Gov. Pedro Pierluisi Urrutia and Public-Private Partnerships Authority (P3A) Executive Director Fermín Fontanés Gómez announced Wednesday that a subsidiary of New Fortress Energy will operate and maintain the legacy power plants of the Puerto Rico Electric Power Authority (PREPA).
The contract went to a New Fortress Energy (NFE) subsidiary called Genera PR, which will work with Pic Group Inc. in charge of training the workforce. The contract already has the approval of the PREPA governing board, the Financial Oversight and Management Board and the Puerto Rico Energy Bureau (PREB).
As part of the 10-year contract, Genera PR will receive $15 million during the 100-day transition period. After the transition period ends, Genera PR will receive a fixed payment of $20 million for the first five years of the contract, an amount that is slated to decrease thereafter. The subsidiary will also receive up to $100 million under a structure of penalties and incentives for performance.
Headquartered in San Juan, Genera PR is a power and energy service provider founded by NFE to support Puerto Rico’s transition to clean, affordable and reliable energy.
Under the public-private partnership (PPP) agreement, Genera will operate, maintain, decommission and modernize the PREPA-owned thermal power generation system of some 3,600 megawatts (MW) after a mobilization period. In this role, Genera will manage the operating budget, fuel contracts and federal funds for the generation fleet on behalf of PREPA.
“All Puerto Ricans deserve access to clean, reliable and low-cost power,” said Wes Edens, the chairman and CEO of NFE, in a statement. “As large investments are made to modernize Puerto Rico’s grid and transition to renewable energy, this partnership will provide meaningful cost savings for consumers and businesses, improve reliability and reduce the environmental impact of an aging thermal generation system. We believe Puerto Rico’s transformation to renewables supported by low-carbon fuel will be a model for markets around the world and a significant step forward in our company’s mission.”
Genera was selected by the P3A after a competitive process that began in May 2020 in compliance with the requirement established by Act 120-2018 (Puerto Rico Electrical System Transformation Act). The selection was made based on extensive grading criteria, which included operational experience, technical expertise, approach and methodology, and estimated cost savings. The contract has received all the necessary regulatory approvals from the government of Puerto Rico, the Financial Oversight and Management Board, and the PREB.
“The public-private partnership that we announce today between the Electric Power Authority as owner of generation assets, Genera PR as the new operator, and the public administration as administrator of the contract, is another big step toward the energy transformation that our people need and deserve,” Pierluisi said. “Our goals with this contract are to continue speeding up the transformation of our electrical system, facilitate the transition to generation through renewable energy in compliance with the Integrated Resource Plan approved by the Energy Bureau, provide effective long-term planning of our energy needs, and maximize the operation of the plants to guarantee the stability of our electrical system while we convert it into a renewed, modern and efficient one that promotes the economic development of Puerto Rico.”
By virtue of the PPP agreement, Genera PR’s responsibilities are: the operation and daily maintenance of generation plants; the administration of facility contracts, including fuel contracts; the supply, storage and maintenance of inventory; the maintenance, repair and replacement of equipment; and the management of blackouts, among others.
Fontanés said at a news conference that the contract will not have a transition period at the end of the 10-year period as Genera PR will be in charge of decommissioning all of the power plants, most of which are old. The plants that would be taken over by the private operator include Palo Seco, Aguirre, Costa Sur, Mayagüez, Cambalache, San Juan, Yabucoa, Daguao, Jobos and Vega Baja.
Fontanés said that during the first 30 days of the contract, Genera PR is required to make job offers to PREPA workers, who will have two years of job permanency with the private operator.
He said the selection of Genera PR is the result of a bidding process that began in 2020 seeking to renew the island’s energy infrastructure, especially after the ravages of hurricanes Irma and Maria in 2017. The P3A received 15 bids, a number that was shortlisted to eight.
Edens, who was present at the press conference, said Genera PR will begin operating by mid-year.
Fontanés said the private operator must give priority to local contractors for work at PREPA to avoid the hiring of its own subsidiaries for work.
Although NFE has a contract to supply fuel, government officials did not see a conflict of interest. They also said the contract will have no impact on PREPA’s bankruptcy process to restructure close to $10 billion in debt.