New Fortress Energy suspends gas deliveries to Puerto Rico

Energy Czar Josué Colón Ortiz

By The Star Staff

New Fortress Energy has suspended deliveries of liquefied natural gas to Puerto Rico.

In a letter written to Energy Czar Josué Colón Ortiz, New Fortress Energy (NFE) CEO Wes Edens said the Puerto Rico Electric Power Authority (PREPA) currently owes NFE over $9 million in unpaid invoices and $3 million in interest on those invoices.

“On June 16, we made clear to PREPA that if such amounts were not paid by June 23, 2025 NFE would suspend gas deliveries, as it is entitled to under the FSPA (agreement),” Edens said. “That letter and the corresponding invoices are attached. It is now past June 23 and PREPA has not paid the amounts due. As a result, NFE is suspending further deliveries of gas under the FSPA until these amounts are paid.”

NFE instructed the vessel that supplies liquefied natural gas (LNG) to Palo Seco and Puerto Nuevo to depart the island, leaving the base units and temporary generation plants in the metropolitan area without gas supplies, according to various media outlets.

Colón Ortiz, who was in Salinas on Sunday to lead an inspection of the repair work being carried out at Aguirre Central’s Unit 2, announced a press conference for after press time.

The news comes after a week in which the contracts held by troubled NFE in Puerto Rico, which provide significant financial support, are under considerable threat.

The Financial Oversight and Management Board recently rejected a new LNG supply contract between Genera PR, the private operator of Puerto Rico’s legacy power plants, and NF Energía, both subsidiaries of NFE. Robert Mujica, the executive director of the oversight board, stated that the board had insufficient time to evaluate the proposed $20 billion, 15-year contract. After an initial review, the board found inconsistencies in the request for proposal and noted a lack of market competition, arguing that the firm effectively holds a monopoly. However, the board agreed to a temporary extension of the current contract to ensure the continuity of services.

NF Energía submitted a bid to provide LNG for all generation plants, while Crowley LNG Puerto Rico LLC proposed supplying LNG to the generation plant in Mayagüez. Colón Ortiz expressed concerns over the oversight board’s actions, pointing out that since May 2018, NFE has had a contract for leasing facilities at the Puerto Nuevo port for a LNG fuel handling facility. Mujica indicated that the oversight board had never evaluated or approved that contract, which was signed in 2018 by NF Energía and former Ports Director Anthony Maceira.

To make matters worse, Rep. José Aponte Hernández announced Sunday that he will initiate an investigation into the 2018 contract awarded to NFE.

“This is an issue we have been addressing since 2017 when we argued that the contract was a poor deal for Puerto Rico,” the former House speaker said. “The statements by [...] Mujica suggesting that they did not evaluate the contract warrant our attention, along with the entire process related to the status and eventual awarding of this contract for such an important port facility over two decades. We will review records, market assessments, and feasibility studies, among other documents.”

Aponte pointed out that he has warned since 2017 that the 2018 contract would establish a gas monopoly in Puerto Rico. “In the coming days, the House Committee on Federal and Veterans Affairs [chaired by Aponte] will start requesting information from all relevant parties -- the [oversight] board, the Ports Authority, and the Electric Power Authority, among others -- to thoroughly understand the studies and processes that led to an agreement detrimental to our people.”

Additionally, the Puerto Rico Energy Bureau dealt a setback to NFE by rejecting changes to the contract held by its subsidiary, Genera. The Energy Bureau declined an amendment to Genera’s contract that aimed to eliminate an incentive scheme, instead opting for an advance payment of $110 million, payable in 11 installments. The changes would have favored Genera due to challenges in proving its entitlement to bonuses.

Moreover, the government chose not to award NFE a contract for 800 megawatts (MW) of temporary power, handing the contract to a firm called Power Expectations instead. The commonwealth appeals court subsequently halted the contract for the 800 MW of temporary energy after some proponents challenged it. Last week, Colón Ortiz announced he would issue a second tender for the contract.