P3A board approves contract for private management of power plants
House Speaker Rafael Hernández Montañez, at lectern, and Senate President José Luis Dalmau Santiago
By THE STAR STAFF
The Public-Private Partnership Authority (P3A) board of directors has unanimously approved the contract that puts Puerto Rico Electric Power Authority (PREPA) legacy power plants under a private operator, P3A Executive Director Fermín Fontanés Gómez announced Sunday in a written statement.
Fontanés said the vote came after the board of directors discussed matters related to the contract, including the concerns of the two public interest members appointed by the Legislature.
The vote also came after a series of meetings in which the board discussed details of the project, the doubts of all the directors, and board members’ suggestions, the statement said.
Last week, Gov. Pedro Pierluisi Urrutia said he had instructed Secretary of State Omar Marrero Díaz, who heads the P3A board, to evaluate suggestions from the Legislature regarding the proposed generation public-private partnership (P3).
The Legislature controls two of the votes on the P3A board that were needed to approve and enable the P3, which was launched in 2020.
House Speaker Rafael Hernández Montañez and Senate President José Luis Dalmau Santiago at a news conference last week set conditions for the proposed P3. Those conditions seek to ensure transparency in the process of establishing the P3 contract, protecting the jobs and benefits of PREPA workers, and ensuring that savings resulting from the P3 contract are used to lower utility rates. They also proposed language that would ban the operator from subcontracting its subsidiaries for work at PREPA. Another condition would require the votes of the two legislative members of the P3A board to approve contract extensions.
Hernández Montañez said in a statement Sunday that the Legislature’s suggestions were incorporated into the contract, whose contents were not revealed. The document has been under scrutiny as officials do not want a repeat of the problems encountered with LUMA Energy, the private operator of PREPA’s transmission and distribution (T&D) system, whose performance has been criticized.
The P3A statement does not reveal the name of the company awarded the P3 contract, but STAR sources have said it is a consortium headed by New Fortress Energy. The governor said last week that he expected the P3A to approve the project.
The contract, nonetheless, still needs to obtain the formal approval of PREPA, the Puerto Rico Energy Bureau and the Financial Oversight and Management Board.
“This is just one step in the approval process required under Act 29-2009 of the Public Administrations and Act 120-2018, Law to Transform the Electric System of Puerto Rico,” the P3A statement said. “After this approval, the Partnership Contract for the Operation and Maintenance of PREPA’s Legacy Generation Assets will be sent to PREPA’s Governing Board and, ultimately, to the Office of the Governor of Puerto Rico for its endorsement. Following the provisions of Act 29-2009, once said approvals are obtained, the details of the project will be communicated.”
The legacy generation assets have a total system-wide PREPA-owned dependable generation capacity of some 3,600 megawatts (MW). The plants include Palo Seco, Aguirre, Costa Sur, Mayagüez, Cambalache, Palo Seco, San Juan, Yabucoa, Daguao, Jobos and Vega Baja.
The contract calls for the operator to introduce private sector operational expertise; increase the safety, reliability, resiliency, power quality and efficiency of Puerto Rico’s legacy generation asset operations; and facilitate Puerto Rico’s transition to PREPA’s Vision for the Future of Power in Puerto Rico described in the Integrated Resource Plan.
The operator must also implement operational excellence of electricity generation facilities consistent with prudent industry practices, including improved safety and compliance with environmental and other applicable regulatory requirements, and increase cost efficiency while achieving operational objectives in coordination with LUMA Energy, the T&D system operator.