PREB denies Genera’s request for $32.48 million incentive

By The Star Staff

The Puerto Rico Energy Bureau (PREB), the island’s energy regulator, has denied a request from Genera PR, the operator of the energy utility’s power plants, for a $32.48 million incentive payment related to work completed by New Fortress Energy.

According to the PREB, Genera is seeking the payment by claiming that “an affiliate made an investment in LNG [liquefied natural gas] regasification infrastructure at the Palo Seco and San Juan facilities.” Genera argues that following the conclusion of temporary emergency missions by the Federal Emergency Management Agency and the U.S. Army Corps of Engineers, its affiliate has not received rental payments for the continued use of the regasification infrastructure.

“Furthermore, Genera appears to imply that if the requested payment is not approved, its affiliate may remove the regasification equipment -- an action that could potentially disrupt fuel supply operations and compromise system reliability,” the PREB wrote, adding that the Genera statement can be interpreted as an implicit threat. “Specifically, Genera contends that if the affiliate-owned infrastructure is withdrawn due to a lack of acknowledgment or approval for the requested incentive, it could take up to a year to design, procure, and install replacement regasification infrastructure. This would require significant capital investment from the Puerto Rico Electric Power Authority (PREPA) and lead to increased fuel costs due to continued reliance on ultra-low-sulfur diesel (ULSD) in the interim.”

The PREB noted that in its Jan. 23 motion, Genera failed to clearly identify which affiliate allegedly incurred the referenced costs, nor did it specify the conditions under which those costs were incurred or the authority that justifies such activities. “Moreover, Genera did not specify who authorized the alleged investment, when such authorization was granted, when the investment and related works were executed, and under whose supervision these activities were carried out,” the PREB stated. “Given that Genera is requesting a payment of approximately $32.48 million to be funded by PREPA’s ratepayers, they deserve a comprehensive and well-substantiated justification for such a significant expenditure.”

Due to Genera’s inability to clearly explain the fundamental basis of its claim, the PREB concluded that the request is unfounded and, once again, is considered an improper tactic to support a claim for an incentive payment.

In its petition to the PREB, Genera alleged that the use of regasification infrastructure to convert LNG into electricity led to fuel cost savings of $64.97 million for PREPA, without requiring any capital investment from the public corporation. In its claim for the $32.48 million incentive payment, the private operator argued that it invested over $29 million in regasification systems and $3.5 million in backup fuel equipment.

However, the PREB determined that the described activity did not align with Initiative 8 of its Fuel Optimization Plan, which pertains to the acquisition or leasing of more efficient supplemental generating equipment or equipment using alternative fuels.

Additionally, the PREB clarified that the process is not adjudicative, but informed Genera that it has the option to seek judicial review within 30 days.