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  • Writer's pictureThe San Juan Daily Star

Regulator tells PREPA, LUMA & Genera to keep within assigned budgets

Genera PR requested that the Puerto Rico Energy Bureau, the island’s energy regulator, reconsider the labor expense reduction that was ordered in a June 25 resolution because, Genera said, its proposed $79 million budget includes job positions necessary to meet its contractual obligation of providing power plant operation services.

By The Star Staff

The Puerto Rico Energy Bureau (PREB) made changes to the budgets of Genera PR, LUMA Energy and the Puerto Rico Electric Power Authority over the weekend, with a stern warning that they must operate within their assigned 2024 budgets.

The PREB approved funding for $11 million to LUMA Energy from the fiscal year (FY) 2024 budget for energy efficiency programs to be used for the remaining months of FY24. The regulator reallocated $21.5 million not used from the Operations and Maintenance Reserve to mitigate bill impacts caused by unforeseen fluctuations in fuel costs.

Genera requested that the PREB reconsider the labor expense reduction that was ordered in a June 25 resolution because, Genera contended, the proposed Genera $79 million budget comprises job positions necessary to meet its contractual obligation of providing power plant operation services, and that if the PREB sustains the decision to reduce that amount, important programs could be put at risk. Genera noted that as of June 28 of this year it had 634 accepted positions, amounting to $49 million in payroll expenses, for former PREPA power plant employees in critical positions and contracted positions that include non-mandatory hires required to support power plant operations for $15.4 million. Genera stated that those positions were not included in earlier GenCo rosters.

Genera also stated that the payroll for already hired Genera employees amounts to $64.3 million and that the budget for pivotal positions for which it is recruiting amounts to $15 million. The private operator asserted that it requires the entire $79.5 million that it requested to guarantee reliable operations. It said the PREB decision to reduce labor expenses also adversely affects Genera’s ability to perform its obligations under the power generation operation and maintenance contracts.

Genera also contended that its proposed budget accounts for a significant reduction compared to PREPA’s GenCo Proposed Budget. Genera asserts that PREPA’s GenCo budget did not account for various vital elements integral to efficient operations, including administrative support, logistics, human resources and other back-office elements.

The PREB found Genera’s contentions to be unpersuasive. Foremost, Genera has allocated more funds for labor than the PREB approved for that purpose. That, the regulator said, is unacceptable and may be considered imprudent and noncompliant with the PREB’s June 25 resolution.

Genera provided a roster of accepted and vacant positions with much larger salary increases, with some as high as 200%. In addition, bonuses are included that range from $600 Christmas bonuses for most employees to other bonuses of as much as $200,000, the PREB said.

The energy regulator also sternly reminded Genera it must exercise responsible administration of public funds. Salary increases of the magnitude observed not only demonstrate a lack of financial prudence but also set a concerning precedent that could have a multiplier effect on salary expectations and negotiations throughout the entire industry, it said.

The PREB also found that PREPA’s contention that its labor budget should not be reduced in accordance with the PREB’s June 25 resolution to be without merit, but found PREPA’s assertions regarding the necessity of additional funding for reimbursement to Genera for it to perform the remedial actions required by the U.S. Environmental Protection Agency to merit additional funding. The PREB also dismissed contentions that PREPA’s increases in other budget items should be restored.

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