Reports: Citing ‘serious cash flow problem,’ AES demands gov’t bailout
By John McPhaul
jpmcphaul@gmail.com
The coal-fire energy generator AES Puerto Rico is in dire economic straits and is demanding a bailout from the island government, according to emails and letters written over the past 11 months and reviewed by the Center for Investigative Journalism and La Perla del Sur newspaper.
A letter from Financial Oversight and Management Board Executive Director Natalie Jaresko to the Puerto Rico Electric Power Authority (PREPA) Governing Board uncovered what until now had been a secret between AES executives and members of Gov. Pedro Pierluisi Urrutia’s administration: that the AES is going through its worst economic crisis and to get out of it, it is demanding that the Puerto Rico government come to its rescue, according to the news outlets.
“The cash flow problem at AES-PR is serious,” reveals Jesús Bolinaga Serfaty, the president of AES, in a communication written on March 24, 2021 to PREPA executives that had been kept secret, but that the Center for Investigative Journalism and La Perla del Sur obtained after months of requests and the presentation of a mandamus resource for access to public information.
The documents show that as of June 2021, AES wanted to transfer ownership of its coal plant in Guayama to the public corporation or any other government entity, wanted PREPA to grant it a new contract, this time only as “operator” of the facility, and wanted the island government to assume all its expenses, including the purchase of coal and more than $150 million in environmental costs. The latter costs would include those incurred in complying with environmental laws, standards and regulations such as the export of coal ash and the monitoring of groundwater, among others.
In the March 24, 2021 letter, Bolinaga Serfaty alleges that AES-PR’s financial precariousness was aggravated by Law 5 of 2020, which prohibits the disposal of coal ash on the island and “drastically increases our administration cost.”
In at least two of the documents delivered last week by PREPA and the Puerto Rico Energy Bureau following the lawsuit, the AES-PR president states that the “unprecedented” ban on coal ash disposal has meant “at least $167 million in additional costs” until 2027, the year in which its electricity sales contract with the Puerto Rico government expires.
According to a breakdown, the contracting of vessels to export thousands of tons of ash to Jacksonville, Florida, the transfer of that load in trucks to a landfill in Georgia and the payments for its disposal in that landfill entail a cost of $18 million annually between 2019 and 2027, and $20 million per year in 2021 and 2022.
The company also added that in 2020, AES required 26 shipments to send more than 529 tons of coal ash off the island for disposal, among other expenses such as the upkeep of the port of Guayama, which cost $7.8 million to be dredged.
PREPA governing board member Tomás Torres Placa said the reason AES is threatening to leave is because it submitted a proposal for the gasification of its plant to the PREB that was rejected.
“AES could take that up again with the PREB in the evaluation for a new integrated resource plan in 2023. The PREB is the one that decides,” Torres Placa said.
The integrated resource plan is the blueprint that determines which sources of energy and projects PREPA should rely upon to generate power.
“They are applying pressure,” Torres Placa said in remarks he brought to PREPA’s board.
AES must stop operating in 2028 when a ban on energy generated by coal goes into effect.