SAN JUAN, Puerto Rico (HPD) — Puerto Rico privatized its electricity production on Wednesday and selected Genera PR to take control of the operation and maintenance of state power generation units in the United States as part of an initial 22-year contract. 5 million dollars.
The announcement comes as the island battles to rebuild its deteriorating power grid amid constant blackouts that Gov. Pedro Pierluisi says is partly attributed to “archaic and unstable” generators.
“I am confident that we are on the right track to give our people the reliable and affordable energy system they deserve,” the governor said.
Genera PR is a subsidiary of New York-based New Fortress Energy, which works closely with Shell Oil and other oil and gas producers. Genera will also manage contracts related to the purchase of fuel for the island’s 12 power facilities as part of a 10-year contract with the Puerto Rican government.
“Today is a historic day,” said State Secretary of State Omar Marrero, who pointed out that recent hurricanes have revealed the deterioration and critical state of the island’s energy network.
The island’s power generators, some over 50 years old, have suffered blackouts at rates five times the industry average in recent years, producing less than half the power forecast by the government.
“Decades of mismanagement and neglect have left Puerto Rico with an expensive, inefficient and outdated energy system,” a federal control board that oversees Puerto Rico’s finances said in a statement supporting the contract awarded to Genera PR.
Many Puerto Ricans are wary of this process, having learned that the privatization of power transmission and distribution in June 2021 did not bring an improvement in problems such as extensive blackouts, which have worsened. The power situation on the island is so bad that the US government recently announced it would provide temporary power generation via barges and onshore generators.
Another concern is that the already high electricity bills could become even more expensive under the new public-private partnership, fears that officials dismissed as they said that Genera PR will receive incentives to generate savings, of which 50% will be passed on to consumers.
The company will receive 22.5 million dollars a year during the first years of the contract, a payment that will decrease as Puerto Rico definitively closes generation units in a bid for renewable energy sources. Genera PR will also receive up to $15 million during a 100-day transition period and up to $100 million a year in incentives, a payment that will also reduce as units close.
Wes Edens, founder and CEO of New Fortress Energy, said that Genera PR will begin operations in the middle of the year.
He added that blackouts are unacceptable and pointed out that electric bills in Puerto Rico “are simply too high.”
“While we recognize the challenges that lie ahead…we believe the opportunities here…are tremendous,” Edens said.
Until Wednesday, the government had refused to publish a copy of the contract or the name of the chosen company even after the governing board of the Puerto Rico electric company and the Authority for Public-Private Partnerships had approved it after meeting in private.
Tomás Torres, a member of the governing board who represents the public interest, was the only one who voted against the contract.
Torres pointed out that these contracts are usually made with extensive citizen participation “given the impact it will have on all sectors that make up the public interest.” He also noted that Genera PR will have a monopoly on power as the sole electricity provider on the island.
In addition, Torres warned that the contract represents additional costs for the state power company, which has some $9 billion in debt — the largest of any Puerto Rican government agency — and remains embroiled in a bitter battle with creditors as it tries to emerge from bankruptcy. . How much of that debt will fall on consumers remains to be seen.