By The Star Staff
Former independent representative Luis Raúl Torres shared his frustration and disappointment regarding the recent renegotiation of the Public-Private Partnership contract with Genera PR, the private operator of the Puerto Rico Electric Power Authority’s (PREPA) legacy power plants.
On February 27, 2025, Genera and PREPA filed a document with the Energy Bureau agreeing to remove the existing incentive structure to ensure “long-term cost savings, administrative simplicity, and greater certainty.”
The amendment acknowledges $15.42 million in verified incentives for Genera, covering Fiscal Year 2024, which is included in a total payment of $110 million.
According to the parties, over the remaining nine years of the contract, the amendment could represent potential cost savings of up to $805.52 million, which would have otherwise been allocated to incentive payments under the current structure. Genera and PREPA further emphasized that, under the existing framework, Genera is entitled to performance-based incentives across six categories, totaling up to $100 million annually. These incentive payments could have amounted to $1 billion. Genera has agreed to forgo all incentive payments for the entire duration of the contract. In exchange, Genera will receive $110 million, payable in eleven monthly installments of $10 million, with payments scheduled to commence by the end of March, subject to approval from the Energy Bureau and the Financial Oversight and Management Board for Puerto Rico (FOMB).
This restructuring eliminates uncertainty in incentive calculations and ensures that 100% of all future operational savings will directly benefit the people of Puerto Rico, rather than being shared with Genera, the parties said. Therefore, Genera and PREPA requested that the Energy Bureau grant preliminary approval for the proposed amendment, pending final submission for regulatory approval. Required approvals from PREPA and P3A Boards have been obtained.
Nonetheless, the Energy Bureau said it is not clear how the amendments save money.
“Upon reviewing the information submitted, the Energy Bureau acknowledges that the proposed amendment could lead to financial benefits, including potential savings for the public, if properly structured and implemented. The changes outlined in the February 27 motion suggest a shift in the incentive framework, potentially resulting in improved operational efficiencies. However, the Energy Bureau notes that, under the original agreement, performance-based incentives were only awarded upon meeting established metrics, raising the question of how the amendments establish genuine cost-saving mechanisms,” a motion to the Energy Bureau reads.
Nevertheless, the Energy Bureau says, the proposed $110 million payment can be considered a cost-saving measure when evaluated against the Net Present Value (NPV) of future incentive payments over a ten-year period. The NPV of $15.42 million earned by Genera in its first year, when projected over ten years, is approximately between $110 million and $120 million. “This NPV figure aligns closely with the proposed payment. By opting for the lump-sum payment, PREPA avoids future financial commitments while securing an equivalent value in today’s terms. This could result in savings by eliminating annual payments and reducing long-term financial uncertainty,” the Bureau said.
This strategy allows for efficient fund usage while maintaining the same overall value, rendering the payment a viable and financially sound option. The shift to a lump-sum payment might be seen as a strategic decision to maximize cost savings for Puerto Rico’s energy consumers. While the proposal includes a $110 million payment, the February 27 motion does not clearly specify how this amount will be budgeted or sourced. The Energy Bureau directs PREPA and Genera, along with any relevant government entities, to clarify the funding source and any budgetary implications associated with this payment.
Governor Jennifer González on Sunday highlighted amendments to the contract between Puerto Rico and Genera PR, a subsidiary of New Fortress Energy, which manages the island’s power generation. The current contract includes performance-based incentives totaling up to $100 million annually, potentially reaching $1 billion over ten years. In response to concerns, the governor instructed Energy Czar Josué Colón and La Fortaleza Chief of Staff Francisco Domenech to renegotiate the contract.
González explained that the amended agreement caps incentive payments at $110 million for the years 2023 and 2024, eliminating potential additional bonuses for Genera PR. The new arrangement ensures that all savings resulting from the company’s operational efficiency directly benefit the public, rather than being divided equally between Genera PR and the government, as previously stipulated.
However, some remain skeptical about the deal, arguing that the company has yet to make substantial improvements in service or capital investments since taking over electricity generation in Puerto Rico two years ago. Critics argue that the privatization of power generation appears to prioritize corporate interests over those of the Puerto Rican people, while issues such as rising electricity rates and funding for retiree pensions remain unaddressed.
Torres, who as representatives investigated the contracts awarded to LUMA and to Genera, said the amendments are not what González Colón announced. “Through this agreement, $110 million will be paid to Genera PR for the years 2023 and 2024, thus eliminating future bonuses that could have reached up to $100 million annually in incentives for achieving savings in the operation of the electric generation system, during the next ten years. In other words, $110 million is being paid in advance bonuses for improvements not yet made and without achieving any savings,” he wrote in social media.
“According to the governor, this agreement could represent a savings of between $360 million and $890 million for Puerto Rico in the next decade. In addition, it was mentioned that 100% of the savings resulting from the operational efficiency of Genera PR will directly benefit the people, instead of being divided 50/50 as previously stipulated. And what savings have been achieved in the two years that Genera PR has been in charge of electricity generation? None,” he said.
On the other hand, there is no tangible evidence of improvements in service and the absence of capital investments by Genera PR and its parent company, New Fortress Energy, reinforce the perception that these agreements benefit corporations more than the Puerto Rican people, he said.