Gov. Pierluisi Privatizes Puerto Rico’s Power Generation

Genera PR, a subsidiary of New York-based New Fortress Energy, was granted a $22.5 million annual contract for 10 years.

Puerto Rico Gov. Pedro Pierluisi has made the privatization of the island’s power production official by choosing a company that will take over the operation and maintenance of the power grid.

Genera PR, a subsidiary of New York-based New Fortress Energy, was granted a $22.5 million annual contract for 10 years. The company will also be in charge of handling contracts related to fuel purchases for the island’s 12 power facilities.

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The owner of the assets will continue to be the Puerto Rico Energy Power Authority (PREPA).

The electric generation privatization follows more frequent and longer power outages that have plagued the island since LUMA took over the transmission and distribution in June 2021, as well as seven approved electricity rate increases. LUMA has a 15-year contract to continue to provide that service, at a cost of $1.5 billion.

“I am sure that we are on the right track to give our people the reliable and affordable energy system that they deserve,” Pierluisi said.

Regarding concerns that the new company will increase the cost of electricity, Fermín Fontanés, executive director of the Public-Private Partnerships Authority, explained that Genera PR will receive incentives to generate savings, which will be shared 50%-50% with PREPA, and the money received by the public corporation will be used to lower the cost.

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Genera will receive $22.5 million annually for the first five years of the contract. That amount is expected to drop as Puerto Rico permanently shutters generation units amid a push for more renewable energy sources. It will also receive up to $15 million during a transition period of 100 days, and up to $100 million a year in incentives, a payment that will also drop as units are shut down.