Aug. 3 at 4:07 PM
$NFE last paragraph is interesting, Genera to submit comments to PREP on fuel contingency plan by August 6th ahead of NFEs August 8th extension. Open to comments :) @CFAstockpicker @VaDeReL
The Fiscal Oversight Board (JSF) approved the one-year extension of Genera PR's diesel supply contract with Puma Energy . This agreement will include a
$500 million increase in the maximum amount to cover potential increases in the volume and cost of the fuel required.
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In mid-July, Genera PR spokesman Iván Báez had announced that the company would opt to exercise the one-year extension options on Puma's contracts for the supply of diesel—which expires on November 16—and for Bunker C, another petroleum derivative, which expires on October 30. Later, however, Báez clarified that, in the case of the Bunker C supply, a request for proposals would be published with a view to awarding a long-term contract.
The extension recently authorized by the Board "includes the supply of 4 million barrels of USLD (ultra-low sulfur diesel). The price to be paid per barrel consists of a scale (fuel market price) plus a fixed price differential, known as an 'adder,' which varies depending on the method used to deliver the ULSD," the Board's letter states .
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Since last month, Genera PR's fuel supplies have been under scrutiny by the Board, the Energy Bureau (NEPR), and Energy Czar Josué Colón , amid the controversy over natural gas contracts with New Fortress Energy (NFE), the parent company of the generation fleet manager. On July 18, Board Executive Director Robert Mujica asked Genera PR to share its plans to secure bunker C and diesel supplies, in view of the upcoming expiration of both contracts.
In recent weeks, seven of the 14 temporary units at the San Juan and Palo Seco power plants had to be shut down due to a diesel shortage and the expiration of one of NFE's natural gas supply contracts. Genera PR has stated that the plants do not have the necessary storage capacity for the temporary units to operate continuously on diesel.
The Board's Friday letter specifies that the maximum amount corresponding to the diesel contract extension, which will take effect on November 17, will be
$500 million, exceeding the
$452 million in the current agreement, "to cover deliveries of ULSD to additional generating units and take into account projected increases in fuel volumes and prices."
In Puerto Rico, diesel is the most expensive fuel used by the thermoelectric fleet managed by Genera PR, with prices that can reach 30 cents per kilowatt hour generated. Among the main generating plants, it is used as an alternative fuel to natural gas at the San Juan power plant and the EcoEléctrica cogeneration plant (Peñuelas), but it is the only source available for production at the rapid response units located in Palo Seco (Toa Baja), Aguirre (Salinas), Costa Sur (Guayanilla), Mayagüez, Cambalache (Arecibo), Daguao (Ceiba), Jobos (Guayama), and Yabucoa.
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Since Genera PR assumed responsibility for the generation fleet in 2023, diesel and bunker C contracts have typically been renewed year after year, in contrast to the natural gas supply, which NFE and Naturgy —the supplier of the EcoEléctrica cogeneration plant and the Costa Sur power plant—have provided under multi-year agreements.
They fail to comply with the contingency plan
On the other hand, the NEPR warned Genera PR that it is obligated to collaborate with the Puerto Rico Electric Power Authority (PREPA) in submitting a "fuel security contingency plan" that it had originally requested from the public corporation by July 29.
“The PREB finds that Genera (…) has an affirmative duty to cooperate with PREPA on all matters affecting fuel security and system reliability. Inaction by either party undermines the statutory mandate to ensure safe, reliable, and affordable electric service,” the agency stipulated in a resolution .
“Given the deadline, the PREB required Genera PR to provide its comments to PREPA on or before August 6, and the public corporation must provide the contingency plan two days later.”
