Puerto Rico Electric Power Authority
Government agency in Puerto Rico From Wikipedia, the free encyclopedia
The Puerto Rico Electric Power Authority (PREPA; Spanish: AEE) is an electric power company owned by the Commonwealth of Puerto Rico responsible for electricity generation, power distribution, and power transmission on the island.[1] PREPA was the only entity authorized to conduct such business in Puerto Rico, making it a government monopoly, until on January 22, 2018, former governor of Puerto Rico, Ricardo Rossello, announced that all assets of the company will be sold in a general privatization of PREPA.[2]
| Agency overview | |
|---|---|
| Formed | May 2, 1941 |
| Dissolved | May 31, 2021 (Transmission Lines & Distribution Areas) by LUMA Energy. June 30, 2023 (Generation Area) by Genera PR. |
| Superseding agency |
|
| Headquarters | San Juan, Puerto Rico |
| Website | aeepr |
Before 2014, he authority was managed by a board of directors appointed by the governor with the advice and consent of the Senate. After 2014, PREPA was managed by the Puerto Rico Energy Commission, a government agency whose board of directors was appointed by the governor.
Hurricane Maria in September 2017 destroyed PREPA's distribution network, creating a blackout in all parts of the island.[3]
History
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Perspective
PREPA was originally named the Puerto Rico Water Resources Authority (PRWRA), created by Act 83 on May 2, 1941,[4] during the governorship of Rexford G. Tugwell. Government-owned, PRWRA unified diverse regional and local electric power companies into one unified electric grid.
Maintenance budget
Over the years the budget for maintenance, which includes such activities as clearing trees near power lines, has diminished. In 2007 it was $251 million and in 2014 it was $202 million.[5][6]
Outages
Throughout its history, PREPA has suffered several outages that have left regions or the entire island of Puerto Rico without power.
In August 2012, 14,000 residents were left without power following Tropical Storm Isaac.[7]
One of these islandwide outages occurred on September 20, 2016, due to a fire at one a PREPA facility known as Central Aguirre.[8] All of Puerto Rico was without power for three days.
On occasion, entire sectors have reportedly been left without power when an animal, such as a cat or an iguana, has caused damage to the grid.[9]
In September 2021 demand for electricity exceeded supply after mechanical and maintenance problems affected various power plants, resulting in four days of consecutive rolling blackouts.[10][11] Central Aguirre and Palo Seco faced problems with the removal of seaweed due to lack of replacement filters that are used to prevent the accumulation of seaweed.[12] The power outages caused classes to be canceled at the Pontifical Catholic University of Puerto Rico and instigated a student protest at the University of Puerto Rico.[13][14]
Hurricanes Irma and Maria
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At the beginning of September 2017, the eye of Hurricane Irma passed north of the island. The strong winds left 1 million residents without power. Power was restored to most, but not all, by September 20, when Hurricane Maria struck, leaving nearly the entire island without power. Two weeks later, power had been restored to about 10 percent of customers.[15] Full restoration took months. Many residents bought generators.[16] Electric companies in unaffected areas ordinarily make contracts for speedy assistance to those hit by disaster, but in this case negotiations took weeks.
The initial $300 million contract for power restoration was given to Whitefish Energy, a Montana company which had only two employees on the day the hurricane struck.[17] The award was controversial on those and other grounds, and was cancelled on October 29. By December 2017, the Army Corps of Engineers had other contractors in place, along with crews brought in through mutual aid agreements with utilities such as Con Edison.[18]
Six weeks after Hurricane Maria, 30 percent of customers had been restored.[19] After two months, almost half had been restored.[20]
On January 6, 2018, representatives of FEMA, the U.S. Army Corps of Engineers, and their armed security details entered a Palo Seco warehouse owned by PREPA to obtain and distribute a massive store of spare parts needed to restore grid power. PREPA has been accused of hoarding the materials and hence delaying the restoration of power. The equipment has since been distributed.[21]
In January 2018, it had been predicted that generation would reach 95% by the following month, and 100% of customers would be restored by June 2018.
On April 18, 2018, an accident at a transmission line knocked out the electrical grid of Puerto Rico. All the island lost power. The following afternoon, PREPA announced that service had been restored to 97% of customers, the same percentage as before this blackout. 40,000 customers were still out of service due to the hurricane seven months earlier.[22]
With June 1 the official start of the 2018 hurricane season, an estimated 11,000+ customers remained without power, possibly for another two months.[23] Although an estimated $3.8B was spent on power grid work since the September hurricanes, the grid is still considered fragile and vulnerable.[24] PREPA announced a $500M one-year master services agreement with MasTec for further power grid reconstruction and modernization services.[25][26]
Costa Sur Power Plant
As a result of the 2019–20 Puerto Rico earthquakes the Costa Sur Power Plant located in Guayanilla was knocked out of service. An estimated 327,000 customers were left without power, and many, as a result, were also without water service. The President of the AEE/PREPA, Jose Ortiz, informed there was extensive damage in the facilities and that repairs would take more than a year.[27][28] FEMA assigned $238 million to help cover cost related to backup units which are used to meet the demand previously covered by Costa Sur.[29]
Controversial $1.5 billion fossil fuels project
In 2017, during Hurricane Maria an unsolicited offer by New Fortress Energy was made to PREPA. In 2020, a court order required the awarded-contract documents be made public and showed several irregularities including that the company doesn't have a liquid-gas production track record in Puerto Rico and that rather than go through a bidding process, the contract was approved quickly. Chris Christie, the former governor of New Jersey was listed as a paid lobbyist for PREPA, in the documents. Ingrid Vila Biaggi, the former Puerto Rico Chief of Staff, made a request for an independent investigation.[30] In 2021 various environmental groups requested the cancellation of the contract.[31]
Office of the Comptroller 2020 audit
An audit in 2020 from Puerto Rico's Office of the Comptroller examined PREPA capital improvement projects from 2010-2018 concluded that PREPA's operations during this period did not adhere to applicable laws and regulations, leading to financial losses and hindering accountability. The audit identified what it called wasteful spending by PREPA, including $191.4 million on projects that yielded no utility, such as the Gasoducto del Sur ($69.2 million), Vía Verde ($31.9 million), Unit Conversion ($47.9 million), Aerogenerators ($3.7 million), and land acquisition ($1 million). The investigation uncovered contracting irregularities for the Vía Verde project, including failure to solicit multiple proposals, lack of board approval for large contracts, payments made before contracts were formalized, missing contractor capacity evaluations, and payments exceeding authorized amounts. PREPA also failed to update its by-laws to incorporate legislative amendments, did not publish required board meeting summaries and public hearing recordings online, and neglected to evaluate board compliance with industry governance standards.[32]
Additionally, the audit revealed a severe lack of transparency, as PREPA's website lacked crucial information required by law, including its organizational chart, governing documents, code of ethics, board meeting minutes, and detailed contract information. PREPA's financial management was found deficient, operating with an accounting manual last updated in 1989, lacking documentation defining account purposes, and failing to establish procedures for reconciling its account numbering system with Federal Energy Regulatory Commission requirements. The report also concluded that PREPA had not properly registered acquired assets, including six land parcels and structures, in its accounting system, an issue that had been previously flagged by external auditors.[32]
For example, during the Gasoducto del Sur project, PREPA entered into complex arrangements with government entities that led to additional costs, including $62.8 million disbursed by AFICA to acquire project assets and provide credit, warehouse rental fees of $342,500, interest payments of $3.2 million, and $6.7 million to reacquire assets that were later transferred to another agency. The audit stated that these financial entanglements strained multiple government entities during Puerto Rico's fiscal crisis and demonstrated the cascading negative effects of PREPA's project mismanagement.[32]
Controversies
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PREPA has accumulated over $9 billion in debt. In the agency’s ongoing bankruptcy proceedings, a federal oversight board stated that it would be “impossible” for Puerto Rico to repay the $8.5 billion requested by bondholders.[33] The bankruptcy case, which began after the territory declared its public debt unpayable in 2015 and officially filed for bankruptcy in 2017, has reportedly discouraged investment and hindered economic development.[33]
PREPA’s electrical infrastructure has experienced long-term deterioration due to decades of underinvestment and insufficient maintenance.[33] The system is aging faster than it can be repaired, with many power plants and substations operating beyond their intended lifespan.[34] Equipment failures in one part of the grid can cause outages across wider areas.[34]
PREPA has also been affected by corruption scandals and frequent changes in leadership.[34] After Hurricane Maria in 2017, U.S. Congress investigated claims that PREPA officials accepted bribes in exchange for prioritizing power restoration to certain areas and businesses.[34] In addition to corruption, poor financial decisions and deferred maintenance by local officials contributed to the utility’s problems. A Government Accountability Office report concluded that PREPA lacked the capacity to manage or upgrade its grid effectively.[34]
Widespread dissatisfaction with the energy system continues. Although the company LUMA Energy currently manages power distribution, much of the public criticism targets infrastructure that remains under PREPA’s control.[34]
In April 2025, the Puerto Rico Oversight Board announced that bondholders of the Puerto Rico Electric Power Authority had no active claims against the central government of the Commonwealth of Puerto Rico in the approximately $575 million US dispute.[35]
LUMA Energy
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Perspective
In 2025, PREPA announced a new debt restructuring plan that reduces its debt from $10 billion to approximately $2.6 billion. The plan requires that PREPA maintain its existing contracts with private energy operators LUMA Energy and Genera PR. It also includes new bond issuances and alternative funding mechanisms designed to limit electricity rate increases.[36]
In June 2020 governor Wanda Vázquez Garced and the AEE/PREPA signed a contract with LUMA Energy that would give the company control of the AEE/PREPA electric grid for 15 years.[37] The meeting in which the contract (which contains over 300 pages in length) was approved lasted only 43 minutes.[38]
The UTIER along with the other unions of the authority expressed disapproval of the contract, organized strikes and submitted amendments to the contract.[39][40] The Puerto Rico House of Representatives called for postponing the contract until 2022 and launched an investigation into the contract.[41][42][43]
In October 2024, the Special Commission of the Puerto Rico Bar concluded that the contract, between the two agreements, violated fundamental legal principles, but also contributed to worsening the energy situation of Puerto Rico. The Special Commission of the Puerto Rico Bar recommends, a Litigation in nullity, or Resolution according to the contractual terms.[44]
Genera PR
In March 2025, Governor Jennifer Gonzalez Colon changes the contract of the government of Puerto Rico with the company Genera PR, changing the contract, as an act of taxation.[45]
Structure
Board of directors
PREPA’s board of directors governed the company and typically included private citizens representing public interests, along with ex officio public officials such as the Secretary of Economic Development and Commerce. Two board members were elected by residential customers and one by commercial customers. However, when the governor and legislature were from the same party, the legislature could change the board's composition. The governor usually appointed four members with Senate approval, making the board more politically influenced than a neutral utility body.[46][47]
Energy sources
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Perspective
The majority of Puerto Rico's electricity is generated using oil and natural gas fired power plants. Puerto Rico also has 21 reservoirs that produce hydroelectric energy.[48]
In 2019 the Puerto Rican government passed legislation requiring the closure of coal fired power plants by 2028 and achieving 100% renewable energy by 2050.[49] A report in 2021 criticized the government for delays in processing applications for electrical interconnection. At the time of said report only 327 applications where approved, representing 0.09% of the total.[50]
In 2021 the government unveiled plans for the Puerto Rico Ocean Technology Complex (PROtech) an Ocean thermal energy conversion project on the southeast coast.[51]
Power plants
 | This section needs to be updated. (February 2021) |
PREPA serves close to 1.5 million customers through several power plants (as of 2015):[52][53] In 2020 the agency continues to report that it serves 1.5 million customers.[54] On July 1, 2023, every generation plant owned by PREPA got taken over by private company Genera PR.[55]
| Power plant | Capacity | Energy source | Ownership | Owner | Operator | Location |
|---|---|---|---|---|---|---|
| AES Ilumina[56] | 24 MW | solar power | private | AES Corporation | AES Corporation | Guayama |
| AES Puerto Rico[57] | 454 MW | coal | private | AES Corporation | AES Corporation | Guayama |
| Aguirre Combined Cycle[58] | 592 MW | diesel fuel | private | Genera PR | Genera PR | Salinas |
| Aguirre Thermoelectric[58] | 900 MW | heavy fuel oil | private | Genera PR | Genera PR | Salinas |
| Cambalache | 248 MW | diesel fuel | private | Genera PR | Genera PR | Arecibo |
| Costa Sur | 990 MW | heavy fuel oil | private | Genera PR | Genera PR | Guayanilla |
| EcoEléctrica[59] | 510 MW | natural gas | private | Gas Natural Fenosa, International Power | Gas Natural Fenosa | Peñuelas |
| Mayaguez | 168 MW | diesel fuel | private | Genera PR | Genera PR | Mayaguez |
| Oriana Solar Farm[60] | 45 MW (58MW(DC)) | solar power | private | Sonnedix | Sonnedix | Isabela |
| Palo Seco | 602 MW | heavy fuel oil | private | Genera PR | Genera PR | Cataño |
| Punta Lima | 26 MW | wind power | private | Sovereign Bank[61] | Gestamp Wind | Naguabo |
| Salinas Solar Park[62] | 16 MW | solar power | private | Sonnedix | Sonnedix | Salinas |
| San Juan Combined Cycle[63] | 464 MW | diesel fuel | private | Genera PR | Genera PR | San Juan |
| San Juan Thermoelectric[63] | 400 MW | heavy fuel oil | private | Genera PR | Genera PR | San Juan |
| San Fermin Solar Farm[64][65] | 27 MW | solar power | private | Uriel Renewables and Coqui Power | Uriel Renewables and Coqui Power | Loiza |
| Santa Isabel Wind Farm[66] | 75 MW | wind power | private | Pattern Energy[67] | Pattern Energy | Santa Isabel |
| Windmar Ponce[68] | 4.5 MW | solar power | private | Windmar Renewable Energy | Windmar Renewable Energy | Ponce |
Subsidiaries
The public corporation also provides fiber optic broadband to private carriers through one of its subsidiary, PREPA Networks. PREPA is also studying the possibility of selling energy to the United States Virgin Islands with the installation of an underwater power cable between Fajardo and the island of St. Thomas—similar to the power cable with which it services its clients in the island municipalities of Vieques and Culebra.[69]
Finances
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Perspective
As of 2014 the authority carries liabilities of US$10.1 billion against assets of $6 billion.[70] It also operates with a deficit of about $354 million against revenues of $4.8 billion.[71][72] In terms of costs, $2.6 billion or about 58% of PREPA's expenses are attributed to fuel purchases alone while salaries and collective bargains represent less than 13% of the authority's expenses.[72]
On May 23, 2014, Citigroup severely curtailed PREPA's line of credit for fuel purchase, forcing PREPA to run out of cash to pay Petrobras, its main oil supplier. Petrobras, in turn, threatened to cut off further shipments to the authority. This forced the authority to take $100 million out of its Capital Improvements Fund in order to pay its debt to Petrobras. PREPA argues that the different agencies of the government of Puerto Rico owe them more than $290 million in debt, while an additional $375 million of revenue is lost through subsidies enacted by the Puerto Rican legislature.[73][74][75][76][77] An additional $600 million is owed to the authority by residential and commercial consumers, some of them by consumers living in public housing.[78][79] The authority argues that it wouldn't have a problem being self-sufficient if it were paid the aforementioned debt and if it weren't forced to give out subsidies. On June 3, 2014, senator Ramón Luis Nieves admitted publicly that, "part of the financial problem at PREPA was provoked by the government and the Puerto Rican legislature."[77]
On June 11, 2014, Fitch Ratings downgraded its rating on the authority's to speculative non-investment grade ("junk status") from BB+ to BB while putting the authority on negative rating watch.[80] PREPA filed for bankruptcy in July 2017.[81]
PREPAs' two largest creditors are OppenheimerFunds and Franklin Templeton.[82]
As of 2021 the payment of PREPA's debt remains in an indefinite "limbo" due to a lack of agreement between the government of Puerto Rico and bond holders. PREPA's debt totals over $9 billion and according to David Skeel, the new president of the Financial Oversight and Management Board for Puerto Rico, it will have to be renegotiated in light of the COVID-19 pandemic.[83] Additional to a lack of progress on debt negotiation a 2020 law passed due to the COVID-19 pandemic in Puerto Rico halted cutting service to clients who failed to pay their utility bills, this resulted in a decrease in the earnings of the agency.[84]
Investigations by the office of the Comptroller revealed from 2010 to 2018 the AEE had mismanaged $192 million on projects without utility.[85]
In March 2021 the AEE announced increase in electric bills for the next three months equivalent to an average of $12 more on clients bills.[86] As part of the contract with LUMA Energy, the AEE has begun transferring funds to LUMA, including $128 million sent by April 2021.[87]
Gallery
Critical electrical grid infrastructure of Costa Sur in the Guánica State Forest
Palo Seco Power Plant, 1973. Photo by John Vachon.
Western Area Power working for USACE, transferring the conductors from the damaged 38-kV transmission pole November 2017
See also
References
External links
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