José F. Ortiz, REPA’s Executive Director. (GFR Media)

Yesterday, PREPA’s Executive Director José F. Ortiz, acknowledged that customers could see an increase in their electricity bills as of August, but said that, if that happens, it´s the Oversight Board’s fault.

According to Ortiz, inaction and lack of “technical” knowledge of the Board’s administrative team ended in PREPA extending the contract with Puma Energy, to pay even higher fees for fuel than those in an initial proposal submitted to the entity last April.

In Ortiz’s opinion, the Board’s limited knowledge also caused the work carried out by New Fortress Energy, aimed at converting San Juan plant units 5 and 6 to natural gas electricity generation, to be delayed for three months.

Ortiz said that both "bad decisions" will cost PREPA about $ 70 million, an impact that the public corporation customers’ will see, either with a slight increase in the electric bill or in the delay in savings that would come one they start with natural gas electricity generation.

This way, Ortiz turned to the Board, which on Sunday, through its lawyer Jaime El Khoury, stated in a letter that PREPA acted negligently and forced the federal entity to approve an extension to Puma’s contract without a request for proposals process (RFP).

With documents in hand, Ortiz denied that PREPA acted against the fiscal plan since the document establishes that the new contracting process required by the Board would be implemented as of 2020 and, meanwhile, it was recommended to renegotiate current contracts.

The Board and PREPA seem to clash because, last April, the public corporation asked the fiscal entity to extend Puma´s contract for another year and for a total close to $ 464 million.

On June 14, the Board denied that request and instructed PREPA to carry out an RFP process.

However, according to Ortiz, the Board’s late response left them with little time for that process.

According to engineer Fernando Padilla, Director of PREPA Project Management Office, given the current situation, negotiations with Puma resumed, but with terms that are more adverse than those discussed in April.

As Puma admitted to using the services of lobbyist Elías Sánchez, El Nuevo Día asked Ortiz if the lawyer intervened in the controversial negotiation.

"Never," PREPA head said.

According to Ortiz, PREPA did not carry out an RFP process in this case either, following the recommendations of the firm Sargent & Lundy, which last February recommended PREPA to reform its contracting processes to agree on the purchase and supply of fuel separately. Ortiz assured that the Board was aware of the firm's recommendation.

Ortizsaid that the reasons for the Board to refused to extend the contract with Puma on the premise that there was no competitive process remain a mystery. This is because the Board allegedly did not object to extending the contract with FreePoint, a company that supplies “bunker 6” fuel. In that case, the Board approved extending the FreePoint contract on June 10, without competition, and for $ 1,596 billion.

Conversion delayed

For Ortiz, PREPA would not have had to extend the contract with Puma if the project to convert San Juan units 5 and 6 to natural gas had not been delayed.

He argued that the project granted to New Fortress Energy was delayed because it took the Board three months to evaluate the agreement.

Initially, Ortiz said that New Fortress would complete the conversion of San Juan units 5 and 6 as of this month. He added that the Board´s "administrative" delay pushed the works completion date to the end of this year.


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