Three companies interested in supplying natural gas to the San Juan and Palo Seco power plants in Toa Baja refused on Thursday, November 12, to negotiate directly with New Fortress Energy (NFE) and demanded payment guarantees from the Puerto Rico Electric Power Authority (PREPA; AEE in Spanish), a committee investigating NFE’s fuel-supply failures was told. The Third Independent Procurement Office (3PPO), acting on instructions from the Public-Private Partnerships Authority (AAPP), has been in talks since November 3 with Crowley, Naturgy and Javelin to set up the alternate supply mechanism known as tolling.
In a statement to the Transportation and Infrastructure Committee, chaired by Representative José Hernández Concepción, the 3PPO said all three are willing to sell natural gas but none will hand its cargo to NFE or contract tolling directly with NFE, so PREPA, through the AAPP, would have to be NFE’s counterparty and buy the gas from the supplier. The 3PPO asked the Oversight Board for guidance on whether PREPA, still in bankruptcy, can offer those guarantees or take on the financial risk.
Energy Bureau president Edison Avilés Deliz said a short-term contract would cost more than the current NFE deal but could be cheaper than diesel: about $30 per cubic meter for alternate-contract gas, versus $40 for diesel and $15 under the NFE contract. The extra costs have not yet been billed to customers, and he requested an audit of PREPA to determine what share of diesel expenses NFE should bear.
AAPP general counsel León Santa Crispín said the government is pursuing court action to enforce NFE’s contractual obligations and would go to federal court on Friday, November 13, to learn the status of negotiations and seek to have NFE allow other companies to participate in gas supply. Hernández Concepción questioned why agencies have not begun canceling the contract despite noncompliance he said costs an additional $1.2 million a day in diesel use, and rejected NFE’s force majeure arguments, saying "the force majeure event is NFE itself." Representatives José Aponte Hernández and Nelie Lebrón Robles also criticized the supply situation.