- ITC Holdings and NRG Energy have proposed to partner with a private investment firm to help bail out Puerto Rico's ailing utility, modernize its transmission system and add generation assets, according to SNL.
- The $3.5 billion deal to aid the Puerto Rico Electric Power Authority (PREPA), will also include private finance firm York Capital Management. PREPA is deep in debt and has been teetering on the edge of bankruptcy.
- First reported by Caribbean Business, the arrangement will include almost 2,000 MW of generation including 400 MW of solar. NRG representatives stress that the proposal is preliminary and that no parties have yet agreed to a deal.
With Puerto Rico's power authority about to default on $700 million in loans this summer, a proposal by Puerto Rico New Generation Partners would inject capital and allow the utility to modernize its generation fleet as well as upgrade transmission infrastructure.
The plan reportedly calls for as much as 1,500 MW of combined-cycle gas capacity and another 400 MW of utility-scale solar. Replacing the island's aging oil fleet could save Puerto Rico billions, and plans call up to 85% of generation to be revamped. Because much of Puerto Rico's power is generated from oil imported from Brazil, its 24 cent-per-KW power rate is about twice the mainland average.
"It is the kind of investment that is required, as it is a comprehensive solution. It isn't just a generation solution; transmission is involved as well," Thomas Atkins, senior director for Generation Development East at NRG Energy, told Caribbean Business. "We believe the location of the generation is very important, as is delivering it where it needs to go. So, we have looked at all those aspects."
Last year a report from FTI Capital Advisors estimated PREPA was owed about $1.75 billion, as accounts receivable have surged in recent years. The authority had over $400 million owed to it from inactive accounts, and the public power agency had stopped referring delinquent accounts to collections agencies.
Editor's Note: This post has been updated to include input from NRG Energy, which stresses that the proposal is preliminary and that no parties have yet agreed to a deal.