The Puerto Rico Energy Bureau (PREB) has approved a portfolio of eleven revised Power Purchase and Operating Agreements (PPOAs) and corresponding Energy Storage Service Agreements (ESSAs) for Proponent No. 3, allowing for federal Investment Tax Credits (ITCs) and expanded renewable generation capacity across the island. The company is legally represented by the law firm Picó […]
The Puerto Rico Energy Bureau (PREB) has approved a portfolio of eleven revised Power Purchase and Operating Agreements (PPOAs) and corresponding Energy Storage Service Agreements (ESSAs) for Proponent No. 3, allowing for federal Investment Tax Credits (ITCs) and expanded renewable generation capacity across the island.
The company is legally represented by the law firm Picó Advisors, but its corporate name is withheld in public motions to protect competitive commercial positioning and deliberative negotiation materials. In another resolution earlier this year, it was officially revealed that Proponent 3’s 11-project portfolio includes facilities slated for development and operation across several municipalities, including Naguabo alongside Moca, Guayama, Salinas, Santa Isabel, Juana Díaz, Sabana Grande, and Quebradillas.
In a Resolution and Order issued June 26, the regulator concluded that PREPA and Proponent No. 3’s latest contract revisions fully aligned with directives outlined in earlier rulings on June 17 and June 25. The PREB had previously rejected a set of revisions submitted June 24, finding that PREPA and the developer had made “material revisions to the Portfolio Pricing Adjustment provision beyond those authorized.”
After reviewing the corrected filings, the Bureau determined that the updated PPOAs adhered to the approved pricing structure and complied with all statutory and regulatory requirements.
The PREB emphasized that the approval does not signal a shift away from its longstanding practice of evaluating renewable energy contracts on a project-by-project basis. Instead, regulators adopted a temporary portfolio-based pricing methodology due to “unique and compelling circumstances” surrounding the accelerated procurement process.
The initiative stems from an Executive Order issued by the governor and coordinated with multiple agencies, including the Financial Oversight and Management Board, to preserve access to federal ITCs amid changes in federal law.
Proponent 3 formally expressed concern over extensive delays, noting that initial project milestones were originally target-dated for late 2025 and that the delays could cause it to miss the deadline.
Proponent 3 then petitioned the PREB to establish a hard negotiation cutoff. Following subsequent disputes over draft contract markups exchanged, the Energy Bureau issued strict, rolling meet-and-confer orders instructing PREPA and the developer to immediately exchange fully compliant draft revisions to preserve the ITC eligibility window.
The accelerated process aims to speed deployment of renewable resources, address urgent generation shortfalls, and secure competitively priced clean energy for ratepayers.
Under the portfolio approach, regulators evaluated compensation based on a weighted-average Levelized Cost of Energy (LCOE) across all 11 projects. While some individual projects exceed LCOE levels approved in standalone procurements, the PREB found that lower-cost projects within the portfolio offset those differences, keeping the overall weighted average within authorized limits.
To maintain compliance over time, the Bureau required a contractual Portfolio Pricing Adjustment mechanism. Any future change in the portfolio’s composition—such as a project withdrawal—that would push the weighted-average LCOE above the approved thresholds must trigger downward rate adjustments.
Given the atypical pricing structure and the importance of maintaining ITC eligibility, the Bureau imposed ongoing oversight requirements.
The PREB stressed that portfolio-based pricing will not become standard practice. “Nothing in this Resolution shall be construed as establishing a general policy or precedent,” the order states, noting that the methodology introduces added regulatory and administrative complexity. Future renewable procurements are expected to return to traditional project-specific evaluations unless similar exceptional circumstances arise.
