Lawmakers propose giving the Energy Bureau the temporary-generation contracting process, sidelining the Authority
Puerto Rico’s energy sector is bracing for another structural shift as lawmakers consider removing the Public-Private Partnership Authority (P3A) and its procurement contractor, the Independent Third-Party Procurement Office (3PPO), from the island’s temporary generation contracting process.
The move would hand full authority to the Puerto Rico Energy Bureau (PREB), reshaping how hundreds of millions of dollars in emergency generation services are sourced and evaluated.
It could also overhaul, in response to a single failed contract, a procurement structure that has closed eight landmark and active public-private partnerships representing more than $8 billion in disclosed investment since it was created in 2009.
For energy developers, the shift could open the door to a more predictable contracting environment, but only if PREB’s forthcoming assessment provides a definitive answer to the central question: How much temporary generation does Puerto Rico actually need now?
The structure lawmakers would replace
The proposal comes at a moment of heightened uncertainty for the island’s grid. PREB gave LUMA Energy until August 30 to deliver a revised assessment of Puerto Rico’s temporary generation needs, a recalculation the regulator says is essential after the collapse of the Power Expectations contract earlier this month.
That contract, intended to supply 400 megawatts of emergency generation, was canceled amid allegations of fraud, leaving the island without a clear procurement path and forcing regulators to revisit assumptions that guided earlier planning.
P3A itself predates the energy transformation. It was created by Act 29-2009, the Public-Private Partnerships Act signed by then-Gov. Luis Fortuño, and its portfolio now spans transportation, maritime and energy infrastructure. Its active partnerships include:
The energy transactions specifically were structured under Act 120-2018, the Electric Power System Transformation Act, which created the legal framework for PREPA’s restructuring. Act 17-2019, the Energy Public Policy Act, is the separate landmark statute that set the island’s renewable targets and expanded PREB’s regulatory powers.
The record is not uniformly favorable, and lawmakers may point to that. P3A is currently pursuing legal and administrative proceedings against LUMA Energy over alleged material breaches of the transmission and distribution contract, a dispute that has moved between state and federal courts and that P3A frames as a potential path to termination.
The authority’s own largest energy transaction is, in other words, in active litigation.
Why 3PPO exists
The 3PPO office was not inserted into the temporary generation process by PREB itself. In its March 19, 2025 resolution, PREB directed PREPA to appear before P3A and initiate the process with 3PPO specifically because Genera PR, which operates PREPA’s generation fleet, had been determined to be a restricted party.
Genera cannot run a competitive procurement for generation capacity it would then operate without an organizational conflict of interest. The 3PPO structure was the mechanism designed to keep evaluation and contract administration independent of Genera’s judgment.
That conflict does not disappear if 3PPO is removed from the process. It would have to be managed some other way.
The legislative proposal
Rep. Víctor Parés Otero, who chairs the House Government Committee, said the Legislature is now reviewing amendments to Regulation 8815, the framework that governs energy procurement, to allow PREB to directly adjudicate contracts for the roughly 800 megawatts of temporary generation the grid still requires.
For the business community, the shift could be significant. PREB, unlike P3A, is a regulatory body with technical staff, established oversight mechanisms, and direct visibility into system conditions. Parés Otero argues that PREB already has statutory authority to procure temporary generation and that recent failures under 3PPO demonstrate the need for a more centralized, technically grounded approach.
“Puerto Rico needs 800 megawatts of temporary generation to avoid load shedding and provide maintenance for generating units,” Parés Otero said in written remarks. “We know there are companies interested in providing that generation, and those processes do not need to go through 3PPO.”
The Legislature also plans to involve its Office of Budget Analysis (OPAL) in any dissemination of procurement information, citing OPAL’s capacity to conduct economic, technical, and actuarial reviews, a move that could add an additional layer of fiscal scrutiny to future contracts.
Regulation 8815, approved in 2016, outlines the rules for acquiring, evaluating, negotiating, and awarding energy contracts, including temporary generation. Parés Otero said the regulation provides a viable pathway for PREB to take the lead, especially after the Power Expectations debacle.
“Given what happened with 3PPO and the Power Expectations contract, that model is not viable,” he said. “However, it can be done through Regulation 8815, giving the Energy Bureau the lead in this transaction.”
The potential restructuring comes as PREB intensifies pressure on LUMA, Genera PR, and PREPA to reconcile timelines, approvals, interconnection requirements, and operational readiness across all temporary generation initiatives.
Recent orders have demanded consolidated schedules and updated technical records, signaling that regulators want clearer market signals before any new procurement is launched.
What the 800-megawatt figure rests on
On March 19, 2025, PREB ordered PREPA to procure up to 800 megawatts of temporary emergency generation, citing recurring blackouts and the catastrophic failure of Aguirre Unit 1. LUMA’s supporting studies had projected a generation deficit in the range of 700 to 850 megawatts, and a subsequent analysis for fiscal 2026 forecast 36.9 days per year with loss-of-load events and more than 196 hours of annual service interruptions.
Since then the arithmetic has moved in the wrong direction. Roughly 1,500 megawatts of PREPA’s thermal fleet, more than 40% of it, has remained out of service in recent weeks, and the Power Expectations cancellation erased 400 megawatts that had been counted toward closing the gap.
The status of a separate 200-megawatt award to Gothams Energy remains unclear. Whether the deficit today is still 800 megawatts, larger, or smaller after repairs, is what PREB has asked LUMA to recalculate, with a deadline of today, August 30.
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