Puerto Rico Electric Power Authority
| Company type | Publicly owned utility |
|---|---|
| Industry | Electric utility |
| Founded | 1941-05-02 |
| Founder | Governor Rexford G. Tugwell administration |
| Headquarters | Puerto Rico , United States |
Area served | Puerto Rico |
Key people | Jose Ortiz (President, as mentioned) |
| Products | Electricity generation, transmission, and distribution |
The Puerto Rico Electric Power Authority (PREPA; Spanish: Autoridad de Energía Eléctrica de Puerto Rico) is a publicly owned utility responsible for the generation, transmission, and distribution of electricity throughout Puerto Rico.
Prior to 2014, PREPA was overseen by a board appointed by the governor and confirmed by the Senate. After 2014, governance transitioned to the Puerto Rico Energy Commission, with its board members appointed by the governor.
In September 2017, Hurricane Maria caused catastrophic damage to PREPA’s distribution infrastructure, resulting in a total blackout across the island. Subsequently, PREPA filed for bankruptcy and began efforts to privatize its operations. In 2021, Luma Energy took over management of the island’s power transmission and distribution networks. By 2023, Genera PR, affiliated with New Fortress Energy, assumed responsibility for operating the power generation facilities amid ongoing privatization initiatives.
History
PREPA was initially established as the Puerto Rico Water Resources Authority (PRWRA) through Act 83 on May 2, 1941, during Governor Rexford G. Tugwell’s administration. This state-run entity consolidated various local and regional electric providers into a unified electrical grid.
In 1979, pursuant to Law 71, PRWRA was renamed the Puerto Rico Electric Power Authority (PREPA) following the decline of hydropower as Puerto Rico’s main energy source.
Outages
PREPA has encountered numerous power interruptions impacting either portions of the island or its entirety. In August 2012, Tropical Storm Isaac caused outages affecting approximately 14,000 residents.
A significant islandwide blackout occurred on September 20, 2016, triggered by a fire at PREPA’s Central Aguirre plant, leaving Puerto Rico without electricity for three days.
Occasionally, wildlife such as cats or iguanas have interfered with electrical equipment, resulting in outages affecting tens of thousands of customers.
The seismic events during 2019–20 severely impaired the Costa Sur Power Plant in Guayanilla, disrupting power supply to an estimated 327,000 customers and impacting water services. PREPA President Jose Ortiz indicated extensive damage necessitating over a year for full repairs. FEMA allocated $238 million to fund backup units compensating for the lost capacity from Costa Sur.
In September 2021, mechanical failures and maintenance challenges at multiple plants led to four days of rotating blackouts due to demand surpassing available supply. Central Aguirre and Palo Seco experienced difficulties clearing seaweed accumulation because of malfunctioning filtration systems and unavailable replacement filters. These outages resulted in class suspensions at the Pontifical Catholic University of Puerto Rico and provoked student demonstrations at the University of Puerto Rico.
Hurricanes Irma and Maria
In early September 2017, Hurricane Irma’s intense winds caused power loss for roughly one million residents. Most service was restored by September 20; however, Hurricane Maria then struck and knocked out electricity across nearly the entire island. Two weeks later, only about 10% of customers had power restored; complete recovery took several months, prompting many households to acquire generators. Unlike standard disaster responses where utilities quickly secure external assistance contracts, negotiations in this instance were delayed.
A $300 million restoration contract was initially awarded to Whitefish Energy—a Montana-based company with only two employees—generating controversy and leading to contract cancellation on October 29. By December 2017, the U.S. Army Corps of Engineers had engaged alternative contractors and crews through mutual aid agreements with utilities such as Con Edison.
Six weeks after Maria’s landfall, power had been restored to approximately 30% of customers; after two months, nearly half were reconnected. On January 6, 2018, FEMA and the Army Corps intervened to seize a PREPA warehouse hoarding essential spare parts that were delaying grid repairs; these components were then distributed accordingly.
Early in 2018, generation capacity was anticipated to reach 95% by February with full customer restoration targeted by June. Nonetheless, on April 18 a transmission line incident caused an islandwide blackout; service was restored for 97% of customers by the following day. Despite this progress, around 40,000 customers remained without electricity seven months after Hurricane Maria.
By June 2018—the beginning of hurricane season—more than 11,000 customers still lacked power with outages expected to persist for up to two additional months. Although $3.8 billion had been invested in grid repairs since September 2017, the electrical system remained fragile and susceptible to failure. PREPA entered into a $500 million one-year master services agreement with MasTec for ongoing reconstruction and modernization efforts of the grid infrastructure.
LUMA Energy
In June 2020, Governor Wanda Vázquez Garced and the Puerto Rico Electric Power Authority (AEE/PREPA) entered into a 15-year agreement granting LUMA Energy operational control over Puerto Rico’s electrical grid. This extensive contract, spanning more than 300 pages, was authorized during a meeting that lasted just 43 minutes.
The agreement faced opposition from UTIER and various labor unions, who organized strikes and proposed amendments. The Puerto Rico House of Representatives advocated for deferring the contract implementation until 2022 and initiated an inquiry into the matter. Similarly, the Senate passed a resolution supporting the postponement of the contract.
By October 2024, the Special Commission of the Puerto Rico Bar Association determined that the contract infringed upon essential legal standards and exacerbated the island’s energy challenges. Their recommendation was either to nullify the agreement or to resolve it in accordance with contractual provisions.
Genera PR
In 2023, Genera PR, affiliated with New Fortress Energy, secured a decade-long contract to manage Puerto Rico’s power generation facilities.
In March 2025, Governor Jennifer Gonzalez Colon modified the government’s arrangement with Genera PR, effectively imposing a form of taxation. Nonetheless, on July 7, 2025, the Puerto Rico Energy Office declined to approve this renegotiation of the public-private partnership contract.
Maintenance
Puerto Rico’s electrical infrastructure has experienced prolonged degradation due to years of insufficient investment and lackluster upkeep. The pace of aging equipment outstrips repair efforts, with numerous power stations and substations functioning beyond their intended lifespan. Failures in one segment frequently lead to broader power outages.
Funding allocated for maintenance has decreased over time—from $251 million in 2007 down to $202 million by 2014—including vital operations such as vegetation management near transmission lines. While LUMA Energy currently oversees power distribution, much of the public dissatisfaction remains directed at infrastructure still under PREPA’s jurisdiction.
Leadership and corruption allegations
PREPA has been plagued by corruption scandals alongside recurrent leadership turnover. Following Hurricane Maria in 2017, investigations by the U.S. Congress uncovered allegations that PREPA officials accepted bribes to expedite power restoration for select regions and commercial interests. Additionally, poor fiscal management and postponed maintenance by local authorities have compounded operational difficulties. A Government Accountability Office report highlighted PREPA’s inadequate capacity to manage or modernize its electrical grid effectively.
Disputed $1.5 billion fossil fuels initiative
During Hurricane Maria in 2017, New Fortress Energy submitted an unsolicited proposal to PREPA. Subsequent disclosure of contract documents in 2020 revealed irregularities: the company lacked prior experience producing liquid natural gas in Puerto Rico, and the contract circumvented a competitive bidding process. Former New Jersey Governor Chris Christie was identified as a compensated lobbyist representing PREPA interests. Former Puerto Rico Chief of Staff Ingrid Vila Biaggi called for an independent probe into these matters. In 2021, environmental organizations urged cancellation of the contract.
Office of the Comptroller 2020 audit
A 2020 examination conducted by Puerto Rico's Office of the Comptroller scrutinized PREPA's capital initiatives spanning from 2010 to 2018, determining that the utility's operations breached legal and regulatory standards, resulting in financial detriment and accountability deficiencies. The review uncovered expenditures totaling $191.4 million on projects that ultimately provided no functional benefit, including Gasoducto del Sur ($69.2 million), Vía Verde ($31.9 million), Unit Conversion ($47.9 million), Aerogenerators ($3.7 million), and land purchases ($1 million). Irregularities in contract management were detected within the Vía Verde project, such as the absence of competitive bidding, lack of board authorization, payments made prior to contract finalization, and expenses surpassing approved limits.
PREPA neglected to revise its by-laws to incorporate legislative changes, failed to make board meeting summaries or public hearing recordings publicly accessible online as required, and did not conduct board compliance assessments aligned with governance best practices in the industry. Transparency shortcomings were evident; PREPA’s website omitted legally mandated disclosures including organizational charts, governing documents, codes of ethics, meeting minutes, and detailed contract information. Financial oversight was insufficient, relying on an accounting manual last revised in 1989 that lacked clear account definitions or procedures consistent with Federal Energy Regulatory Commission guidelines. Additionally, the utility did not properly record acquired assets within its accounting system.
For instance, during the Gasoducto del Sur initiative, PREPA entered into complex agreements with governmental bodies that generated additional expenses: AFICA disbursed $62.8 million for asset acquisition and credit guarantees; warehouse rental fees amounted to $342,500; interest payments reached $3.2 million; and $6.7 million was spent reacquiring assets subsequently transferred elsewhere. These financial entanglements placed strain on multiple government agencies amid Puerto Rico’s fiscal crisis and exemplified the ripple effects stemming from PREPA’s mismanagement of projects.
Manufactured financial crisis
A fiscal disagreement involving PREPA has disrupted operations for LUMA Energy and Genera PR. PREPA is reported to have withheld approximately $700 million in operational funds owed to these entities while continuing to collect revenue from customers. As a result, LUMA reported a deficit ranging between $190 million and $350 million, which contributed to a 12% increase in outage duration and a 2% rise in outage frequency relative to the prior year.
Furthermore, PREPA failed to establish a storm reserve fund for emergency preparedness, raising alarms given Puerto Rico’s vulnerability to hurricanes. Genera PR encountered difficulties in compensating fuel suppliers, leading a contractor to block shipments at the Port of San Juan due to unpaid bills.
The Financial Oversight and Management Board (FOMB) verified PREPA’s revenue shortfalls. In response, the Puerto Rico Energy Bureau initiated a rate case—the first since 2017—to restore revenue stability. However, government officials led by Colón reportedly resisted rate hikes citing political concerns.
LNG fuel contract controversy
A contentious 15-year liquefied natural gas (LNG) supply agreement valued at billions was awarded to New Fortress Energy Inc. subsidiaries NF Energía and Genera PR.
The FOMB criticized this arrangement for lacking proper governmental justification and alleged that LNG shipments were intentionally withheld following expiration of a previous contract, potentially as leverage to compel regulatory approval of the new deal. While Colón denied involvement in these actions, companies asserted he spearheaded government negotiations related to the contract.
Whitefish 2.0
In response to power generation deficits and recurrent blackouts, PREPA granted an emergency contract worth between $500 million and $1 billion to Power Expectations LLC, a company based in Florida. Subsequent inquiries uncovered that the firm had no prior experience with large-scale utility projects, and its CEO possessed a criminal history. A court in Puerto Rico halted the agreement due to the company's failure to meet required technical, financial, and ethical standards.
This incident was labeled “Whitefish 2.0,” alluding to a similar scandal from 2017. The Request for Proposals (RFP) process was restarted, causing delays in deploying temporary generation capacity needed for the summer season and exacerbating power shortages. Initially, Josué Colón had proposed using LNG barges, but this plan was replaced by land-based units, although their prompt operational readiness remains uncertain.
Board of directors
The governance of PREPA rested with its board of directors, which typically comprised private individuals representing public interests alongside ex officio members such as the Secretary of Economic Development and Commerce. Residential customers elected two representatives, while commercial customers selected one. When the governor and legislature were controlled by the same political party, the legislature held the authority to modify the board’s composition. Generally, the governor appointed four members subject to Senate confirmation, resulting in a board where political influence often overshadowed impartial utility management.
Energy sources
The majority of Puerto Rico’s electricity generation relies on oil and natural gas-fired facilities, supplemented by 21 hydroelectric reservoirs. In 2019, legislation mandated the closure of coal-fired plants by 2028 and set a target of achieving 100% renewable energy by 2050. Nevertheless, a 2021 report revealed substantial delays in processing renewable energy interconnection requests, with only 327 applications approved—representing merely 0.09% of total submissions. That same year, the government introduced the Puerto Rico Ocean Technology Complex (PROtech), an ocean thermal energy conversion initiative located on the southeast coast aimed at broadening energy diversification.
Power plants
As of 2015 and continuing into 2020, PREPA supplied electricity to roughly 1.5 million customers through several power generation facilities. On July 1, 2023, ownership of all PREPA-operated generation plants was transferred to Genera PR, a private enterprise.
| Power plant | Capacity | Energy source | Ownership | Owner | Operator | Location |
|---|---|---|---|---|---|---|
| AES Ilumina | 24 MW | solar power | private | AES Corporation | AES Corporation | Guayama |
| AES Puerto Rico | 454 MW | coal | private | AES Corporation | AES Corporation | Guayama |
| Aguirre Combined Cycle | 592 MW | diesel fuel | private | Genera PR | Genera PR | Salinas |
| Aguirre Thermoelectric | 900 MW | heavy fuel oil | private | Genera PR | Genera PR | Salinas |
| Cambalache | 248 MW | diesel fuel | private | Genera PR | Genera PR | Arecibo |
| Costa Sur | 990 MW | heavy fuel oil | private | Genera PR | Genera PR | Guayanilla |
| EcoEléctrica | 510 MW | natural gas | private | Gas Natural Fenosa, International Power | Gas Natural Fenosa | Peñuelas |
| 'Mayaguez' | '168 MW' | 'diesel fuel' | 'private' | 'Genera PR' | 'Genera PR' | 'Mayaguez' |
| 'Oriana Solar Farm' | '45 MW (58MWDC)' | 'solar power' | 'private' | 'Sonnedix' | 'Sonnedix' | 'Isabela' |
| 'Palo Seco' | '602 MW' | 'heavy fuel oil' | 'private' | 'Genera PR' | 'Genera PR' | 'Cataño' |
| 'Punta Lima' | '26 MW' | 'wind power' | 'private' | 'Sovereign Bank' | 'Gestamp Wind' | 'Naguabo, Puerto Rico#Naguabo' |
Subsidiaries
The public utility extends fiber optic broadband services to private providers via its subsidiary, PREPA Networks. Additionally, PREPA is investigating the possibility of exporting electricity to the United States Virgin Islands through an underwater transmission line connecting Fajardo and St. Thomas, akin to existing submarine cables that serve Vieques and Culebra.
Finances
By 2014, PREPA reported liabilities totaling US$10.1 billion compared to assets worth $6 billion, operating at a deficit of $354 million on revenues of $4.8 billion. Fuel expenses constitute roughly 58% ($2.6 billion) of total costs, whereas wages and collective bargaining expenses represent less than 13%.
In May 2014, Citigroup reduced PREPA’s credit facility for fuel purchases, compelling the utility to withdraw $100 million from its Capital Improvements Fund to settle payments with Petrobras, its primary oil supplier. PREPA asserts it is owed over $290 million by various Puerto Rican government entities and suffers an annual loss of $375 million due to legislative subsidies. Meanwhile, residential and commercial customers owe approximately $600 million in outstanding payments, including substantial arrears from public housing tenants. PREPA maintains that financial self-sufficiency is achievable if these debts are collected and subsidies eliminated. In June 2014, Senator Ramón Luis Nieves acknowledged government actions as contributing factors to PREPA’s fiscal challenges.
On June 11, 2014, Fitch Ratings downgraded PREPA’s credit rating to BB—classified as speculative non-investment grade—with a negative outlook. The utility filed for bankruptcy protection in July 2017.
Among PREPA’s principal creditors are OppenheimerFunds and Franklin Templeton. As of 2021, debt resolution remains stalled due to unsuccessful negotiations between Puerto Rico’s government and bondholders. The agency’s outstanding debt exceeds $9 billion and requires restructuring in light of the COVID-19 pandemic’s economic effects. A 2020 statute prohibiting service disconnections for unpaid bills during the pandemic further diminished revenue streams.
An audit by the Comptroller uncovered mismanagement involving $192 million spent on ineffective projects between 2010 and 2018. In March 2021, PREPA announced an average monthly electricity bill increase of $12 per customer over three months. Under its agreement with LUMA Energy, PREPA transferred $128 million to LUMA by April 2021.
Ongoing bankruptcy proceedings underscore the impracticality of repaying the $8.5 billion demanded by bondholders, discouraging investment and impeding economic development.
In April 2025, the Puerto Rico Oversight Board ruled that PREPA bondholders hold no active claims against the Commonwealth government in a dispute involving $575 million.
That same year, PREPA introduced a debt restructuring proposal reducing its obligations from $10 billion to about $2.6 billion. The plan requires retention of contracts with private operators LUMA Energy and Genera PR while incorporating new bond issuances and alternative financing measures designed to mitigate increases in electricity rates.