FINANCIAL OVERSIGHT AND MANAGEMENT BOARD 

 FOR PUERTO RICO                                                                                    Members 

Andrew G. Biggs 

Carlos M. García 

Arthur J. González 

José R. González 

Ana J. Matosantos 

David A. Skeel, Jr.

 José B. Carrión III 

 Chair Natalie A. Jaresko

Executive Director 

 PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

BY ELECTRONIC MAIL 

March 4, 2019 

Mr. José F. Ortiz Vázquez 

Chief Executive Officer 

Puerto Rico Electric Power Authority 

Re: New Fortress Energía LLC. 

Dear Mr. Ortiz Vázquez: 

In accordance with the contract review policy of the Financial Oversight and Management Board 

for Puerto Rico (“FOMB”) established pursuant to Section 204(b)(2) of PROMESA, we have 

reviewed the proposed contract between the Puerto Rico Electric Power Authority (“PREPA”) and 

New Fortress Energía LLC (“NFE”) which has been submitted to the FOMB for its evaluation (the 

“Proposed Contract”). 

After reviewing the Proposed Contract, the FOMB approves it subject to the observations and 

conditions set forth in Appendix A hereto. 

Please note that our review is solely limited to the compliance of the Proposed Contract with the 

applicable fiscal plan and no other matters. For the avoidance of doubt, the review performed by 

the FOMB does not cover a legal review of the contractual documentation or the contracting 

process, including without limitation: (i) compliance with contracting requirements under 

applicable laws, rules, and regulations, both federal and local and (ii) compliance with applicable 

laws, rules, and regulations governing procurement activities, both federal and local. In addition, 

the FOMB has not engaged in any due diligence or background check with respect to the 

contracting parties nor whether the contracting parties comply with the requirements under the 

applicable contract. Any material change to the Proposed Contract must be submitted beforehand 

to the FOMB for its review. 

This letter is delivered as of the date hereof and we reserve the right to provide additional 

observations and modify this letter based on information not available when the review was 

conducted. In addition, during the course of our review, we may receive information which we 

may determine to refer to the relevant authorities. 

Case:17-03283-LTS Doc#:23285-3 Filed:01/19/23 Entered:01/19/23 16:05:10 Desc:

Exhibit C Page 1 of 3
Mr. Ortiz Vázquez 

March 4, 2019 

Page 2 of 2 

PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

This letter is issued only to PREPA and solely with respect to the Proposed Contract. 

Sincerely, 

Jaime A. El Koury 

General Counsel 

CC. Christian Sobrino Vega 

Case:17-03283-LTS Doc#:23285-3 Filed:01/19/23 Entered:01/19/23 16:05:10 Desc:

Exhibit C Page 2 of 3
 PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

Appendix A

Fiscal Plan Alignment 

This review covers the proposed contract between New Fortress Energía LLC (“NFE”) and the 

Puerto Rico Electric Power Authority (“PREPA”) for the services of converting San Juan Units 5 

and 6 (collectively, “SJ 5&6”) to burning natural gas (in addition to diesel fuel), and to supply the 

same units with natural gas for an initial term of 5 years. The proposed contract is valued at 

approximately $1.5 billion. The valuation contemplates both the cost associated with the fuel 

conversion work and the cost of supplying natural gas to SJ 5&6 for the initial 5-year term, 

excluding any possible contract extension. 

Our review was based on five sources of information: (a) the proposed NFE contract; (b) the RFP 

bidding documents published by PREPA; (c) the RFP evaluation and selection documentation 

developed by PREPA; (d) correspondence from PREPA in response to Oversight Board inquiries; 

and (e) in-person meetings with PREPA. 

Based on the information made available to us, the Oversight Board estimates that the proposed 

contract has the potential of generating between $180 million and $280 million in savings during 

the initial 5-year period.1

 Lowering generation costs and transitioning towards cheaper and more 

environmentally friendly generation resources (including natural gas and renewables) is a key 

objective of PREPA’s certified Fiscal Plan. The proposed contract is consistent with these 

objectives. 

The Oversight Board’s approval of the proposed contract is subject to the following conditions: 

First, because actual savings are dependent on the overall price of natural gas and the actual 

capacity factor of SJ 5&6, PREPA must provide periodical reporting on the progress of the SJ 5&6 

conversion project, as well as on unit dispatch and utilization. PREPA and Oversight staff shall 

agree on reporting cadence and other requirements. 

Second, to ensure savings to ratepayers are maximized, PREPA must conduct a formal study to 

assess whether to extend the agreement with NFE (and under which terms and conditions) or hold 

a new competitive procurement process for supplying natural gas to SJ 5&6. PREPA must 

conclude such study prior to the deadline for notifying its intention to extend the term of the 

agreement established in Section 3.1(b) of the proposed contract. Any determination to extend the 

contract or to hold a new competitive procurement process must be based on the results of the said 

assessment. 

This contract review was conducted on the basis of information submitted by the Government of 

the Commonwealth of Puerto Rico. The Financial Oversight and Management Board for Puerto 

Rico has not independently verified the information included in the submission. Should FOMB 

become aware of any inaccuracies or misrepresentations – whether intentional or not – it would 

re-evaluate its assessment. 

                                                      

1

 Actual savings dependent on market prices of natural gas and each unit’s capacity factor.  

Case:17-03283-LTS Doc#:23285-3 Filed:01/19/23 Entered:01/19/23 16:05:10 Desc:

Exhibit C Page 3 of 3