Date: November 25, 2025
Topics: Labor Budget Items · Federal & Non-Federal Labor Resources · Ongoing Initiatives · Inventory & Equipment
The Puerto Rico Energy Bureau (PREB or NEPR) continued its evidentiary proceedings in NEPR-AP-2023-0003 on November 25, 2025, focusing on key issues that directly affect ratepayer costs, utility labor budgets, federal funding eligibility, and the operational readiness of generation equipment. The hearing covered Genera’s proposed labor-related budget items, the permissible use of FEMA Category Z funds, disagreements over whether federal funding produces ratepayer savings, the delay of the Retail Wheeling (RW) program until 2029, and the cost implications of maintaining auxiliary equipment — including the TM2500 mobile generation units — now funded by ratepayers.
Genera explained that the main difference between the Constrained Budget and the Optimal Budget relates to labor costs tied to its internal labor union proposal. This raised the question of whether ratepayer representation should be included in future union negotiations.
Genera reported:
These labor assumptions are central to understanding Genera’s projected operational costs and their potential effect on future rate design.
The hearing clarified that FEMA Category Z funds cannot be used to cover Genera’s daily operational workforce. Category Z is limited exclusively to:
Because FEMA-funded projects are temporary, Genera subcontracts specialized services instead of hiring new permanent staff. This ensures compliance with federal reimbursement rules while enabling execution of short-term federally supported projects.
A central disagreement emerged over whether federal funding leads to direct savings for ratepayers:
PREB emphasized that federal funds do not automatically reduce electricity bills. Instead, they simply shift who pays for a project. If a cost is already embedded in the rate structure, ratepayers do not see a decrease — even if federal dollars ultimately fund the project.
Genera countered that certain federally funded projects will reduce:
These long-term efficiencies, not the federal funds themselves, are the source of potential savings for customers.
The discussion moved to the Operation and Maintenance Agreement (OMA) between Genera and the government. The parties plan to review Annex 2, which includes a 50/50 shared-savings incentive.
Key points:
This issue is likely to remain a focal point as NEPR evaluates Genera’s long-term compensation structure.
LUMA confirmed a 2029 start date, which the PREB criticized as unacceptable.
The delay stems from:
Although PREB’s April 24, 2024 Resolution and Order required annual RW reporting through 2029, the Bureau made clear during the hearing that the extended timeline remains problematic in the context of rate design.
Genera clarified it holds no additional auxiliary equipment beyond:
This impacts both maintenance costs and the timeline for restoring or replacing equipment under Genera’s operational control.
The hearing also addressed the TM2500 mobile gas turbines:
Federal funding did not cover ongoing O&M, meaning:
FEMA obligated:
As federal support expires, maintaining this equipment becomes a direct ratepayer responsibility, influencing future rate-setting decisions.
As NEPR moves toward final decisions in NEPR-AP-2023-0003, the issues addressed in this hearing — labor budgeting, the limits of FEMA Category Z funding, federal-funded efficiencies, Retail Wheeling delays, and TM2500 O&M costs — will directly shape Puerto Rico’s rate design and long-term energy transition. For continued analysis of PREB regulatory proceedings and Puerto Rico energy law developments, visit MZLS and our Puerto Rico Energy Law Firm practice. You can also read our related in-depth coverage at MZLS Insights.
