Oversight Board approves $85 million energy contract with conditions
The Financial Oversight and Management Board has approved, with conditions, a proposed 25-year power purchase and operating agreement between the Puerto Rico Electric Power Authority (PREPA) and CK1, LLC for a 25-megawatt solar project in Juana Díaz.
The June 30 determination cited the project’s competitive pricing but also flagged execution risks tied to pending interconnection studies and federal tax-credit deadlines.
The agreement stems from the accelerated procurement process established under Executive Order 2025-047, which sought to preserve eligibility for federal Investment Tax Credits while directing PREPA and the Puerto Rico Energy Bureau to secure competitively priced renewable energy projects.
According to OpenCorporates, CK1, LLC is an active Puerto Rico-registered limited liability company headquartered in San Juan.
The contract sets a first-year base rate of $121 per megawatt-hour, with no escalation, and has an estimated value of $85.4 million. The Board said the price compares favorably with amended Tranche 1 power purchase and operating agreements, Tranche 2 contracts, and the $125-per-megawatt-hour benchmark for Tranche 4. “The proposed contract offers favorable pricing compared to prior renewable energy procurements in Puerto Rico,” the Board wrote.
Despite that pricing, the approval includes significant caveats. The Puerto Rico Energy Bureau initially required interconnection studies to be completed before construction could begin, but later allowed PREPA to proceed earlier to meet Investment Tax Credit deadlines. The Board warned that any delay could jeopardize the project’s ability to meet the July 4, 2026 construction deadline and the December 31, 2027 placed-in-service requirement.
The Board also highlighted potential cost exposure. If final interconnection studies estimate PREPA interconnection facility costs above $20 million, CK1 may either assume the excess costs or terminate the contract and recover its proposal security. If actual costs come in below $20 million, the base rate must be reduced. “Until the applicable interconnection studies are finalized, the Project’s interconnection costs, construction schedule, and the achievement of the expected economic benefits to ratepayers remain uncertain,” the Board noted.
PREPA certified that the contract is a pass-through expenditure with no budgetary impact and will be paid from Account No. 01-4042-54710-050-668-0000.
