Energy Bureau orders external audit after identifying “multiple inconsistencies” in PREPA data

The process of buying, acquiring, transporting, storing and consuming fuel in the Authority for electricity (PREPA) has been the subject of an external audit for the past three years, after the public company Puerto Rico Energy Bureau information with “multiple inconsistencies” that the regulator could not reproduce or validate.

The audit is responsible for the specialist firm of Larkin & Associates, based in Arizona, and should end “sometime this year,” Angel Rivera de la Cruz, one of the Bureau’s associate commissioners, said yesterday.

“We need to ensure the healthy functioning of the Authority and we decided it was wise to conduct a fuel audit. Aside from inventory and finance, we are going to look at other processes that the Authority needs to determine if they are efficient and within the standards and practices of what needs to be done, ”Rivera de la Cruz told El Nuevo Día.

The Agency recommended the audit on September 29, when it presented the reconsideration of the adjustment clauses for the purchase of fuel for the period from June to August 2020. By law, PREPA is required to submit its revenue forecasts to the Bureau quarterly and charges adjusted to the price of a barrel of oil. The regulatory body reconciles the figures submitted by PREPA.

By then – and still is – the price of a barrel of oil had not recovered from the collapse it recorded in April as a result of the COVID-19 pandemic. However, PREPA reported that it was purchasing fuel at a rate of $ 102 a barrel for the San Juan plant and $ 76 for the Palo Seco plant. According to Rivera de la Cruz, these figures are “inconsistent with the prices seen in the market at the time” ($ 59 per barrel).

When the Authority filed its application, it requested a $ 91.6 million reconciliation for the purchase of fuel. But if he presented higher charges than assumed, the difference could be smaller, “he said, noting that the Bureau has not yet reached a decision on the reconciliation for June, July and August 2020.

In the meantime, on Nov. 20, the Bureau passed a resolution and injunction making the audit official and announcing that it would be conducted by Larkin & Associates. The regulator demanded “full cooperation” from PREPA.

“The Office has opened an investigation file covering the 2018, 2019 and 2020 financial years. It is an extremely complex audit, with a lot of information to be handled. We have already made and received various information obligations to the Authority. We are now analyzing this first wave of information to determine what else is needed to complete the process, ”said Rivera de la Cruz.

Due to the pandemic, remote jobs are being carried out.

In a separate interview, PREPA Director Efran Paredes confirmed that there have already been two meetings with Larkin & Associates staff as part of the audit. “I am open to any audit as it is part of my role to make sure things are done as they should. We work together, ”he said.

Paredes attributed the “multiple incongruities” identified by the Bureau to a delay in the timing of data entry into the internal Asset Suite platform, affecting the price of a barrel of oil. “I don’t think there is a problem beyond the accounting reconciliation of the case,” he said.

He added that, as a corrective measure – and in parallel with the audit – he ordered “the development of a data entry protocol for our accounting base so that the factories can report both barrels of fuel coming in and costs”. As part of this protocol, data is entered into Asset Suite daily rather than every 72 or 96 hours (three or four days).