The Energy Bureau orders an external audit after identifying “several inconsistencies” in the PREPA data

The process of buying, purchasing, transporting, storing and consuming fuel in Electricity Authority (PREPA) has been the subject of an external audit in the last three years, after the public corporation has submitted Puerto Rico Energy Bureau information with “several inconsistencies” that the regulator could not reproduce or validate.

The audit is handled by Arizona-based Larkin & Associates, and should be completed “sometime this year,” Angel Rivera de la Cruz, one of the bureau’s associate commissioners, said yesterday.

“We need to ensure the proper functioning of the Authority and we have decided that it is prudent to conduct a fuel audit. In addition to inventory and funding, we will look at other processes that the Authority needs to determine if they are effective and in line with the rules and practices of what should be done, ”Rivera de la Cruz told El Nuevo Día.

The Bureau recommended the audit on 29 September, when it had to reconsider the adjustment clauses for the purchase of fuel for the period June-August 2020. By law, PREPA must submit to the Quarterly Bureau its projections of revenue and expenditure adjusted to the price of a barrel of oil. The regulatory body reconciles the figures presented by PREPA.

Until then – and still – the price of a barrel of oil had not recovered from the collapse it recorded in April due to the COVID-19 pandemic. However, PREPA reported that it bought 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 incompatible with the prices seen on the market at that time” ($ 59 per barrel).

“When the Authority made the deposit, it requested a reconciliation of $ 91.6 million for the purchase of fuel. But if it presented higher-than-expected costs, the difference could be smaller, “he said, noting that the Bureau had not yet decided on reconciliation for June, July and August 2020.

In the meantime, the Bureau approved, on November 20, a resolution and an order formalizing the audit and informing that it will be carried out by Larkin & Associates. The regulator called for PREPA “full cooperation”.

“The office has opened an investigation file and covers the fiscal years 2018, 2019 and 2020. It is an extremely complex audit, with a lot of information that needs to be managed. I have already made several requests for information to the Authority and received them. We are now in the process of 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, jobs are being carried out remotely.

In a separate interview, PREPA Executive 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, because part of my role is to see that things are done the way they should be. We are cooperating, “he said.

Paredes attributed the “multiple inconsistencies” identified by the Bureau to a gap when entering data into the internal Asset Suite platform, which affected the price of a barrel of oil. “I don’t think there is a problem beyond accounting reconciliation,” he said.

He added that, as a corrective measure – and simultaneously with the audit – he ordered “the development of a protocol for entering data into our accounting database, by the fact that power plants can report both incoming fuel barrels and costs”. As part of this protocol, data will be entered into the Asset Suite daily, rather than every 72 or 96 hours (three or four days).