March 7, 2026 – La Fortaleza, San Juan, Puerto Rico – The transformation of Puerto Rico’s energy system continues advancing with another major milestone under the administration of Governor Jenniffer González-Colón, following approval by the Puerto Rico Energy Bureau (PREB) to convert Units 3 and 4 of the Palo Seco Power Plant to operate with natural gas as their primary fuel.
Governor González-Colón, together with the Energy Czar and Executive Director of the Puerto Rico Public-Private Partnerships Authority (P3A), Josué Colón-Ortiz, emphasized that the decision will help accelerate the modernization of the island’s electric system while generating an estimated $40.6 million in savings that will be directed toward reducing electricity costs for consumers.
“With this conversion, we are once again delivering on our commitment to build a more reliable, modern, and efficient energy system—one that will also generate tangible and significant savings for the people of Puerto Rico. This approval also allows the use of federal funds to complete the necessary work, meaning that these improvements will not represent an additional cost to consumers,” the Governor stated.
Units 3 and 4 at the Palo Seco Power Plant each have a generation capacity of approximately 216 megawatts, representing a significant contribution to the island’s power generation. According to the Governor, converting the units to natural gas will allow them to operate at a lower production cost, enabling efficiency gains that can translate into lower electricity service costs.
“These units represent additional generation capacity that will now be able to operate in a more cost-effective manner. This project is part of our ongoing effort to rebuild and modernize the baseload generation of Puerto Rico’s electric system so that we can meet both current and future energy needs,” added Governor González-Colón.
Energy Czar Josué Colón-Ortiz explained that the conversion of these units represents an important step, particularly considering that both units were originally designed and built in the late 1960s.
“This process of converting generation units to operate primarily on natural gas allows us to transform the power generation system into one that is more modern and cost-effective, using a cleaner, less polluting, and more affordable fuel than residual No. 6 oil,” Colón-Ortiz said.
The first bill Governor González-Colón signed into law, Act 1-2025, which she also authored and submitted to the Puerto Rico Legislative Assembly, establishes that “no priority is greater for a government than ensuring energy security and stability for its citizens through infrastructure and an electric system that is modern, reliable, resilient, and cost-effective.” This legislation enabled the implementation of these changes.
“In addition to the economic benefits, this conversion will also significantly reduce pollutant emissions, including sulfur dioxide (SO₂), contributing to improved air quality. None of this would have been possible without the leadership of our Governor, who from day one has made the reconstruction of Puerto Rico’s energy system a top priority,” Colón-Ortiz added.
The estimated cost to convert the two units is $20 million, which will be covered with funds from the Federal Emergency Management Agency (FEMA). The primary equipment and components are already located at the plant. The conversions will begin as soon as the Environmental Protection Agency (EPA) grants the necessary permits, starting with Unit 4 followed by Unit 3.
Genera estimates that if the EPA grants the necessary permits within the next six weeks, both units could be fully converted to natural gas by the end of 2026.
On January 9, 2026, Genera requested authorization from the PREB to request federal funding to the Central Office for Recovery, Reconstruction and Resiliency (COR3) and FEMA under the Stafford Act’s Section 428 and/or Section 406 Hazard Mitigation Program, to allow the units to operate with dual fuel capability—using natural gas as the primary fuel and No. 6 fuel oil as backup. The submission included the project’s scope of work and cost estimates required for FEMA review, and Genera has since been responding to requests for additional information.
In its determination, the PREB concluded that “the balance of interests favors the approval of Genera’s proposal and that the proposal complies with the applicable regulatory framework.” Accordingly, the PREB approved the proposed fuel conversion for Units 3 and 4 at Palo Seco, noting that the approval is limited to the project described in the documents submitted by Genera and that any modifications will require additional authorization before implementation.
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