Speaker 2 | 00:02
2I be.
Fabian Velez | 00:07
You're.
Monads. Come ready to go. [Laughter] They have me more.
Speaker 2 | 00:26
[Laughter] I going over. Going to. Hi. Pa.
Fabian Velez | 00:31
Okay on the... Okay, we send the well goszaki tooi of balo ete caronian yteno kuno sa koi preparanomotag to say IMO to out transcrito see the fta yon lackey yatemo spencering and loi for theme Miguel A.
Speaker 3 | 00:52
I do.
Fabian Velez | 01:11
Jamigel A. Up here. Me again. Me again. Me again?
IA tamo. A tamo connector. Okay, that like.
Speaker 2 | 01:43
But.
Fabian Velez | 01:58
Yolanda yack you set a connector. No memo com were no they have a thank you for that. Okay II here yellow okay e Mariaa tahaa okay Joanata e one seven okay we otena Spencer and Lalia and a loy [Laughter].
Speaker 2 | 02:50
People like Single FELLOWANAGAN. Dossi [Laughter] Nag. Casso Rico.
Fabian Velez | 03:07
Okay at the Maris Sancoot Lito para the harp person okay when ops e when okay pube Harpzato and Munda.
Good morning everybody.
Speaker 3 | 03:42
Oswaldo shows up. There we go. It just got thirty. Hey, guys. All right, so. So, Oswaldo, I, just so you know, I know everyone loves when I pontificate on things, but I actually have a hard stop at 12:45 because we have... I just have a scheduling conflict that I can't change.
Speaker 2 | 04:13
No problem. So I think we have enough time because so basically, it's a summary. Okay, sure. Your proposal. We tried to go to get Asu or one of his assistants involved, but they're dealing with the... A meeting at the owner's mansion or Talesa.
So they're involved with that, but that doesn't mean that eventually we will be able to hold a meeting with them. If you still want a meeting.
Speaker 3 | 04:49
Yeah, I mean, I think, as valdo, if you think appropriate, you know, I've. I think you guys see how serious I've been towards Puerto Rico these last six months. The professionalism. We're involved in this process now for the second time, and I think you see how serious we've been here. We are involved in the exigency process.
I think we were helpful in explaining to Puerto Rico its options. It has to terminate in the port agreement. I've offered Puerto Rico 2,500,000,000 dollars. So I think that at some point, I think it would be appreciated if we could have a conversation with Joe's White.
Okay.
Speaker 2 | 05:36
Just to review some of your offerings. Europe is currently offering 209 megawatts at Costa. Right?
Speaker 3 | 05:48
So.
Speaker 2 | 05:48
Two mW, 218, yeah, okay, and we're offering that at 2028 if you're using an LD.
Speaker 3 | 06:06
Yeah, if we're using LNG, it's around 20.8 cents per kilowatt hour all in.
Speaker 2 | 06:15
Okay, and for that, you would need to enter into some sort of agreement with Papa and Anturgi.
Speaker 3 | 06:27
So I don't think Oswaldo. I don't think we need to enter into an agreement with Natures. We've had Carlos from NCV here review a Prepa's agreement with Natures. We believe that you just buy it from Natures and then you resell it to Javelin at Costa, so we don't have to get involved in your relationship with Natures. I recommend we don't get involved. You guys just maximize the full capacity of that contract and whatever you're not using, Costa the soor. You head over to Javelin for the temporary generation units.
Speaker 4 | 07:03
Based on public information available out there, Prepa has not been using the total capacity available under the Natures contract. So what we're thinking is that the available volume there could be sold. Prepa could sell it to Javelin and use it to generate power cost.
Speaker 3 | 07:28
Azur and Oswaldo. Just so you know, that Natur contract that you guys have right now, that is the cheapest contract in the world right now for LNG, you're not going to do better than that. So, to not fully utilize the volumes that they are guaranteeing under that contract,
it's just a lost opportunity to really supply Puerto Rico with cheap power.
Speaker 2 | 07:56
Okay. So, what would happen if, for some reason, the last time we approached Prepa regarding this issue, and they said no, we haven't approached them now, but we're going to do it to see whether they change their position somehow?
If this is not possible, do you have any alternative for LG?
Speaker 3 | 08:26
So. two things. One, I want to make sure you know we are not asking you to commit for ten years on the LNG. You guys can make a decision every month. You could choose differently. You could choose LNG or you could choose diesel. Our facility is dual-fueled for diesel or LNG, and we need no long-term commitment from you guys.
So, even if you can't get legal counsel over the line today, but you believe you could get them over there tomorrow, it's no big deal. In January, in September, you could do diesel, in October you could do LNG, and in November you could go back to diesel.
Speaker 2 | 09:06
Whatever what your LG plan would definitely require naturity. You don't have an option B for that.
Speaker 3 | 09:16
So our option B for that is we've got an idea of what we would build, Oswaldo, we just haven't done it in fairness, the full detailed engineering. But from Peerless, you can build literally. It's just a 1,000-meter pipe. Very easy to build, but obviously, we have to go through the permitting process for that.
Then, we would build a regas, a small regasifier, or however big you want at Costa Sur. And then we could bring it into the LNG to Peerless, and that LNG can be used for both Costa or our temporary units or both.
But that's a separate project. That is a project that we're happy to work on. It's not one that we could implement in 4560 days, but we would love to do it, to be frank, right? It would be great.
Speaker 2 | 10:15
And if you were to reach an agreement with Prepa, you still would need the regasiifier.
Speaker 3 | 10:23
No, if we were to... If we were to... If we were to... If we were to reach an agreement with Prepa on Naturgy, we don't need the re-gasifier. You guys already have full capacity for re-gasification at Eco Electria, so you don't need anything. You just need to nominate under your contract with Naturgy that you're going to max out the volumes, and then anything you don't use at Costa Store, you give to Javelin.
So we don't need to talk to Naturgy. We don't need re-gasification, we don't need pipelines, we don't need anything. We just need the lawyer at Prepa to agree that there's no restriction on Prepa from reselling the LNG to Javelin. We have Carlos on the phone who's reviewed the contract. There is no such restriction. We're happy to speak to the lawyer at Prepa, and there's absolutely no reason for her to not accept it, pretty frankly.
Speaker 2 | 11:27
All we're going to present to Prepa with are two different alternatives. One would be for you to use naturally, straightforward, and the other one would be for you to get the LNG in the case that the units go out of service.
Speaker 3 | 11:59
I think... So I say that last part again was.
Speaker 2 | 12:03
In the event that the Prepa units are there in Costa, and they are out of service for any reason, then you would have the alternative of, if they do not agree to a straightforward agreement that you're going to have access, at least to have that other alternative.
Speaker 3 | 12:25
So sorry. Let me maybe restate it a little bit, Valdo. So right now with the generation, and Miguel would know this, and we could send some of these numbers over to Miguel and Fabia, but you don't fully utilize your contract with Natur because you don't have the generation of Costa.
So we already know that you have excess capacity under that contract with Natur G, so whether Costa Stor is running or not, it really doesn't make a difference. It just makes a difference on how much is available.
We already know today definitively, based on the current generation at Costa Stor, that you have over 200 mW worth of LNG from Natur G that's available that we could use at the Javelins operations. Now, of course, if the cost of sewer goes down, then there's even more capacity, and we could try to figure out what to do with it.
But I think the rate-determining step is not a matter of whether there's enough capacity in the contract or not. It's just a matter of, will proper legal counsel get comfortable that they can resell it to Javelin?
We would strongly encourage you to have a call with MCV or Carlos. If you need us to prepare a legal opinion for Prepa, we could do that, too. It's really... I'll be frank as well. It's very simple.
Speaker 2 | 14:00
Spencer. and from where are you getting your information regarding your allegation that there's an excess? Is that something that you have already provided us?
Speaker 3 | 14:15
No, we can give you that summary. We know the operations of Costerwil, obviously through Pedro Oswaldo. You know.
Speaker 2 | 14:24
That would be nice to have on our side because when we make the request to Prepa, we would like to provide them with information.
Speaker 3 | 14:33
Okay, we'll get that to you.
Speaker 2 | 14:35
Okay. So they recognize the stores and actually we can establish that that's a fact. Okay.
Speaker 3 | 14:40
Perfect.
Speaker 2 | 14:42
Okay. Aside from that.
Speaker 3 | 14:47
And then of course, just as Oswaldo, we are already in our proposal building the capabilities for diesel as well. So that's the full optionality for Prepa to determine whether they want LNG each month or whether they want diesel and every month they can make a decision. They don't have to choose right now for the long term.
Okay. So we.
Speaker 5 | 15:14
We did. You know. We did lay out Oswaldo, if we can resend it, the cover letter that we sent you on page three of the cover letter to our response. We do lay out our understanding of the quantities from the Natur contract and the consumption of the coast to sewer units and kind of how you get to the excess capacity that's available.
It's in the cover letter on page three, and I think it's it might be in the response in more detail somewhere else. I just got to find it. But it's definitely in the cover letter.
Speaker 2 | 15:54
But it has to come from a source that Prepa would recognize.
Speaker 3 | 15:58
Yeah, we can. We'll have it quoted by Pedro. Yeah.
Speaker 5 | 16:01
We can tie it.
Speaker 3 | 16:02
We'll have it prepared by Pedro. A letter from him to the three PPO talking about the quantities.
Speaker 2 | 16:09
Yes, that would be perfect.
Speaker 3 | 16:11
Okay, great.
Speaker 2 | 16:13
And we're talking about a hundred and 16 million dollars a year.
Speaker 3 | 16:26
Hundred and fifty seven. Yeah, hundred 6757.
Speaker 2 | 16:31
Oh57. 57. Okay, and how will that work?
Speaker 3 | 16:41
It's a fixed rental payment each month per turbine. So I think if I have it correct, I think it's around... It's roughly 1.5 million dollars per turbine per month. We're planning on doing around nine turbines.
So that gets you to your monthly rental fee.
Speaker 2 | 17:03
Okay? And that's basically that forms part of the price.
Speaker 3 | 17:11
That's part of the price.
Speaker 2 | 17:13
Okay, so it is basically a 30% recalculated take or pay.
Speaker 3 | 17:22
So okay, yeah, let me quickly do that. So using natural gas, it's about 40%. So 8 cents, 8.4 cents divided by 20.8 is 40 cents. Using LNG, it's 30 cents, 30% of the price.
Speaker 2 | 17:53
Okay. You mentioned that you would have the capacity to provide a gig with 156 mega.
Speaker 3 | 18:07
So a gig, we can definitely do it. To be frank, we would love to do it with a gig. We can easily do the 156 MW. We could potentially do more. We just haven't spent as much time at a gig as we have with Costa with Fatherative, to be frank.
Then the question for us... By the way, we would work with the same consortium. I spoke to the CEO of APR today as well. If all this works well, the same team would likely do the Ageri project as well.
So if you're happy with our team, we would keep it together to the extent possible. Then the question is what you want to do for fuel now. If you want to do LNG trucks, which we just assumed was a nonstarter because we wouldn't recommend it, Oswaldo, but if you guys are taking the decision you want to do trucks, then we could come up with a trucking strategy.
If you're willing to do diesel, which is there's already an existing diesel tank there. And I think we already have the storage tanks at Corco. The way GE used to work was that diesel would come into Corco, and then it would reload on barges and go to a GEA, so all the infrastructure is already set up there.
So, if you would give us access to the diesel tank there, it would become a seamless operation with your existing infrastructure. Secondly,
if you wanted at some point to convert it to LNG, there are ideas out there. I believe there are ideas in the past, which is setting up an LNG import terminal and then putting in an underwater pipe connecting the terminal into a GEA so you can avoid trucks. Happy to do that.
I think all these things are not difficult; we just need guidance from you on what you prefer. If you're already fueling a GEA, then why don't we just tap into the same fuel stream that you're using rather than inventing a new logistics route?
Our view for Magire was that we would just get you the generators and rent them to you, and you guys would manage all the fuel supply within your existing operation of a GEA because you're already going to be fueling your power plants.
But if you want us to set up a separate logistics chain, just tell us, and we'll do it and we'll do what you guys want.
Speaker 2 | 21:03
Let me ask you.
Speaker 3 | 21:04
None of it is difficult as well, though. Really, none of it is a difficult professor.
Speaker 2 | 21:09
As we have always been discussing, age, Costa, but this particular RFP opens the door to other alternatives on the island. Have you considered any other location, for example, San Juan?
Speaker 3 | 21:28
I mean, we would love to do San Juan. It's an obvious location. I think Oswaldo, you know how I feel about the NFE terminal, and I've offered the island to pay the purchase price. So, anything we could do in San Juan, we would be ecstatic to jump on that opportunity.
Speaker 2 | 21:50
Okay.
Speaker 5 | 21:51
And been looking obviously at Paloseco as part of the exigency process, right? Then we have familiarity through Pedro and others to Mayaguez. So, we've looked at that from a fueling supply as well.
Just to echo Spencer that the answer is yes, we have, we would have broad interest across all of the units in Puerto in.
Speaker 3 | 22:19
Puerto Rico, Oswaldo. We know the San Juan units were at five and six assets. Well, from the exigency process, we know the TED gen units in the San Juan terminal. We've already studied the trucking route from the San Juan terminal to Paloseco, so we've already done all the work from an operations perspective. We just need guidance from you on what you want us to do.
Speaker 2 | 22:48
Okay, Miro, I'm leaving the best question for the end.
Speaker 3 | 22:55
I know you are, I know.
Speaker 2 | 22:57
You know.
Speaker 3 | 22:58
I know it's coming. I'm looking at as I'm up.
Fabian Velez | 23:02
[Laughter].
Speaker 2 | 23:04
For the time.
Speaker 3 | 23:05
You out as Oswaldo. I'm hoping to time you out. Let's go for it. Bring up the first.
Speaker 2 | 23:14
Spencer, you know that we're not the ones imposing the terms. I know we're domestic, and that's clear. Possibly, that's why you want to talk to those. I think it's a good idea. I'm not saying it's not a good idea because we do with whatever is forwarded to us, it is our obligation to try to negotiate those terms.
There's something that is outside what we were instructed. Then we have to go back to the stakeholder. That's not now. So... Right now, there are two issues. One has to do with the other request for the payment of a capacity payment which was not included in the last week and those $75 million that we did discuss, but it was not part of the RP or of the instructions that we will receive.
So... Can you tell me about that?
Speaker 3 | 24:29
So. there are a few things. As Baldo, the way I get to the $75 million is consistent with the way you guys work with EREA that's equivalent to roughly two months of operating costs and two months of fuel. Now, I understand you have certain constraints and administrative constraints, right?
If you want it, again, I think a lot of this is form over substance, so I just need to know what works for you. If you just want to say, like you do with Hanera, we will deposit two months of operating costs and fuel costs into a protected bank account.
That makes it easier for you because that is very similar to how you do with Hanera. Then that works for me, right? Or if you don't have the cash to do that, then... So now you know where the $75 comes from.
Then the question is, I could set it up very similarly to Hanera. So it looks, feels, and smells like Hanera. Because it's two months of capacity and fuel charges. Maybe that makes it easier for you to do.
If you needed to be financed, I thought I came up with a very slick financing proposal where I could give you $75 million. I basically lend the collateral. Have you seen my presentation as Oswaldo? Yes.
So basically, I'd lend $75 million to the Commonwealth. The Commonwealth lends it to you, put it in a bank account for security, you collect interest income on it. And so the net cost to Puerto Rico is like 150-200 basis points for insurance.
That's nothing, right? I understand it requires a legislative process for you, and it's administratively problematic.
Speaker 2 | 26:52
Yes, the FMB. We have to send this to the attorneys in the bankruptcy case and make sure we can do it.
Speaker 3 | 27:02
I understand. But to be frank, I don't see why the FMB or anyone... This is normal course of business, by the way. I'm posting an LC to all of my vendors and fuel suppliers. So, I think the only people in the room who don't think it's normal are Puerto Rico,
right? So, you guys, it's totally normal course of business. I'm not worried about the FMB. I'm just actually worried about the sausage-making process. You guys think it's more problematic than it really needs to be.
So then my question to you is I could potentially go back to all my vendors, right? Javelin is the fuel supplier, and they can go back and buy credit risk insurance on Prepa, but they're just going to charge you for it.
It's going to be much more expensive than the two percent carrying cost of doing my little financing structure. So, if that's easier for you to do, I can go back and negotiate with everyone, but I think that's going to probably cost you half a cent, ballpark. More in your all-in cost.
So instead of being 20.8 cents, it'd be 21.2 cents, or instead of being 27.9 cents for diesel, it'd be 28.3 cents, ballpark. Because people are going to go out there, they're going to spend the money on buying credit insurance. They're going to get their faces ripped off, right? Nobody wants to take the proper risk.
But I can't do that. If you want. I just need direction from you.
Speaker 2 | 28:59
Not that I want, but it would be a good thing to have on my side. So if you can provide me with those numbers and how that would affect the cost.
Speaker 3 | 29:12
So let me.
Speaker 2 | 29:13
Let me be nice and have.
Speaker 3 | 29:15
So. let me ask you questions about those. So, for my guys, I need to go back and negotiate today. Okay, what are you more sensitive to? Are you more sensitive to an upfront payment or are you more sensitive to the all-in cost per kilowatt hour?
For example, I can tell you if you're willing to pay an additional mobilization payment of 20 million dollars, then the capacity payment doesn't have to increase that much going forward. Or if you don't want to pay 20 and you only want to pay 10, then they're going to raise the capacity payment. The more you're willing to pay upfront, the lower the all-in cost is going to be for you over ten years.
But you kind of need to give me some... I can't afford to come up with many different iterations of it. I have to go in with a negotiation. I need guidance from you. What do you want me to do?
If you want me to minimize the total cost of generation, that means there's going to be more money upfront. If you're telling me you want less money upfront, then it's going to be a higher total cost of generation. I need guidance.
Speaker 2 | 30:27
Yes, well, basically, from what I hear, this is... It's going to be very difficult to sell the $5 million as if it was on the last occasion. If I can provide them an alternative, for example, if it ends up being half a cent, that's something that they may consume.
So I would present both alternatives. Okay, I want to give them an alternative A and an alternative B because that would be your best chance to have them approve something.
Speaker 3 | 31:10
Okay. listen to me again. I think I'm always striving to do what is the lowest cost for the island, which is why I presented my financing proposal. I know you have this administrative thing issue, but again, I think you know my point.
I think that is only a self-generated issue inside Puerto Rico. I do not believe anyone serious at the OMB or even the hedge funds who own the PREPA bonds would not think this is the normal course of business.
It's the cheapest thing I can do for you. I will come up with option B, but I don't think it's the right option. I've been trying to reduce the price to the ratepayers, but because it doesn't feel right to do something that's uneconomic,
I will go back and negotiate today, and I will come back with a proposal.
Speaker 2 | 32:08
Okay, so Spencer, we have made extensive research on the market, and we know what the yield is. In a regular course of business in many areas that we have been discussing, but our stakeholders have their own way of doing business.
Speaker 3 | 32:29
So.
Speaker 2 | 32:29
Although. we know if we were negotiating something private, this always seems very reasonable. We're talking, and we will be talking only about the numbers and what we have to do.
But I need to present this to people that they want to know about the options, whether there's an option B, an option C because their decisions are not necessarily based on the final price but on other considerations.
Speaker 3 | 33:06
Okay, I'll do it all. Do I'll get going on it today. I'll get you something. At some point today, if that if that's okay, but if it's okay, it may be sort of, you know, late tonight because I'm. I really have... I'm in court for seven hours, so it's not something I could get out of.
So, is it okay if I get you something this evening?
Speaker 2 | 33:31
Yeah, no problem. Okay, are you going as a defendant or as a plaintiff or a.
Fabian Velez | 33:38
Did as night. Was.
Speaker 3 | 33:41
I don't know, that's... I think that's actually all three, all three.
Speaker 2 | 33:50
So good.
Speaker 3 | 33:52
So, anyway, so okay, I'll let me know, but I want to fight, right, to try to get the best deal. I don't want to just try and get anything from these guys. It's never just one conversation. As Volo, yeah, with these guys.
Okay, so I get get.
Speaker 2 | 34:18
Any question for us.
Speaker 3 | 34:21
Yeah. So, as well. So, how are you guys? I would say we were a little bit... I think as you know, disappointed last time around on the RFP process. How are you guys going to be evaluating these RFP proposals? Is it just going to be based on price?
Fabian Velez | 34:46
It just.
Speaker 3 | 34:48
Or are people going to take seriously sort of experience reputation balance sheet.
It's sort of like a black box to me. On what is the decision making internally?
Fabian Velez | 35:00
To I now alive.
Speaker 3 | 35:00
And think we were very surprised that, frankly, we're even in the same planet as Power Expectations. To be frank, Swiss one...
It's just all very confusing to me, and I would love to get some sort of feedback from you guys as to how you guys think about decision-making and what's important and what's so.
Speaker 2 | 35:26
Spencer, just to make it clear, we're talking to you at this juncture about price and other considerations because we understand that your company qualifies. So it's not right now, it's not a matter of whether you qualify as a proponent or a provider, it's a matter of pricing and other conditions.
So the stakeholders are going to get our recommendations. We're going to be recommending more than one company so that they can make the decision in terms of what they understand is the best option for them. Right now, we have... If you are proposing something that is squarely inside what our instructions for negotiating are, then we will be having another conversation.
But since we have to go back to them, what would happen eventually is that we would have to eliminate proponents based on the fact that what we were providing was provided as... So the negotiating tools, the negotiating parameters, we're not there.
And we have to go back to the stakeholder.
Speaker 5 | 37:06
And so, Oswaldo, when you say that you're making a recommendation for more than one proponent, is it still the expectation that there's more than one winner to this or more than one award that's given?
Speaker 2 | 37:22
Yes. Well, we're not right now. We're not going to play against a scenario where a winner takes this up. Thanks, you all. So.
Speaker 3 | 37:32
Oswaldo what is your sense of timing and the reason why I ask that is, one of the conditions to the RFP was that everyone was supposed to include signed and executed agreements with all their vendors. I'm not sure if anybody else did that, but I would tell you we spent a lot of time and energy as Oswaldo on that. That was not easy. It was a monumental task. We do have sunset provisions on those agreements that expire at the end of the month. I wanted to get a sense of timing from you. As you can imagine, people are not happy.
So, getting a sense of the timetable, what you think the timetable is for to get to a deal would be helpful because they're all going to ask me that question.
Speaker 2 | 38:32
Okay, so I got asked that question yesterday, and I told the person that it was two days ago. So now it's three days ago. We have to close this chapter as soon as possible. So if we are able to enter into terms with whoever we're there, okay? It could be today, it could be tomorrow.
Speaker 3 | 38:58
And then how do you see our process that we'll submit this, do you think? You know, at some point are we going to be, you know, are we going to be speaking to Joe way is how does it all work? Kind of going forward.
Speaker 2 | 39:14
Yes. Once you're the last meeting we're holding with proponents and we're ready to provide a report as soon as you provide me with the information that you're going to be inviting me to today, tomorrow, and based on a presentation, which is going to be basically what we discuss here.
We're going to hear from the stakeholders. So we'll get back to you. Okay? So it's not going to be like we're going to hear from them and take this decision without going back to you.
If there's something that differs, we would like you to consider.
Speaker 3 | 40:12
And, of the reason, Oswaldo, is it's important to me to try and have a relationship with Joe. At the end of the day, regardless of what legal contracts say, I really do want him to look me in the eye and tell me if I do what I'm supposed to do, that I'm going to get paid, and that goes a long.
Speaker 2 | 40:40
Wayso long so it's like bad body. Everybody wants to meet him.
Speaker 3 | 40:45
Yeah, I hear you. Okay, well, listen, my request is in, and I think I know why, and we'll get you something today. I'll get negotiating and I'll do my best.
Speaker 2 | 41:05
Okay? Perfect.
Speaker 3 | 41:07
Okay, so, all right, guys, anything else from the Javelin side?
Speaker 5 | 41:14
Thank you all for your time.
Speaker 3 | 41:16
Thank you, Miguel. This is a world record, Miguel. We did it withinin.
Fabian Velez | 41:23
A Guinness record.
Speaker 2 | 41:24
Definitely yeah, go have a good case.
Fabian Velez | 41:24
Guinness record. [Laughter] Bye.
Speaker 3 | 41:28
Bye guys take care of care.
Fabian Velez | 41:29
By.
Speaker 3 | 41:30
Bye everyone, thank you.
Speaker 5 | 41:33
Bye Thank you.