Corporate Misconduct Case Study: PREPA/Genera PR and Its Impact on Puerto Rico

A Cloud Over Puerto Rico

For the people of Puerto Rico, a stable power grid is a critical lifeline necessary to sustain life. I guess that’s also the case everywhere else on the planet too, but this story is about Puerto Rico so Puerto Rico gets the call out. But while communities depend on the light and electricity flowing from plants like the Palo Seco Steam Power Plant in Toa Baja, the very entities entrusted with this essential service have been operating under a cloud of secrecy and environmental negligence.

This is a story about the air people breathe and the breakdown of public trust when the guardians of a public good prioritize expediency over public health.

The Corporate Playbook: How the Harm Was Done

An investigation by the U.S. Environmental Protection Agency (EPA) reveals a disturbing pattern of behavior by both the state-owned Puerto Rico Electric Power Authority (PREPA) and Genera PR, the private company contracted to take over operations in July 2023.

The facts, laid bare in a legal settlement, paint a picture not of a single mistake, but of systemic disregard for the laws designed to protect human health and the environment.

The playbook was simple and devastatingly effective:

• Break the Rules: Around August 2023, the facility burned through its yearly allotted amount of diesel fuel, consuming far more than its permit allowed. This meant pumping an unpermitted quantity of pollutants into the air. This was done under the justification of a strained electric grid, essentially using a public crisis as cover for violating public safety laws.
• Don’t Check Your Work: The facility was required to perform annual emissions tests by July 30, 2023, to ensure its turbines weren’t releasing excessive amounts of harmful pollutants. They didn’t bother to conduct these critical safety checks until December 2023, flying blind for months while operating under intense pressure.
• Hide the Evidence: Perhaps most damning, PREPA and Genera failed to submit a single semi-annual compliance report since the power units were first installed in 2019. For years, they kept regulators and the public completely in the dark, creating a black hole of accountability where their environmental performance could not be scrutinized.
• Obscure Responsibility: When the private operator Genera PR officially took control, it failed to notify regulators of the change in the “responsible official” as required by law. This failure further muddied the waters of who, exactly, was accountable for the facility’s ongoing violations.

A Cascade of Consequences: The Real-World Impact

These actions have tangible, real-world consequences for the people and environment of Puerto Rico.

Public Health Crisis

The regulations violated by PREPA and Genera are in place to control emissions of nitrogen oxides (NOx), sulfur dioxide (SO2), and other hazardous air pollutants. These are not harmless substances. They are known contributors to respiratory diseases like asthma, cardiovascular damage, and acid rain. By burning excess fuel and failing to test or report their emissions, the plant’s operators allowed an unknown quantity of these toxins to foul the air around Toa Baja, gambling with the health of the surrounding community.

Environmental Degradation

The pollutants released from stationary combustion turbines contribute to smog, damage local ecosystems, and harm water quality. The years of non-compliance represent a sustained assault on a local environment already bearing the burden of heavy industry and climate vulnerability.

Erosion of Community

This case represents a profound breach of the social contract. A public utility and its private successor, tasked with providing a fundamental service, chose to operate outside the law. This erodes public trust not only in the companies themselves but in the government’s ability to protect its citizens from corporate harm, a particularly painful reality in a place with a long history of institutional neglect.

A System Designed for This: Profit, Deregulation, and Power

This is not the story of a few bad actors. The failure at the Palo Seco plant is a predictable outcome of a neoliberal economic system that prioritizes profit and deregulation over people.

The decision to privatize the operation of Puerto Rico’s power generation is central to this story. A private, for-profit entity like Genera PR has a fiduciary duty to its shareholders, creating a powerful incentive to cut costs. Deferring expensive emissions tests, pushing equipment beyond its legal limits to meet demand, and avoiding the administrative costs of compliance are all ways to protect the bottom line.

When the grid is under stress, this system reveals its true priorities. Instead of treating the crisis as a reason for more stringent oversight and caution, the operators used it as an excuse to bypass environmental laws. The system is designed to sacrifice public health for operational continuity and financial gain.

Dodging Accountability: How the Powerful Evade Justice

The resolution to this years-long pattern of neglect is a case study in weak corporate accountability. PREPA and Genera PR agreed to pay a civil penalty of $145,000.

For massive entities overseeing critical infrastructure, this amount is only a minor business expense, easily absorbed and factored into future operational budgets.

Crucially, the settlement allows the companies to “neither admit nor deny the factual allegations and alleged violations”.

This legal maneuver is a shield. It prevents their wrongdoing from being formally established as fact, protecting them from further liability and allowing them to control the public narrative. No individual executive is named or held personally responsible. The destructive system punished the corporate checkbook with a trivial amount while shielding the decision-makers from consequences.

Reclaiming Power: Pathways to Real Change

This case makes clear that true accountability requires systemic change. Meaningful solutions must go beyond paltry fines and strike at the heart of the system that produces these outcomes.

• Penalties with Teeth: Fines must be tied to a company’s revenue and the severity of the public harm, making compliance the only financially viable option.
• End “No-Guilt” Settlements: Corporations must be forced to admit wrongdoing, providing a clear record of their actions and empowering communities to seek further justice.
• Empower Communities: Local environmental groups and citizen councils should be granted automatic legal standing and independent oversight authority over critical infrastructure projects, especially those managed through public-private partnerships.
• Re-center the Public Good: The privatization of essential services must be re-evaluated. If a service like electricity is too critical to fail, it is too critical to be managed for private profit at the expense of public health.

Conclusion: A Story of a System, Not an Exception

The story of the Palo Seco plant is not an outlier. It is a window into the logical, brutal functioning of an economic system that views clean air, public health, and legal compliance as obstacles to be managed, rather than fundamental duties. The document from the EPA be like an artifact of a system designed to produce predictable victims.

Until that exploitative system is reformed, communities like Toa Baja will continue to pay the price for corporate profit.

All factual claims in this article were derived from the Consent Agreement and Final Order in the matter of the Puerto Rico Electric Power Authority and Genera PR, LLC, Docket No. CAA-02-2025-1203, filed with the U.S. Environmental Protection Agency, Region 2.

The consent agreement can be found on the EPA’s website: https://yosemite.epa.gov/oa/rhc/epaadmin.nsf/Filings/4239E4B06AB5856085258CC9004291DA/$File/PREPAGenera251203CAFO.pdf