SAN JUAN — On Wednesday, the same day it was set to expire, the Puerto Rico Public-Private Alliances (P3) granted LUMA Energy an extension of its provisional contract that will only end once the Puerto Rico Electric Power Authority’s (PREPA) debt restructuring is completed.
“The extension of LUMA’s supplementary contract is in the public interest,” Gov. Pedro Pierluisi said at a press conference on Wednesday.
The extension was approved by the P3’s board of directors, PREPA’s board of directors, and the federally imposed Financial Oversight and Management Board for Puerto Rico (FOMBPR), known by Puerto Ricans as “La Junta.”
The supplementary contract implies that the Puerto Rican government will pay more money than the agreed amount in the proposed 15-year contract, which was scheduled to go into effect on Thursday, December 1. LUMA was paid $115 million in 2022 under the provisional contract, but the government will pay $122 million due to cost-of-living and inflation increases under the new supplementary contract.
The 15-year contract, in contrast, set the company’s pay at $70 million in the first year with an annual limit of $105 million, not including possible bonuses.
“The extension of the supplementary contract will permit the over 3,000 men and women of LUMA to continue working to construct a more trustworthy, resilient, and clean energy system for the 1.5 million Puerto Ricans that we have the privilege to serve,” said Wayne Stensby, president and CEO of LUMA, in a written statement issued on Wednesday.
Little Input From Public Representatives
Liza Ortiz Camacho and Eduardo Ferrer Ríos, public interest representatives to the P3’s board of directors, abstained from voting on the contract as an expression of their disagreement with its extension under Law 29-2009, which requires a simple majority vote. The two representatives maintain the board should have voted under the guidelines created by Law 120-2018, which states that any transaction that passes the “function, service or installation” of any part of PREPA onto a private company requires two favorable votes from the public interest representatives.
Meanwhile, Tomás Torres Placa, the public interest representative for PREPA’s board of directors, voted “No,” resulting in a 4-1 outcome in favor of extending the contract.
“The people of Puerto Rico should know that every blackout, all the increase in prices, and all the layoffs and displacements of workers, have a name and a last name: Pedro Pierluisi,” said José Luis Dalmau, president of the Puerto Rico Senate, in a written statement issued on Wednesday. “The extension of the contract is a blank check so LUMA can put its hand in the pockets of the people; and in addition, the attitude of insensitivity towards the public continues.”
Waiting on PREPA
P3 approved extending LUMA’s provisional contract until PREPA’s debt restructuring case is finished, which could carry into the summer of 2023 at the earliest, according to New York District Court Judge Laura Taylor Swain, who handles the case. If, for example, the case takes two more years to reach a conclusion, then LUMA will be paid the higher amount stipulated by the supplementary contract alongside any inflation and cost-of-living increases.
Even Gov. Pierluis himself acknowledges that PREPA’s debt restructuring will likely end in only two ways: either the federal courts approve a debt restructuring deal —which has been denied repeatedly and is at a “standstill after almost six years of negotiations“— or the case is rejected.
If the federal courts reject the case, Pierluisi explained, LUMA will continue servicing Puerto Rico under a transition plan that has already been approved by the Puerto Rico Energy Bureau.
“That last scenario would have great risks for Puerto Rico,” he said Wednesday.
During the press conference, Pierluisi acknowledged that basing the supplementary contract on a set term “was not acceptable to me because there’s no type of guarantee that in six months the (PREPA) bankruptcy process will be finished.”
Price Increases, More Blackouts Under LUMA
Since LUMA took over in May 2021, Puerto Ricans have constantly complained about an increase in the number of brownouts and blackouts they have experienced, greatly affecting their quality of life.
“The blackouts have been very hard because they last so long and we have a community of impoverished people whose lives are made extremely difficult without electricity,” Olga, an elderly woman who regularly attends anti-LUMA protests, told Latino Rebels.
Entire streets without power were already a common sight on the archipelago before the takeover, but they have become even more pronounced now. Under PREPA, the average outage time per year was 20 hours, while under LUMA it has risen to 27.5 hours, according to the System Average Interruption Duration Index.
Puerto Ricans have also experienced seven rate increases in the price of electricity. These increases, along with the rising cost of living, have led many Puerto Ricans to protest in the streets against LUMA and the government.
In a written statement, LUMA said it had seen “18 months of historic goals,” noting that its response to Hurricane Fiona and the multiple FEMA projects they have been granted.
“People need to understand we need to take it a step further, that what we’re doing is no longer enough and that the government needs to feel more pressure,” Jocelyn Velazquez, spokesperson for Jornada Se Acabaron Las Promesas, told Latino Rebels at a protest held in Old San Juan on Tuesday, adding that she herself has lost many of her appliances at home due to the blackouts.
She and 13 other activists were arrested on October 26 for crossing the permanent police barricade in Old San Juan, but were released hours later without charges.
On Tuesday, activists again crossed the barrier but stood peacefully in front of police. While the police department deployed over a hundred officers to the scene, no arrests were made and the night ended without major incident.
Activists said they would continue protesting for the end of the LUMA contract.
“We can’t trust them, and we can’t extend it more just for the same thing,” Olga said.
Gov. Pierluisi, who has repeatedly downplayed the anti-LUMA protests and defended the private company, described the people calling for the contract’s cancellation were responding to “small politics.” He then reiterated that canceling the contract would be “an absurdity, a nightmare.”
Carlos Edill Berríos Polanco is the Caribbean correspondent for Latino Rebels, based in San Juan, Puerto Rico. Twitter: @Vaquero2XL
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