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A prehearing concerning an inquiry initiated by the Puerto Rico Energy Bureau (PREB) into LUMA Energy’s assertions that the Puerto Rico Electric Power Authority (PREPA) has not adequately funded its service accounts as stipulated in the management and operational contract, is scheduled for Friday, Nov. 8.
This prehearing was called for by examiner Scott Hempling, a professor at Georgetown University Law Center and legal expert in public utility regulations, who has served as an advisor to the PREB.
On Oct. 16, the PREB released a resolution mandating PREPA to reply to the regulator’s inquiries regarding LUMA’s present system liquidity. This order also instructed PREPA to confront LUMA’s claims that it has “chronically failed” to fully finance LUMA’s Service Accounts, as allegedly required by the Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement and the Puerto Rico Thermal Generation Facilities Operation and Maintenance Agreement.
On Oct. 25, PREPA submitted a document titled “Motion in Compliance with Resolution and Order of October 16, 2024,” arguing that its responsibilities to finance LUMA’s service accounts are “contingent” on having adequate liquidity within PREPA’s accounts. PREPA maintained that these accounts are primarily funded through sources controlled by LUMA.
PREPA argued that LUMA has been unsuccessful in accessing funds from the Federal Emergency Management Agency (FEMA) and in collecting payments from customers. Liquidity concerns were also emphasized in a private communication to the PREB from Omar Marrero Díaz, the island’s secretary of state and executive director of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF).
The communication highlighted the urgency of PREPA’s liquidity difficulties and the critical need for addressing these cash limitations with both immediate and long-term solutions that would enable PREPA to sufficiently fund service accounts related to transmission and distribution operation and maintenance. AAFAF urged the PREB to “take all necessary actions” to ensure that PREPA has adequate liquidity to fulfill its responsibilities, including the replenishment of service accounts.
On Oct. 30, the PREB issued a resolution and order appointing Hempling as hearing examiner to assess the “critical liquidity issues.”
