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On Thursday, Puerto Rico Energy Bureau Chairman Edison Avilés Deliz announced that following three years of operations under the supplemental contract, they are now prepared to impose fines on LUMA Energy for failure to comply.
Avilés Deliz indicated that the benchmark for these metrics will align with the standards previously set by the Puerto Rico Electric Power Authority (PREPA) before its bankruptcy declaration.
“From a standard regulatory perspective, as [PREPA Executive Director] Josué Colón pointed out, we established a ‘baseline,’ and we aim to assess how LUMA performs in relation to that ‘baseline,’” Avilés Deliz remarked during a government transition hearing. “At certain times, it has fallen below the Authority’s former standards and at other times exceeded them. Over the past three years, we have gathered this data, and I believe we have reached a level of maturity to enforce the fines mechanism provided by law to ensure their ongoing improvement. And I’m talking about regulatory actions, not bonuses, which are customary in any jurisdiction.”
During the hearing, Colón pointed out that the private consortium managing PREPA’s transmission and distribution network has failed to promptly request reimbursement of federal reconstruction funds, which he believes has resulted in a fiscal issue for PREPA. It was revealed that LUMA Energy has contracted IEM to manage reimbursement issues, a company that also holds contracts worth billions with the Central Office for Recovery, Reconstruction and Resilience (COR3) and the Department of Housing for reconstruction funding (refer to another article on this page).
Concerning the possible termination of LUMA’s contract, Jorge Colberg Toro questioned Fermín Fontanéz Gómez, Executive Director of the Public-Private Partnerships Authority, who clarified that violations under the original contract, rather than the active supplement, must span three consecutive years, with the clock resetting if the period is interrupted.
“In other words, we all understand the situation we are currently facing,” Colberg Toro stated. “… We must wait until we emerge from bankruptcy for those particular contract provisions to take effect.”
