New York – The Puerto Rico Energy Bureau (NEPR) approved a budget for the next fiscal year 2025 of $1,315.9 million dollars for the private companies LUMA Energy and Genera PR to manage the entire electrical system, an amount greater than that had requested.
In a resolution and order published by the newspaper El Vocero this Saturday, the NEPR, the regulator of the energy industry on the island, specified that, of the previous amount, LUMA will receive $582.1 million for the management of the transmission and distribution system.
The foreign consortium is the one that has been in charge, since the summer of 2021, of the transmission and distribution system of the Electric Power Authority (PREPA). The $582.1 million represents $13.8 million more than the company asked for. However, the amount of $110.6 million for capital works not financed with federal money represents $13.1 million less than the $123.7 million that LUMA had requested.
As for Genera PR, the other private company that has been managing PREPA’s electricity generation since last summer, the NEPR allocated $300.3 million, even though the New Fortress Energy subsidiary had requested $319.2 million.
Regarding the budget for the management of hydroelectric plants, the Bureau granted $13.6 million, equivalent to 50% less than the $26.2 million requested.
The NEPR also denied the request for $997,000 to increase the number of employees at Genera from 54 to 84.
Additionally, the quasi-judicial entity approved $27.5 million for expenses related to the PREPA bankruptcy process under Title III of the Promesa Law, as well as another $28.9 million for advice from the Fiscal Control Board (JCF) in the case, and $59.5 million for the payment of debts.
LUMA must respond to progress in vegetation clearing work
Another important aspect contained in the document is that LUMA will have to report every month on the progress or stagnation of the vegetation removal work on the lines for which new personnel has been assigned. In the case of Genera, the company will have to provide monthly information on the status of maintenance work on the thermoelectric plants.
LUMA executives have opted for vegetation clearing efforts, financed with federal funds, to reduce the number of blackouts that Puerto Ricans suffer daily.
“After a review of the presentations and responses of the parties to the questions posed at (information requirements) and at the Technical Conference, the Energy Bureau MODIFIES the annual budgets presented by LUMA… and APPROVES the modified version of the subject budgets to the reporting requirements… established in this Resolution and Order. All existing reporting requirements remain in full force and effect,” specifies the document as quoted by El Vocero.
Executive Director of AEE criticizes LUMA’s “exorbitant” expenses
On the other hand, the executive director of the AEE, Josué Colón, sparked the debate on the performance of LUMA by exposing, in a letter sent to the executive director of the Board, Robert F. Mujica, the “exorbitant” expenses incurred by the company.
The letter, dated June 27, emerged right in the middle of the discussion over the new budget for the company.
“Despite LUMA’s resistance to revealing any information to PREPA on this matter, PREPA discovered that LUMA spends more than $200 million,” reads the letter, referring to the Assigned Employees Program.
Colón is referring to the employees of the three companies that make up the consortium, namely the Canadian firm ATCO and the US-based companies Quanta Services Inc. and IEM.
“The taxpayer-funded Assigned Employees Program does not create jobs for people in Puerto Rico who are equally or better prepared in maintenance and operation of transmission and distribution (T&D) systems,” adds the text published by El Nuevo Día.
“The salaries, wages and benefits paid to seconded employees far exceed those of local employees,” the AEE executive director continued.
Flight tickets, hotel stays and vehicle rentals by LUMA employees
The official also noted that 20% of the total allocation for the program is used for expenses such as airfare, hotel stays and car rentals for the assigned employees and their spouses.
“These exorbitant expenses are unjustified and unnecessary, and only benefit the LUMA consortium, rather than the people of Puerto Rico. Furthermore, PREPA has identified that LUMA spends exorbitant amounts of money on advertising and marketing without any proven benefit to taxpayers,” he said.
LUMA responds
In response to Colón’s complaint, LUMA sent a statement indicating that Colón’s statements included multiple falsehoods and misleading and erroneous information.
According to the company, “as a result of the fiscal errors of PREPA, the operator prior to LUMA, which includes a historic bankruptcy of $10,000 million, fiscal mismanagement and operational failures, LUMA is obligated under our operating contract to remain within of a budget.”
LUMA also argued that the assigned employees have “high-level experience and operational excellence, which is vital to rebuilding the electrical system.”
They added that the cost of contractors is “significantly” higher than that of crews with seconded employees because there is a profit margin for contractors and the costs of seconded employees are based solely on associates.
“Our parent companies have invested in sending world-class professionals hired at 11 utilities across the United States to build programs on LUMA and lead grid transformation. This is crucial for Puerto Rico due to PREPA’s poor preparation and decades of operational failures,” LUMA insisted.
According to LUMA, they have also hired 300 recent graduates and 100 internship students from six universities on the island. “At LUMA, we also prepare hundreds of employees and line attendants through LUMA College’s technical training programs, including the first line attendant program certified by the Department of Labor in Puerto Rico,” they explained.
For almost a month, LUMA has remained in the “eye of the hurricane” due to massive blackouts that have affected hundreds of thousands of customers and forced the transfer by sea and land of a new transformer to the Santa Isabel substation, a town to the south. from Puerto Rico.
Interruptions in service continue to be reported three years after LUMA began work on the island under the promise that it would improve service and advance the reconstruction and maintenance work of the network.
Consecutive increases in electricity rates continue under LUMA, even though the company is paid more than PREPA to operate T&D systems and manages multimillion-dollar allocations of federal funds for the repair and modernization of the electrical grid.
The debate on the energy crisis on the island focuses on arguments about the failure of the corporation’s privatization, the need to cancel the contract and a potential transition of PREPA to some public entity as a solution.
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