Citing legal, operational risks, LUMA asks PREB to pause a pair of determinations

In a motion filed Wednesday, LUMA Energy, the private operator of the island’s electric power transmission and distribution system, asked the Puerto Rico Energy Bureau to pause both the $750‑per‑hour cap on external legal counsel and the regulator’s blanket denial of fiscal year 2026 Title III cost recovery. 

By THE STAR STAFF

LUMA Energy moved this week to pause two key determinations in the Puerto Rico Energy Bureau’s (PREB) Final Rate Order, warning that immediate enforcement would disrupt its ability to meet legal and operational obligations tied to the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy and ongoing regulatory proceedings.

In a motion filed Wednesday, the private operator of PREPA’s transmission and distribution system asked the PREB to stay both the $750‑per‑hour cap on external legal counsel and the agency’s blanket denial of fiscal year (FY) 2026 Title III cost recovery. LUMA’s request comes as its broader motion for reconsideration, submitted on May 5, remains pending. The company argues that the PREB retains full authority under Regulation 8543 to grant interim relief while reconsideration is underway.

LUMA told regulators that without temporary relief it faces “disruption to ongoing work associated with active Title III‑related proceedings,” including depositions, document production and other discovery obligations in PREPA’s bankruptcy case. The company also warned that the fee cap would force it to curtail legal representation in complex litigation and regulatory matters already underway, including class‑action lawsuits and active PREB dockets such as the PREPA rate review and the Integrated Resource Plan proceeding.

According to the filing, the fee cap would apply retroactively to FY 2026, even though the fiscal year began in July 2025 and legal teams were already retained and staffed under previously approved budgets. LUMA argued that the PREB already has oversight tools in place through departmental budgets and quarterly reporting, making an hourly cap unnecessary and potentially harmful.

In challenging the denial of Title III cost recovery, the company asserted that the PREB’s decision contradicts the Transmission and Distribution [T&D] System Operation and Maintenance Agreement and the Supplemental Terms Agreement -- contracts the PREB itself approved. Those agreements classify Title III participation as a T&D Pass‑Through Expenditure and specify that LUMA is not responsible for costs related to PREPA’s bankruptcy. LUMA said its participation in Title III proceedings is not optional, noting that it must respond to information requests from PREPA, the Financial Oversight and Management Board, bondholders, and the Title III court’s mediation teams.

The urgency of the request, LUMA said, has increased in light of recent developments in federal court. On April 13, U.S. District Judge Laura Taylor Swain lifted portions of the litigation stay to allow bondholders to pursue an accounting counterclaim and conduct related discovery. The court has since set schedules for document production and hearings before Magistrate Judge Judith Dein. LUMA argued that these developments have created immediate legal obligations that cannot be met if the PREB’s denial of Title III funding remains in place.

The company warned that without access to FY 2026 Title III funds, it would be forced either to incur legally required expenses without budgeted resources or to scale back participation in federal litigation, potentially harming PREPA and undermining LUMA’s contractual duties.

LUMA asked the PREB to temporarily suspend the fee cap and the Title III cost denial while reconsideration is pending, and to allow the company to continue using external counsel within its approved overall legal budget. It also requested authorization to access the FY 2026 Title III funds included in the provisional budget, arguing that such relief would prevent “immediate and concrete harm” while PREB evaluates the grid operator’s broader motion for reconsideration.