Colón Ortiz: LUMA contract to be canceled when time ‘is right’
- The San Juan Daily Star
- May 22
- 3 min read
By The Star Staff
As controversy surrounds the future of LUMA Energy’s contract to operate and maintain Puerto Rico’s electric power transmission and distribution (T&D) system, Public-Private Partnerships Authority (P3A) Director Josué Colón Ortiz said Wednesday the government is prepared to terminate the contract with LUMA Energy this year.
Gov. Jenniffer González Colón had previously promised to cancel the agreement due to widespread dissatisfaction with the company’s performance, particularly regarding ongoing power grid instability.
“I want to emphasize that we are fully prepared to proceed this year when we determine it is right,” Colón Ortiz said in a public hearing in the island House of Representatives. “The governor has been very clear that this will happen within the year. We are committed to ensuring that we protect the best interests of the people of Puerto Rico. We want to make certain that when we take this step, it will not result in any negative outcomes for the public. Once we feel ready, we will proceed with the necessary actions. Based on our activities in recent months and our previous efforts, I am confident that we have sufficient documentation to support this process.”
Colón Ortiz’s remarks were made during a public hearing of the House Government Committee, chaired by Rep. Víctor Parés Otero, regarding House Resolution 42. The measure calls for the investigation of matters related to the structure and performance of public agencies, government digitalization, electoral legislation, and issues related to the island’s energy policy. The session also evaluated the format of the LUMA Energy bill, the review of changes to the base rate, and the state of the electrical system in light of the increase in energy demand during the summer season.
Colón Ortiz, who also serves as the island’s energy czar, acknowledged that there is currently no company lined up to replace LUMA Energy, which in 2020 signed a 15-year agreement to operate the Puerto Rico Electric Power Authority’s (PREPA) T&D system. However, he expressed confidence that companies are interested in taking over the role.
Colón Ortiz also did not provide specific reasons to back up the cancellation of the 15-year contract, which has an annual base fee of $115 million.
Despite the existing and looming challenges, LUMA Energy denied allegations that it is not complying with its contract.
The firm said in a statement that it has made strides in various infrastructure projects aimed at strengthening Puerto Rico’s energy resilience, including the installation of new utility poles, upgrading critical substations, and collaborating on clean energy projects to add over 990 megawatts (MW) of renewable energy and 700 MW of energy storage to the electrical grid. Additionally, LUMA said, it has signed an agreement with the Federal Emergency Management Agency to invest $630 million in overhauling the fragile grid.
“We reject the unfounded assertions made by Engineer Josué Colón regarding any suggestion of noncompliance with our contract responsibilities,” LUMA President & CEO Juan Saca stated. “PREPA/P3A have not used any of the tools available in the OMA [Operation and Maintenance Agreement] to resolve alleged events of noncompliance, except on one occasion, where PREPA itself abandoned the procedure. The intention of the OMA is to provide ample opportunity to resolve disputes or differences between the parties in a collaborative spirit. We invite P3A and PREPA to use the available tools if they truly believe that there is any noncompliance on our part.”
The governor, meanwhile, reacted matter-of-factly to Colón Ortiz’s statements at the hearing.
“This is the same thing I’ve been saying for months and what I said during the campaign: that we were going to cancel the LUMA contract,” González Colón said. “We have to do things right, and that’s why the first thing we did was create a multi-sector working committee to conduct this entire evaluation of the generation situation and the creation of the energy czar’s office, which has been tasked with conducting the oversight that no one had done before. So, as part of that effort, you’ve seen the many letters from both sides of the operators [generation and T&D] and the energy czar, as well as the processes being carried out in the Public-Private Partnerships [Authority].”