Energy Bureau concludes hearings on rate review process

LUMA Energy President & CEO Juan Saca

By THE STAR STAFF

The Puerto Rico Energy Bureau (PREB) has concluded evidentiary hearings in the rate review process, marking the end of several weeks of technical, transparent, and rigorous analysis of the island’s electrical system and the investments needed to strengthen the quality, reliability, and resilience of the service provided to customers.

As requested by the PREB, LUMA Energy, the private operator of the island’s electric power transmission and distribution system, presented two investment plans -- one optimal and one limited -- to define the financing levels required to improve system reliability and resilience. The company emphasized that every cent paid by customers for the transmission and distribution portion of their bill will be reinvested directly into the electrical grid.

The hearings addressed multiple topics with direct impact on customers and system operations, including the condition of transmission and distribution infrastructure, execution of operational work, emergency response, integration of new technologies, and efficient use of federal funds. Those elements are considered key to improving service stability.

“This rate review process is essential to evaluate, with transparency and technical rigor, what investments are necessary to address historical deficiencies in the system and protect customer service in the long term,” said Alejandro Figueroa, LUMA’s chief regulatory affairs officer. “Our focus has been to clearly explain how these investments are identified and prioritized and how available resources are used responsibly, always under the oversight of the Energy Bureau.”

The analysis prioritized studying system operations, maximizing federal funds, and implementing initiatives to improve service reliability, aiming to reduce outages, strengthen emergency response, and increase grid resilience.

Operational evaluations included the condition of critical equipment that has exceeded its useful life after decades of deferred maintenance, as well as criteria for prioritizing work and balancing preventive and corrective maintenance to minimize service impacts.

Key initiatives discussed to improve system reliability included vegetation management, modernization of substations, grid automation, evaluation and replacement of smart meters, and improvements to public lighting -- all aimed at providing more stable and consistent service to communities.

Another significant component was the use of federal funds, particularly those related to the Federal Emergency Management Agency (FEMA). During the hearings, LUMA explained the complexity of eligibility, review, and reimbursement processes, as well as the need in certain cases to use non-federal funds for urgent work that cannot wait for final resolutions without compromising system stability. FEMA ultimately determines project eligibility, and ongoing efforts seek to maximize every available federal dollar and reduce future pressure on rates, the grid operator said.

LUMA reiterated that it operates under a strictly regulated and audited model and does not benefit economically from rate adjustments, as its compensation is fixed under the operation and maintenance agreement. Every dollar approved for transmission and distribution is reinvested directly into operating, maintaining, and modernizing the grid that serves some 1.5 million customers in Puerto Rico, the company said.

“Under the current rate structure, about 80% of the bill’s cost corresponds to system components not operated by LUMA, such as fuel, subsidies, and other expenses,” LUMA President and CEO Juan Saca said. “This fact underscores the importance of clearly communicating how costs are distributed and how each investment seeks to maximize value for customers.”

With the hearings concluded last week, the PREB will evaluate the full case record and is expected to issue its determination during the first quarter of 2026. That decision will define the investment and financing framework that will guide improvements to the electrical system in the short and medium term.