Energy Bureau orders LUMA and Genera to address fuel costs after global oil price drop

The Energy Bureau is examining fuel cost projections that could influence upcoming electricity rates. 

By THE STAR STAFF

The Puerto Rico Energy Bureau has ordered LUMA Energy and Genera PR to appear at a virtual technical conference on June 25 to explain how they developed their latest fuel and purchased power cost projections, particularly in light of a sudden decline in international oil prices following a June 14 agreement between the United States and Iran.

LUMA is the private operator of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution system while Genera PR operates its power plants.

In a Resolution and Order issued June 18, the Bureau said the recent drop in oil prices could materially affect the quarterly factors LUMA filed on June 1 and June 15. The agency stressed that this development “must be considered” in the preparation of the projections and directed LUMA to submit an amended quarterly factor proposal by June 24 at noon if the new market conditions were not incorporated. The conference will focus on the proposed Fuel Adjustment Clause, Purchased Power Cost Adjustment, and other rate components that determine customer bills for the July–September 2026 period.

The Bureau also issued two extensive Requests for Information requiring LUMA and Genera to provide detailed data on system operations, fuel supply, outages, and accounting practices. The questions cover a wide range of issues, including whether the companies have identified errors in their proposed rates, whether they have experienced fuel delivery delays or force majeure notices, and whether unplanned outages affected fuel and purchased power costs during the March–May 2026 reconciliation period. The Bureau is also seeking explanations for any instances in which lower‑cost fuels such as LNG were unavailable, forcing reliance on more expensive alternatives.

The order demands full disclosure of any natural gas delivery shortfalls, including the dollar impact on monthly fuel costs, and requires LUMA to provide journal entries and reconciliations related to fuel inventories as of May 31. Regulators also want updates on the status of a $55 million fuel cost deferral tied to a dispute with New Fortress Energy, first identified in a December 2025 order, and whether that deferral has affected LUMA’s March 2026 reconciliation.

On the annual factors side, the Bureau is asking LUMA to clarify the corrections to its proposed CILT, SUBA‑HH, SUBA‑NHH, and energy-efficiency rates for the July 2026–June 2027 period. Regulators flagged discrepancies in LUMA’s subsidy forecasts, including references to FY 2026 data in FY 2027 filings, and questioned the removal of certain subsidies, including Lifeline Residential Service, public housing subsidies, irrigation district costs, and the General Agricultural Service subsidy. The Bureau is also seeking the source of a $16.5 million annual contribution to the Energy Bureau included in the SUBA‑HH rider and wants confirmation of whether LUMA included any provision for uncollectible accounts in its proposed annual factors.