The San Juan Daily Star
Energy regulator approves LUMA request to shift $47 million to operating budget
By The Star Staff
The Puerto Rico Energy Bureau (PREB) approved on Wednesday a budget amendment requested by LUMA Energy to reallocate $47 million from its non-federally funded capital budgets to its operating budget to provide for higher than anticipated labor expenditures for fiscal year (FY) 2022.
In support of the request, LUMA cited the need to have trained and qualified essential utility workers, provide safety and operational training for the existing workforce, perform foundational activities to support advancing federally funded work and address the severe backlog of uncompleted work left at the commencement of LUMA operations, which required an increase in the private consortium’s operating budget.
LUMA stated that the increased operating budget funds will be drawn from the non-federally funded capital budget, primarily from the distribution, substation, and enabling improvement portfolios, which are forecast to be under budget for FY 2022.
LUMA noted in the document that lower than anticipated non-federally funded capital expenditures in the distribution improvement portfolio are primarily the result of lower than anticipated spending in the distribution automation program, which is seeking federal funding for equipment that will increase the portion of the program that is federally funded. LUMA also stated it was awaiting receipt of equipment, delivery of which has been slower than anticipated due to foundational activities and disruptions in the global supply chain. LUMA asserted that these factors have resulted in some activities being deferred until FY 2023 as reflected in the FY 2023 Annual Budget.
LUMA also proposed to reallocate $29 million between improvement portfolios, moving costs to the Enabling Improvement Portfolio for increased spending within the Health, Safety, Environment & Quality and Technical Improvement programs, in accord with the significant level of safety and technical training provided throughout FY 2022.
The 2021 Financial Oversight and Management Board-Certified Fiscal Plan reflected updated macro-economic assumptions provided by the Puerto Rico Fiscal Agency and Financial Advisory Authority and increased the base rate revenue forecast by some $60 million. Increases in the generation and other budgets of $44 million partially offset that increase.
As an initial matter, the PREB noted that the amendment request does not result in increased customer base rates and does not result in an increase to LUMA’s aggregate expenditures.
“In view of the inability of LUMA to fully discover the extent of the training and onboarding that would be required, the extent of unfulfilled work orders and the minimal work executed to facilitate federal funding before LUMA assumed operations as operator, the Energy Bureau has no objection to the specified reallocation of funds among Improvement Portfolios to further these important goals” the PREB said. “Notwithstanding the foregoing, the window for justifications based on lack of actual information is closed. The Energy Bureau warns LUMA that any future reallocation or redistribution of funds amongst budget programs or line items shall be timely anticipated and requested before the Energy Bureau. Furthermore, the Energy Bureau ADMONISHES LUMA and PREPA of the need for effective coordination. The Distribution, Substation and Enabling Portfolios, from which the Non-Federally funded capital funds for re-allocation to the Operating Budget will be primarily drawn, must not be detrimentally affected as a result and System Remediation must continue apace.”