Energy regulator says LUMA’s 3-year budget is incomplete
By The Star Staff
The Puerto Rico Energy Bureau (PREB) of the Public Service Regulatory Board has refrained from approving the budget of LUMA Energy, the private operator hired to manage the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system, for the first three years of operation because it is incomplete.
The PREB, according to a statement issued Tuesday, asked LUMA Energy to submit on or before April 12 all the information required to properly evaluate its initial three-year budget. The approval of the budget is one of several conditions that must be met under its contract with PREPA for the company to take over management of the public utility’s T&D.
LUMA filed a request with PREB on Feb. 24 to approve its initial budget as part of PREPA’s transition process. The contract is currently in the front-end transition phase but LUMA Energy is slated to take over control of operations on June 1.
However, the STAR learned that La Fortaleza is trying to advance the takeover date.
After a preliminary review of the proposed budget, the PREB concluded that it is incomplete, since “it lacks an in-depth discussion on key issues, supporting data, analysis and other necessary assessments for the Energy Bureau to make an adequate evaluation,” as determined in its Resolution and Order issued Monday.
The initial budget prepared by LUMA assumes that the company will operate for the first three years with the same basic rate approved by the PREB in January 2017, and implemented in May 2019 with retroactive effect to August 2016.
The PREB noted that its determination does not take care of LUMA’s request.
“Once LUMA delivers the required information on the initial budget presented, and without exhausting the possibility of new requirements, if necessary, the Bureau will establish a procedural calendar, which will include public and technical hearings, as well as accept public comments,” the PREB said.
The initial budget does not contain funding for the payment of PREPA’s bonded debt or for the payment of an $894 million loan that PREPA may need from the central government to repay the LUMA Energy contract.
The budget submitted by LUMA Energy totals $3.6 billion in fiscal year (FY) 2022, which begins July 1, and goes up to $4 billion in FY 2023 and $4.1 billion in FY 2024. While the numbers include $650 million in federal funds for FY 2020, $1 billion in FY 2023 and $1.2 billion in FY 2024, the total numbers are similar to PREPA’s revenue requirement established by the PREB in 2017.
The regulatory entity indicated that it reserves its final decision on the initial budget and also warned that if its Resolution and Order is not complied with, it could make any appropriate determination within its legal and administrative powers to ensure that the public welfare and the stability of the power system are maintained. LUMA Energy is certified by the PREB as an electrical utility company and subject to its jurisdiction.