Energy regulators await LUMA emergency response plan
By The Star Staff
LUMA Energy, the company contracted to operate the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system, does not have an emergency response plan in place and only $30 million set aside for emergencies in the event that a major storm hits the island during the hurricane season, which starts June 1.
The information came out at a hearing at the Puerto Rico Energy Bureau (PREB), which is analyzing PREPA’s budget for the first three years of operation. The budget totals $626 million for fiscal year (FY) 2022, $622 million for FY 2023 and $582 million for FY 2024. It does not include an estimated $288 million that will be used to operate the generation side of PREPA.
LUMA Energy has a 15-year contract with PREPA that is currently in the front-end transition phase. The company will take full control of PREPA on June 1.
Mario Hurtado, a vice-president at LUMA Energy, said officials began to work on an emergency response plan at the end of January that they expect to submit to the PREB. However, officials noted that the firm has a budget for fleet replacement and an inventory of spare parts in the event of a storm.
Hurricanes Irma and Maria in 2017 destroyed the island power grid, leaving most island residents without power for up to a year. Studies have shown that some 3,000 to 4,000 people died in the aftermath of the hurricanes because of situations attributed to the loss of power.
PREB Commissioner Lilian Mateo said the subject of an emergency response was an important one because LUMA Energy was taking over PREPA’s T&D at the start of the hurricane season.
She expressed concern thatLUMA Energy did not have a plan ready at the same time it is getting used to a transition.
“We not only want to know you have funded certain aspects but how they will enable you to respond to emergencies when all these things are happening at the same time and you are getting familiar with the system,” she said. “That is one of the things we need to receive a proper response from LUMA on.”
She also asked officials if $30 million would be enough to deal with an emergency situation.
“Probably,” replied Darren Miller, LUMA’s chief financial officer.
Also on Monday, federal Judge Laura Taylor Swain agreed to give priority over other debt to the payments that PREPA will make to LUMA Energy when it takes over June 1. Under the contract, PREPA will pay LUMA $70 million for the first years and then $105 million for each of years four to 15, plus incentive fees. PREPA has been in bankruptcy since 2017 to restructure $9 billion in debt.