Ex-consumer rep on PREPA board: Extension of LUMA contract is illegal

Tomás Torres Placa, former consumer representative on the governing board of the Puerto Rico Electric Power Authority

By THE STAR STAFF

Tomás Torres Placa, a former consumer representative on the board of the Puerto Rico Electric Power Authority (PREPA), asserted Wednesday that the extension of LUMA Energy’s supplemental contract contravenes Law 120 of 2018, presenting a significant legal challenge to the utility operator.

Torres Placa emphasized that during a November 2022 public hearing, PREPA’s board did not reach full consensus on the contract renewal. He argued this lack of unanimity violates the transparency and voting standards required by Law 120 for public-private partnership agreements.

Torres Placa said that while the initial vote at PREPA complied with internal procedures, the Public‑Private Partnerships Authority (P3A) requires unanimous approval from all board members to validate transactions. Since two members abstained, he contends the vote may be legally nullified -- an argument he describes as particularly strong under Law 120. The resolution extending LUMA’s contract was signed by PREPA Governing Board Chairman Fernando Gil Enseñat.

“When this [supplementary contract with LUMA Energy] was put to a vote, in the Electric Power Authority, it was voted in favor, it was voted against, but the procedural aspect was in accordance with the law,” Torres Placa noted in a radio interview. “In the Public-Private Partnerships Authority, there is the problem. There that is defined as a transaction of PREPA in which the vote of the entire board is wanted and two of its members abstained, so it can be interpreted that abstention is null, and that is a strong approach.”

LUMA Energy, a private consortium, has been operating PREPA’s transmission and distribution system since June 1, 2021. The company secured a 15‑year contract signed on June 22, 2020, under the Transmission and Distribution Operation and Maintenance Agreement, taking over duties previously managed solely by PREPA.

Law 120, officially known as the Puerto Rico Electric Power System Transformation Act, was enacted in June 2018. It establishes rigorous procedural safeguards -- such as mandatory competitive bidding, transparency measures, certification by the Puerto Rico Energy Bureau, and legislative approval for significant public -- private contracts. Central to the legislation are its requirements for full transparency and consensus in decision-making, which Torres Placa asserts were not met in the contested P3A vote.

The P3A and PREPA have filed a lawsuit in San Juan Superior Court challenging the validity of the supplemental contract extension executed on Nov.  30, 2022. The legal action contends the extension bypassed necessary approvals mandated by Law 120 and shifted significant control over PREPA’s exit from oversight under the federal Puerto Rico Oversight, Management and Economic Stability Act to LUMA, thereby limiting accountability. The plaintiffs are seeking a declaratory judgment to invalidate the contract and preliminary injunctions to compel LUMA to provide full operational transparency and ensure an orderly transition should the extension be deemed void.

After LUMA sought to remove the lawsuit to federal court, the government filed a second lawsuit against LUMA Energy in which it presented the same arguments as the first lawsuit. In response, the private grid operator on Wednesday requested that the new lawsuit be transferred to federal court under Title III.

LUMA noted that the previous lawsuit filed by the island government was moved to the federal court, and reiterated that the original contract and its subsequent extension were created, negotiated, and executed by the Puerto Rico government itself within the existing legal framework.

LUMA has vowed to pursue “all necessary defenses” to preserve the agreement and described the litigation as a “distraction” from its ongoing efforts. The company highlighted key achievements since taking over operations, citing extensive infrastructure improvements -- including vegetation clearing, pole replacements and substation modernization -- funded through federal grants exceeding $2.4 billion. LUMA described the lawsuit as politically motivated and underlined its progress in strengthening the island’s power system.

The game of legal chess appeared to continue later Wednesday when Gov. Jenniffer González Colón said a third lawsuit will be filed soon, after LUMA’s decision to once again request the removal to federal court of the government’s latest legal action.

“We knew they were going to file another motion to take the case to the federal level to avoid addressing it,” the governor said. “The government of Puerto Rico has thought about all of this, has studied it, and our lawyers, both at the state and federal levels, are prepared.”

As the case advances, all eyes are on whether the abstentions from the P3A vote will be interpreted as nullifying the approval -- and how that determination might affect LUMA’s future control and operations of Puerto Rico’s electric grid.