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Fontanes said LUMA Energy contract could end in November if PREPA remains in bankruptcy


Fermín Fontanés Gómez

By The Star Staff


While the Puerto Rico Electric Power Authority (PREPA) pays LUMA Energy, it has no say over the private operator’s handling of the utility’s transmission and distribution system, responsible for six major power outages that left millions in the dark this year, officials said Monday.


During a public hearing of the House Economic Development, Planning, Telecomunications and PPP Committee analyzing the proposed cancellation of the LUMA Energy contract, Public Private Partnership Authority (P3A) Director Fermín Fontanés, said that if an agreement to end PREPA’s bankruptcy is not reached by November 30, 2022, LUMA Energy contract can terminate the contract due to a breach of the government.


“If by November 30 the bankruptcy has not ended, then the contract is dissolved,” said Fontanés said.


Immediately, Torres Cruz said: “It is dissolved, Hail Mary, good thing you acknowledge it publicly. Excellent! If you had explained that from the beginning, there would not be so much trouble.”


Fontanés Gómez added that “it would be dissolved because the government of Puerto Rico would have defaulted on November 30.” He explained that the government of Puerto Rico, according to the contract, would pay a “termination fee.”


LUMA Energy, a subsidiary of Quanta and ATCO, took over the management of PREPA’s transmission and distribution system in June 2021 following a one-year transition period.


PREPA Executive Director Josue Colón, on the other hand, blamed problems with T&D lines as the cause of six power outages that left millions without service but noted that the energy utility is powerless.


Despite owning all energy assets and paying for LUMA Energy’s operations, Colón said PREPA is not in the list of entities overseeing LUMA Energy because of problems with the law. The Public Private Partnership Authority, which does not have the expertise, and the Energy Bureau, the energy industry regulator, are the ones that monitor LUMA Energy.


“My suggestion is for you to go to the origin of everything. Under the current legislation, PREPA pays for everything but has not vote. We pay $20 million to the Energy Bureau and $9.5 million to P3,” he told the panel about proposed changes to current law.


The power utility responsible for $9 billion in FEMA funds to rebuild the energy grid but has no say in how LUMA Energy uses the funds, he said. “I have to comply whether I am in agreement or not,” Colón said.


PREPA’s Board President Fernando Gil-Enseñat also said PREPA’s board had no oversight over LUMA Energy and has met with LUMA officials to discuss problems with the energy grid because they are both members of a committee within the Board.


In response to a question from Committee Chairman Luis Raúl Torres, Colon listed the causes of at least six major power outages, all of which were blamed on problems with transmission lines that caused generation units to shut down.


For instance, a fault in a 115,000 KW transmission line from the Viaduct to San Juan brought down units six and nine in the San Juan Power plant, unit 3 at the Palo Seco Power Plant and unit 2 in the Aguirre Power plant, leaving thousands without power on February 21. The utility turned on several power units as backup but those units use diesel to operate, which is more costly.


Colón said that on April 5, LUMA Energy workers conducted work at a substation in Palo Seco and in AES without coordinating with PREPA first and caused the failure of Unit 1 in AES and Units 3 and 4 at the Palo Seco Power Plant.


The following day, a short circuit at a transmission center in Costa Sur caused power units to shutdown, leaving all of Puerto Rico without service, he said.


On August 9, a failure in a 230,000 KW line between the Costa Sur power plant and the Cambalache power plant and another failure in a 52,000 between Costa Sur and the Ecoeléctrica power plant caused Unit 2 in AES and Unit 1 in Ecoeléctrica to fail, leaving thousands without service.


On August 12, Colon said a 230,000 KW transmission line between Costa Sur and Manati caused the failure of units in AES, the Aguirre Power Plant and the Costa Sur power plant.


Three days later, a failure in a 39,000 KW line between the Mayaguez power plant and the Acacia Substation and a failure in a 51,100 kW between the Cambalache power plant and Manati caused four power units to shut down.


Colon said he has written letters to LUMA Energy informing the private operator about problems in the T&D.


On the other hand, P3 Authority Director Fermín Fontanes said he did not know anything about an internet webpage presumably paid for by LUMA Energy called Tumba el Tumbe to attack opponents of the private operator. Committee Chairman Luis Raúl Torres said he has information that the web page was created in April 2021 and paid for by LUMA Energy’s parent company, Quanta.


“We are going to ask you to investigate and we want to know if this was paid for with public funds,” Torres said.


He also informed Fontanes of a top P3 official who is also using a pseudonym in the social media pages to attack opponents of the contract.

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