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  • Writer's pictureThe San Juan Daily Star

Governor on calls to cancel LUMA contract: ‘For what? To go back to what we had? No way’

Gov. Pedro Pierluisi

By The Star Staff

Gov. Pedro Pierluisi Urrutia said Tuesday that despite the demonstrations today that will demand the cancellation of the LUMA Energy contract, his inclination is not to cancel it and he asked “what for?”

“Not because some are going to go to protest that they want that contract to be canceled,” the governor said at a press conference. “I have already stated that it does not work like that. In other words, cancel it for what? To go back to what we had? No way.”

Questioned about the possibility that Senate Bill 931, which seeks to transfer $220.5 million “surplus” funds from the State Insurance Fund Corp. (SIF) to stop the rise in the energy and water service rates, the latter of which has already entered into force, could be salvaged, Pierluisi said he is waiting for legislators to reconsider their opposition to the administration bill.

“I still do not accept that because I think that those who are thinking of voting against that bill should come around in time, because it falls to the wayside that what this bill automatically does is eliminate the increase of four cents [to the energy rate],” the governor said. “They may not like the shape and form, but who wants a four-cent increase in their electricity bill? I would like to know who. So, the [Energy] Bureau is the one that has imposed it; that was the decision of the regulatory entity based on the costs of the purchase of fuel for the [Electric Power] Authority; obviously, the rise in the cost of oil is the reason that the increase was ordered, but already the chairman of the [Energy] Bureau himself has said that if that bill is approved, the increase is reversed and then it is zero -- zero increase.”

“I insist that they leave the playing to the crowd aside and focus on the well being of our people, which is that we do not have an increase in the cost of electricity,” the governor added.

Earlier this week the governor said that the Puerto Rico Constitution forces him to defend the contract with LUMA Energy, the private operator of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution system, despite public demands from citizens and several mayors to cancel it.

“It is not a matter of endorsing,” Pierluisi said at a press conference on Monday. “I understand that there is a demonstration scheduled for Wednesday. Good. And as in any democracy, and in ours, we respect any demonstration. Anyone who wants to march against that contract can still do so. This type of demonstration has already occurred in the past.”

After a one-year transition, LUMA Energy took over PREPA’s transmission and distribution system for $115 million a year in the summer of 2021 as part of a 15-year contract amid promises that the power service would improve. However, Puerto Rico residents continue to endure blackouts and higher energy costs. A protest slated for today will start at the Capitol in Puerta de Tierra and proceed to La Fortaleza in Old San Juan.

The Financial Oversight and Management Board supports the LUMA Energy contract, stating that it is the result of a careful, extensive and legal process that was and still is required under Puerto Rico’s Public-Private Partnership Law.

“It is also the result of the clear need to transform the power sector, as set out in Act 120-2018 and Law 17-2019, and as recognized by the Government and the Fiscal Board,” the oversight board said in 2020. “PREPA does not have a legal option to cancel the contract, and the discussions on the cancellation of the contract are not helpful to the clear need to transform the agency and attract private sector investment and job creation to Puerto Rico.”

“My position is that this contract was duly granted and under the government of Puerto Rico contracts are respected,” the governor said. “Moreover, the Constitution requires that all contractual relationships not be undermined. The word of the people of Puerto Rico is pledged to that contract and LUMA has a role to play under that contract.”

Pierluisi relied upon the process of rebuilding the electrical grid to end recurrent blackouts.

“The solution for the blackouts that we have had, the permanent solution is the reconstruction that is underway and we are going to inform the people of how the reconstruction of the electrical network is going, which is key, as well as the pending improvements in the power plants,” he said. “That is ongoing and that is the solution.”

“We have the funds for that and it is important that from time to time we report on the progress of that reconstruction,” the governor added.

In recent weeks, LUMA Energy has only announced “historic projects” to replace lighting as part of that reconstruction process.

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