Governor reiterates support for PREPA on heels of funding measure’s unanimous defeat in House
By John McPhaul
Gov. Pedro Pierluisi Urrutia reiterated his support on Thursday for the allocation to finance the Puerto Rico Electric Power Authoritiy’s (PREPA) contract with LUMA Energy after a joint resolution approving the $750 million funding assignment was unanimously (43-0) voted down by the island House of Representatives.
“I believe that there is no justified cause to postpone the execution of the LUMA contract to January 2022 or any later date, since all the requirements to commence said execution have been met or are expected to be met on or before 1 June 2021,” Pierluisi said in a written statement. “I reiterate my support for the model of public-private partnerships to modernize and restore the transmission and distribution of energy in Puerto Rico in order to improve the service to our people, provide more accessible and cheaper energy, and promote the diversification of our energy sources.”
The governor said the approval of the joint resolution is not necessary because the Public-Private Partnerships Authority and PREPA will be in a position to negotiate any amendment to the LUMA contract that is “beneficial to the public interest.”
Meanwhile, House Speaker Rafael Hernández Montañez hailed Wednesday’s unanimous vote rejecting the allocation as a clear signal that the people of Puerto Rico do not want to foot the bill for the privatization of PREPA.
“Defeated 43-0 with the votes of all the delegations in @CamaraConPR, RCC-139, which allocated $750 million from the general fund to LUMA,” Hernández Montañez wrote on the social network Twitter regarding the defeat of House Joint Resolution 139. “A clear and forceful rejection of the use of the money of those most in need to finance the contract between PREPA and LUMA.”
Six lawmakers missed the vote while two, Lourdes Ramos and Eladio Cardona, abstained.
“[The defeated $750 million proposal] is an increase,” said Rep. Jesús Santa Rodríguez, who chairs the House of Finance Committee. “But it will not appear on your bill. It will be half hidden, but in essence it is the money that we have paid from the IVU [the Spanish acronym for sales and use tax], income contribution, different rates for services and items that we buy. It is our money.”
Meanwhile, Natalie Jaresko, the executive director of the federal Financial Oversight and Management Board, has said that under the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, the oversight board can allocate funds to PREPA, even if the governor or the Legislature does not approve it.
Pierluisi announced on May 5, that he had issued an express veto of a House joint resolution that, among other issues, sought to postpone the LUMA Energy contract, which goes into effect on June 1. In his veto, the governor stated that the measure in itself was unconstitutional, since it undermined current contractual obligations.
Pierluisi pointed out that the measure is significantly inconsistent with the Fiscal Plan of the Puerto Rico government and PREPA. He also maintained that the legislation is unnecessary since the protections it intends to implement are covered by the rule of law, and that it is inconsistent with the transformation of the energy sector that the government and the people demand.
In his veto, the governor also stated that if it were strictly necessary to evaluate amendments to the contract, the mechanisms to negotiate such amendments already exist.
Pierluisi reiterated that his position has been clear regarding the contract with LUMA Energy.
“I always said that the contract had to guarantee several issues, such as not requesting increases in the electricity rate to compensate for LUMA’s administrative expenses and that Law 120-2018 is complied with so that PREPA employees are guaranteed consideration for employment with LUMA with the same benefits that they received in the [Power] Authority or better, including the pension plan to which LUMA as an employer must now contribute,” the governor said. “In the alternative, that they be guaranteed a position in the government, either in PREPA or another agency.”
Similarly, Pierluisi had indicated that the contract must comply with the standards of services and improvements to the system in accordance with the public policy established in Law 17-2019, that there are measures to avoid conflicts of interest in the awarding of contracts, and that clear and specific compliance and performance metrics are established and met.
“To ensure that these matters are fulfilled, as soon as I started my government I signed Executive Order 2021-012, which created the steering committee chaired by the secretary of State, Larry Seilhamer,” Pierluisi said. “This committee may also evaluate and recommend possible amendments. We all want a robust and resilient electrical system, and my government is committed to the energy transformation that leads Puerto Rico toward renewable energy. Continuing to do the same is not an option. I am always focused on the best for our people and my actions prove it.”
On Thursday, Electrical Industry and Irrigation Workers Union President Ángel Rafael Figueroa Jaramillo repudiated the oversight board’s willingness to pass over the Legislature by approving the certified budget with the inclusion of funds to pay for part of the disputed contract with LUMA Energy.
“Although this action by the Board may not be legal, now more than ever the delegations of the NPP [New Progressve Party], PDP [Popular Democratic Party], CVM [Citizens Victory Movement], PIP [Puerto Rican Independence Party] and DP [Dignity Project], in the House and the Senate, together with the independent senator [José Vargas Vidot], have to unite to override the veto of the governor,” Figueroa Jaramillo said in a written statement. “This is the only way to stop the contract that will increase the electricity bill and prevent wasting millions [of dollars] that will be taken from pensions, municipalities, the University [of Puerto Rico], among other services in the country. In this way, they will show that they really represent the interests of Puerto Rico and Puerto Ricans, not allowing the [federal oversight] Board to do whatever it wants with the taxpayers’ money.”