Hearing today on request to stop LUMA Energy contract

By The Star Staff

The federal Title III bankruptcy court is slated to hear a dispute today on whether to grant a preliminary injunction requested by the Electrical Industry and Irrigation Workers Union (UTIER by its Spanish acronym) to stop LUMA Energy from taking over the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system.

“The court will review all declarations that have been submitted in either support of or opposition to the preliminary injunction motion in advance of the hearing. All such declarations are deemed submitted as direct testimony,” the court said in a recent filing.

Because of the coronavirus pandemic protocols that are currently in place, the hearing will be online. To listen in on the proceedings by telephone, members of the public should dial (888) 363-4749, and enter the access code (7214978) and security code (6298) when prompted. The access lines will be in listen-only mode at all times.

The UTIER motion has described the contract signed with LUMA Energy as leonine and costly. The union said the contract violates local and federal laws and the workers’ rights contained in the collective bargaining agreement.

“This court should grant the preliminary Injunction sought by plaintiffs to avoid imminent and severe irreparable damage,” UTIER said. “When the Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement with LUMA Energy and its supplemental agreement was made public in June 2020, UTIER studied the content of its clauses and immediately denounced the contract as leonine and contrary to Puerto Rico law.”

The union’s concerns have been echoed by politicians and think tank groups such as the Center for a New Economy.

The federal Financial Oversight and Management Board said that nearly four years ago, massive natural disasters crippled Puerto Rico and PREPA. Since then, says the board, the government parties have worked hard to prevent a repeat of 2017, and to remediate the historical problems plaguing the island’s electrical system and PREPA.

“UTIER, as the Court knows, has repeatedly and unsuccessfully tried to frustrate these much needed and long overdue reforms. Now, through the preliminary injunction motion, UTIER attacks the cornerstone of PREPA’s transformation: the impending implementation of the LUMA Energy Operation and Management Agreement, which will put PREPA’s Transmission and Distribution System under private and professional management in line with the policy goals of Act 120-2018 and Act 17- 2019,” the oversight board has said. “This effort should fail, too; if a preliminary injunction is entered, circumstances could lead to LUMA Energy terminating the O&M Agreement, halting PREPA’s transformation.”

The oversight board said the preliminary injunction motion falls far short of meeting the stringent standards for granting it.

“Plaintiffs must prevail on four factors: irreparable harm, the balance of hardships, the public interest, and the likelihood of success on the merits, to prevail,” the federal board said. “They fail to prove even one; as we show, each factor strongly favors denying the Motion and allowing PREPA to proceed with the next stage of its transformation.”

An injunction, the oversight board said, would create dangerous uncertainty and risk severe consequences for PREPA and Puerto Rico precisely when LUMA Energy’s expertise is most needed: the start of the 2021 hurricane season, which begins in June and is expected to be an especially active one.

“As part of its front-end transition services, LUMA Energy has worked for months creating an extensive emergency preparedness plan for critical projects and conducting over 2,000 hours of training to improve PREPA’s ability to restore power and protect the safety of its workers and the public,” the board said. “Although that plan will be phased in over time, an injunction would stop that work in its tracks, leaving PREPA with no time, and less expertise, to formulate and execute an equally effective program. This would gravely harm PREPA and Puerto Rico’s ability to prepare for and recover from an emergency.”

However, in recent hearings before the Puerto Rico Energy Bureau (PREB), LUMA Energy has said it does not have an emergency response plan ready. The private consortium also does not have the T&D system operating principles ready. At a recent hearing, PREB Commissioner Lillian Mateo chided the firm.

“How are you going to operate the system if you don’t know anything about it?” she said.

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