House leaders support move to end LUMA contract

Speaker of the Puerto Rico House of Representatives Carlos “Johnny” Méndez Núñez

By THE STAR STAFF

Puerto Rico’s government has taken its first legal step to end its multimillion-dollar contract with LUMA Energy LLC, the private operator responsible for the island’s electricity transmission and distribution system. The lawsuit, announced late last week, comes as the island continues to battle chronic outages, rising power bills and a sluggish reconstruction of its grid devastated by Hurricane Maria in 2017.

Speaker of the Puerto Rico House of Representatives Carlos “Johnny” Méndez Núñez and House Government Committee Chairman Víctor Parés Otero voiced strong support on Sunday for the governor’s decision, framing last Thursday’s announcement as the culmination of years of legislative oversight. Méndez Núñez emphasized that the New Progressive Party (NPP) delegation had monitored LUMA since 2021 and laid the groundwork for the filing of the lawsuit through House Bill 268 -- now Law 2-2025 -- which set the legal foundation for contract termination.

“We committed to canceling the contract during the campaign, and we acted on that commitment,” he said, adding that the lawsuit aligns with the delegation’s longstanding position.

Parés Otero echoed that sentiment, noting that the oversight initiative originated in the NPP-controlled House and included measures such as appointing a compliance coordinator and rejecting a controversial $300 fee for photovoltaic system owners.

“This lawsuit is another step toward LUMA’s departure,” he stated.

Gov. Jenniffer González Colón, who pledged during her campaign to oust LUMA, criticized the company for failing to deliver promised improvements.

“Despite their assurances, the electrical system has not improved with the speed, consistency, or effectiveness Puerto Rico deserves,” González Colón said.

She highlighted that LUMA has access to nearly $11 billion in federal funds but has recovered only about $550 million in reimbursements from the Federal Emergency Management Agency.

“This is unacceptable,” the governor added, accusing the company of misleading the public about its expertise in handling federal processes.

Energy Czar Josué Colón Ortiz detailed that the lawsuit alleges that the company’s failures include poor management of federal funding, power outages that cripple the electrical grid, unaddressed vegetation hazards, cost overruns and evasive audits.

“The Government of Puerto Rico will no longer subsidize incompetence or excuse insubordination,” Colón Ortiz said. “Puerto Ricans deserve an electricity grid operator that keeps the lights on, respects public funds, and abides by the terms and conditions of the signed contract.”

LUMA, a consortium of Calgary, Alberta, Canada-based Atco and Houston’s Quanta Services Inc., took over Puerto Rico’s grid in June 2021, inheriting infrastructure weakened by decades of neglect under the Puerto Rico Electric Power Authority (PREPA), which is still struggling to restructure more than $9 billion in debt. The ongoing outages -- also linked to Genera PR, which manages power generation -- have disrupted daily life, shuttered small businesses and endangered residents with medical needs.

The government is already in talks with mainland U.S. power companies to ensure a smooth transition if the contract is terminated.

The lawsuit, filed as a request for declaratory judgment and a preliminary injunction, aims to invalidate a 2022 contract extension and ensure a smooth transition process. In addition, the governor has asked the Puerto Rico Supreme Court to urgently review the legal and public interest issues raised by the case.

According to the complaint, the extension effectively gave LUMA unlimited control over Puerto Rico’s electrical grid while stripping the Public-Private Partnerships Authority (P3A) and PREPA of their decision-making authority, prioritizing private interests over the public good. It further argues that the extension was approved without the necessary votes from the P3A board and without the regulatory or legislative approvals required by law.

Signed on Nov. 30, 2022, the extension eliminated the original time limit and linked the contract’s continuation to LUMA’s acceptance of PREPA’s debt restructuring plan. The lawsuit contends that the arrangement left Puerto Rico locked into an agreement lacking enforceable performance standards or clear accountability measures.

The government is asking the court to declare the extension invalid, confirm that the interim contract expired after 18 months, and mandate an organized transition. It also seeks an injunction compelling LUMA to provide critical operational data within 48 hours, including employee and contractor rosters, customer databases, inventories, georeferenced maps, maintenance schedules, and technology systems. Last Friday, Judge Arnaldo Callejo in San Juan denied the preliminary injunction request and scheduled a hearing for Dec. 22.

The governor defended the legal filing on Friday, noting that, among other things, it aims to protect the island while the transition stipulated in the contract is carried out.

“The original contract states that if there is a cancellation, there is a one-year transition period,” she said at a press conference in Corozal.

She added that the goal is to ensure operational continuity even when a new operator is selected.

“That is why this legal action is the orderly way to handle this situation … and that is one of the provisions we want to see implemented in an orderly manner through the courts,” González Colón said.