LUMA amends 10-year plan to regionalize federally funded projects

By The Star Staff

LUMA Energy, the operator of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system and other areas, recently amended the 10-year plan to rebuild the island’s power grid, streamlining it in such a way that proposed federally funded projects appear to be reduced in number by 46.

The original plan prepared by PREPA earlier this year had a list of 185 projects that were divided by municipalities. However, LUMA Energy eliminated an entire section in the 10-year plan that divided the projects by municipalities in favor of dividing them into seven regions.

While at first glance it appears that the number of projects was reduced to 139 from the 185 proposed by PREPA, a LUMA Energy executive said the total number of projects remains the same and attributed the new numbers to the fact that they were grouped into regions. The Federal Emergency Management Agency (FEMA) approved $10.7 billion to rebuild the island’s power infrastructure.

“It is the same work even though the numbers changed,” said Paul Goguen, LUMA Energy’s vice president of capital projects, in a recent presentation to the Puerto Rico Energy Bureau (PREB).

He said the new structure proposed by LUMA for the evaluation of federally funded projects will ensure they not only meet requirements from the Central Office of Recovery, Reconstruction and Resilience (COR3), the PREB and FEMA, but also that there are higher recovery costs and no additional costs are passed on to customers.

“It is how we will package the construction contract; how we will present it to COR3 and to FEMA,” Goguen said.

Tomás Torres, the consumer representative to PREPA’s board, said he saw problems with the new structure because even if projects are contracted in a regionalized form, LUMA Energy must take into account the needs of the individual municipalities, all of which have their own territorial organizational plans.

“Even if the projects are conceptualized by region, you must have the support of mayors,” he said. “It is an error and should be reconsidered because the mayors and community leaders are the closest to their constituents, and to avoid duplication of efforts and maximize funding.”

Torres noted that energy projects, such as those that entail burying power lines, not only impact power infrastructure but also have an impact on traffic, sidewalks and businesses in each of the towns’ urban centers or downtown areas.

The Mayors Federation or the Mayors Association could not be reached for comment.

The amendment of the 10-year plan comes at a time when some mayors have been critical of LUMA Energy over its slow response in performing repairs since it took over PREPA’s T&D on June 1 after a one-year transition period. Some mayors have activated their own workers to conduct repairs.

LUMA Energy has also been reluctant to provide information for a House of Representatives probe into its operations. Last week, the Puerto Rico Court of Appeals ordered Popular Democratic Party Representative Luis Raul Torres, who oversees the probe into LUMA Energy, to present a brief today regarding LUMA Energy’s refusal to turn over documents to the House.

LUMA’s initial budgets rely heavily upon the use and maximization of federal funding support. Of planned fiscal year (FY) 2022 capital expenditures of $774.5 million, $650.4 million is targeted to receive federal funding support. In FY 2023, LUMA’s budget includes $1.05 billion in federal funding support, out of total capital expenditures of $1.2 billion. Similarly, in FY 2024, LUMA’s proposed budget includes $1.2 billion in federal funding support out of total capital expenditures of $1.3 billion.

The PREB in a ruling in May said there remains uncertainty about the exact federal funding procedures that will be implemented by LUMA, and about the efficiency of the transition of federal funding responsibility from PREPA to LUMA. The regulator then required LUMA to provide monthly reporting of federal funding activity, so it may monitor such activity and may require further action, as needed, to ensure that ratepayers are protected and are receiving the greatest possible benefit from available federal funding sources.

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