LUMA CEO: PREPA hasn’t transferred funds needed for grid ops

LUMA Energy President & CEO Juan Saca presented detailed data that he said shows the Puerto Rico Electric Power Authority has failed to transfer the necessary funds for grid operations and maintenance, despite the funds having been approved by the Puerto Rico Energy Bureau and stipulated in LUMA’s Operation and Maintenance Agreement. (Gerardo Moya)

By THE STAR STAFF

LUMA Energy President & CEO Juan Saca sounded the alarm on Tuesday over a chronic funding shortfall from the Puerto Rico Electric Power Authority (PREPA), which he says is directly undermining the stability of the island’s electrical grid.

During a House Government Committee hearing chaired by Rep. Víctor Parés Otero, Saca presented detailed data showing that PREPA has failed to transfer the necessary funds for grid operations and maintenance, despite the funds having been approved by the Puerto Rico Energy Bureau and stipulated in LUMA’s Operation and Maintenance Agreement.

According to LUMA, between July 2024 and June 2025, PREPA transferred only about 30% of the required funds, leaving a 70% deficit and contributing to an accumulated shortfall of $800 million since LUMA took over electric power transmission and distribution system operations in 2021.

“This liquidity crisis is not due to a lack of revenue,” Saca stated. “It stems from PREPA’s deliberate decision to withhold funds, in violation of the transmission and distribution contract and approved budgets. This ongoing lack of financing is severely limiting our ability to carry out critical work that directly benefits customers.”

The LUMA chief’s testimony included evidence of financial and operational challenges caused by PREPA’s sustained noncompliance with its contractual and budgetary obligations. Among the most pressing issues is the Emergency Reserve Account, which has remained unfunded since 2023. As a result, LUMA has had to divert over $225 million from its operational budget to cover emergency response costs, leading to the postponement or cancellation of essential maintenance and modernization projects. The company also reported that unpaid invoices exceeding $200 million have led some suppliers to suspend services, affecting small and midsize businesses that support grid operations.

Despite the financial constraints, LUMA highlighted measurable progress in improving the reliability and resilience of Puerto Rico’s electrical system. Since 2021, the company has cleared some 7,000 miles of vegetation, installed more than 10,000 automated devices to reduce outages, replaced more than 33,000 utility poles and upgraded more than 180,000 streetlights, and completed maintenance and repairs at all 300 substations across the island.

“Our teams remain committed to delivering reliable service and advancing the transformation of Puerto Rico’s electric system,” Saca said. “The people of Puerto Rico deserve a resilient and dependable grid, and achieving that requires transparency, stable funding, and genuine collaboration among all stakeholders.”

Looking ahead, LUMA plans to continue advancing key infrastructure projects, including the installation of the largest transformer in Puerto Rico’s history, which will benefit more than 200,000 customers. The company also expects to complete long-overdue upgrades to the Monacillos substation -- restoring its full operational capacity for the first time in more than four decades -- and energize a new transformer in the Caguas substation.

Recent high-impact projects have already improved system redundancy and resilience for more than 175,000 customers. Those included proactive upgrades to the Ceiba transmission line and planned improvements in the Naguabo and Humacao substations; reinforced infrastructure in Humacao and San Lorenzo, including the reconstruction of transmission line 12,600; replacement of the fiber optic line between Vega Baja and Bayamón, benefiting more than 100,000 customers; and key work completed at the Crea substation in Bayamón and installation of a new transformer in Monacillos.

“These achievements are the direct result of the dedication and tireless efforts of our field teams,” Saca said. “We will continue doing everything within our power to strengthen the grid, but stable funding and collaboration with government and federal entities are essential to building the reliable energy future Puerto Ricans deserve.”