LUMA Energy says regulator’s demands for prior budget approvals is out of bounds

LUMA: Regulator’s demands for prior budget approvals are out of bounds

By The Star Staff

LUMA Energy, the private operator of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution system, has accused the Puerto Rico Energy Bureau (PREB) of managing the affairs of a public utility in excess of its legal authority.

In a document filed on Nov. 1, LUMA Energy submitted evidence to support claims that it is unreasonable and inconsistent with its operation and management contract to have to seek prior approval from the energy regulator to reallocate funds for expenses that do not exceed 5% of an approved budget and to seek amendment of an approved budget when spending remains within the limits of the 2017 rate order and does not require a rate review process.

LUMA said it is committed to maintaining the transmission and distribution system in a manner that is fiscally responsible.

“The current 5% line-item variance threshold that this Energy Bureau has adopted to require pre-approvals of spending variances or reallocations of funds within approved Budgets and the third quarter reporting deadline for budget amendments and reallocations, impose significant logistical, administrative and regulatory burdens,” the private operator said.

LUMA’s arguments are part of an ongoing discussion over the entity’s budget.

As reported by the STAR, a prehearing is slated for this Friday in an investigation ordered by the PREB into LUMA’s claims that PREPA has failed to fund its service accounts as required under the operation and management contract.

The prehearing was ordered by examiner Scott Hempling, a Georgetown University Law Center professor and lawyer with expertise in public utility law, who has worked as an adviser to the PREB.