LUMA president faces long questioning in House but often declines to answer

By The Star Staff

LUMA Energy President Wayne Stensby said Sunday he does not have a legal opinion nor does he discuss with Federal Emergency Management Administration (FEMA) officials whether the private operator can legally administer $10.2 billion in federal funds to upgrade the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system.

“We don’t need it,” he told the House Committee for Economic Development, Planning, Telecommunications, Public-Private Partnerships and Energy investigating the controversial 15-year contract granted to LUMA Energy to operate PREPA’s T&D, customer service and billing divisions.

LUMA, owned by ATCO and Quanta Services, has a partnership with IEM, a firm that has had experience managing over $80 billion in federal disaster funds. Committee Chairman Luis Raúl Torres said FEMA helps state, local, tribal and territorial governments and certain types of private nonprofit organizations recover from major disasters or emergencies, but that LUMA Energy was a for-profit corporation.

Stensby, who arrived at the hearing with a lawyer identified as Margarita Mercado, submitted a written presentation to the panel before answering questions from the committee.

However, he avoided answering many of the questions arguing the need for confidentiality in the processes to avoid offering specific data on hiring, salaries and other aspects of LUMA Energy’s contract with PREPA.

He also did not reveal how many PREPA employees have already been hired by LUMA Energy.. He said LUMA Energy would need an estimated 3,800 employees to operate the utility starting on June 1, which is the start of the hurricane season. He said LUMA has interviewed 1,500 employees, of which 1,132 are PREPA employees, but he could not provide numbers as to how many workers have been hired so far.

Torres asked that he provide the committee with the names and positions of the 1,332 employees interviewed, which Stensby refused to provide arguing that the information was private.

At one point in the hearing, however, House Speaker Rafael Hernández Montañez confronted him with a March 11 letter that PREPA wrote to LUMA Energy stating that the fact that LUMA has not hired any workers yet was creating uncertainty. The firm, however, on Saturday published photos stating that it had commenced the hiring of workers.

Several times during the hearing Stensby also refused to disclose his yearly salary, but said his payment will also come from LUMA. He also declined to provide the name of his wife. He did reveal he has shares in ATCO but hesitated when asked to provide to the committee the names of shareholders in Quanta and ATCO that reside in Puerto Rico because while the information is public, the addresses are not.

“What comes out of the fees and energy charges and what PREPA pays you in your contract is paid for with public funds,” Torres said. “That is why the information I ask of you is public.”

As the former executive vice president of corporate development at Canadian Utilities, Stensby’s total compensation was $1,146,340 Canadian.

As part of the contract, PREPA will pay LUMA a fixed annual rate that will start at $70 million the first year, $90 million the second, and $100 million the third year. In the fourth year and for the remainder of the 15-year agreement, the annual payment to the operator will be $105 million, but if the operator meets certain metrics and yields certain savings, payments could reach $125 million per year. As a limited liability company, Stensby said, LUMA’s liability to PREPA is limited to $105 million.

Stensby also confirmed information obtained previously by the committee to the effect that LUMA Energy was incorporated by Quanta and ATCO in Puerto Rico on Jan. 17, 2020, or three months after it was selected as the preferred bidder in the process supervised by the commonwealth Public-Private Partnership Authority (P3A).

While Stensby insisted he was representing LUMA, he later had to acknowledge that he was representing the consortium after Torres noted several times that the company had not been incorporated until January 2020 and therefore did not exist. Stensby also said he began to participate in the negotiation for the LUMA Energy contract on Jan. 15, 2020, or two days before it was incorporated.

Asked if LUMA Energy will be willing to conduct a bidding process again if the contract is voided because LUMA had not been incorporated, Stensby insisted that the contract was legal.

Torres asked questions that sought to determine if Stensby had done any kind of lobbying in favor of his company. He said he never met former Gov. Ricardo Rosselló Nevares but acknowledged meeting with Gov. Pedro Pierluisi Urruita before he became governor and twice after. He said he also met with the other political candidates running for governor.

He also had several meetings with former PREPA Executive Director José Ortiz.

When asked if he knew former New Jersey Gov. Chris Christie, Stensby said the question was beyond the committee’s scope of inquiry.

PREPA hired Christie as an administrative consultant, charging at a rate of $28,750 per month until December.

In response to a question, Stensby said he never met Elias Sánchez, the controversial lobbyist who was close to Rosselló.

While he said LUMA Energy will continue the policies of PREPA of paying the contribution in lieu of taxes to island municipalities or keeping the subsidies for public housing projects, Stensby said he did not know that the utility did not shut off power to delinquent rate payers on Fridays or on holidays.

The House last week submitted a resolution seeking to postpone the contract so it can be amended as critics say it is a very leonine contract. Stensby said the contract was negotiated with the law firm Cleary, Gottlieb and Hamilton, which represented the P3A. LUMA Energy is exempted from complying with some 15 local laws in the management of the utility’s T&D system and is not required to honor the collective bargaining agreement between the utility and its workers.

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