LUMA says ruling on contract clause could result in higher rates

U.S. District Judge Laura Taylor Swain

By THE STAR STAFF

Grid operator LUMA Energy warned on Tuesday that a recent legal decision affecting its contractual immunity could result in higher electricity bills for consumers across the island.

The company that operates Puerto Rico’s electric power transmission and distribution system issued the statement following a ruling by U.S. District Judge Laura Taylor Swain, who denied LUMA’s request to halt a lawsuit filed by the island government’s Department of Consumer Affairs (DACO) in the commonwealth Supreme Court. As previously reported by the Star, the lawsuit challenges a clause in LUMA’s contract with the Puerto Rico Electric Power Authority (PREPA) that exempts the company from liability for damages to consumer appliances and equipment resulting from blackouts or energy interruptions.

“We are reviewing the Federal Bankruptcy Court’s decision to evaluate our legal options,” LUMA said in a statement. “As we’ve reiterated, any ruling that limits or eliminates our liability exemption would affect the contractual mechanisms designed to protect both system operations and customers. This could translate into a negative economic impact on consumer bills.”

DACO argues that the immunity clause violates consumer rights by shielding LUMA from responsibility for damages caused by power outages or system failures. The federal court determined that DACO’s lawsuit is not subject to the automatic stay under PREPA’s bankruptcy proceedings, concluding that the case involves the exercise of Puerto Rico’s regulatory and public protection powers.

LUMA emphasized its commitment to working with relevant authorities while defending the interests of both customers and the island’s electrical system.

“Our goal is to ensure stability, investment, and the transformation of Puerto Rico’s energy grid,” the company added.