LUMA warns of deepening liquidity crisis as Genera seeks $30 million in Emergency Reserve funding

By THE STAR STAFF

LUMA Energy is urging regulators to take a broader look at Puerto Rico’s strained electrical system finances before ordering a $30 million transfer to Genera PR’s contingency reserve fund.

In a motion filed Tuesday, the private operator of the island’s electric power transmission and distribution grid argued that the system’s liquidity has deteriorated to the point where shifting tens of millions into a single emergency account could further destabilize day‑to‑day operations across all entities.

The filing responds to a Sept. 11 motion from Genera PR, which asked the Puerto Rico Energy Bureau (PREB) to compel the Puerto Rico Electric Power Authority (PREPA) to immediately fund the contingency reserve account created under a June 15 order. Genera said the account remains unfunded and that the absence of dedicated emergency cash hampers its ability to respond to outages, equipment failures and other urgent events.

The grid operator’s motion came a day after the PREB held a hearing to examine a request for a six-cent hike and the utility’s problems receiving natural gas supplies.

LUMA countered that the entire system is already under severe financial pressure. The company pointed to its Aug. 18 informative report, which showed the electrical system’s operating accounts were collectively underfunded by roughly $37.5 million before the August replenishment cycle. LUMA’s accounts carried a $30.5 million shortfall, Genera’s were underfunded by $6.2 million, and PREPA’s by about $800,000.

Fuel costs have also surged beyond what the Fuel Charge Adjustment (FCA) collects from customers. LUMA reported that FCA revenues fell short by $108 million between May and June, with another $75.9 million gap identified for June and July. The motion notes that “fuel costs have significantly exceeded Fuel Charge Adjustment revenues,” creating a structural mismatch between collections and expenses.

Updated August data shows the situation worsening. LUMA told regulators the system is now facing a total funding deficiency of about $101.6 million, including more than $83 million in LUMA’s accounts, nearly $17 million in Genera’s, and $1.5 million in PREPA’s. The company said those figures reflect a system‑wide liquidity constraint that affects all operators, not just Genera.

While acknowledging that contingency reserve accounts serve an important operational purpose, LUMA argued that ordering PREPA to fund Genera’s reserve at this moment would “further erode the liquidity available to support the System’s operations as a whole.” The company urged the PREB to weigh the broader cash position and the practical limits on PREPA’s ability to redirect funds without deepening shortfalls elsewhere.

LUMA asked regulators to take notice of the current funding deficiencies, evaluate Genera’s request within the context of the system’s overall liquidity, and consider how a $30 million transfer could affect essential operations across the grid.

Tuesday’s motion was filed and served on all parties by attorneys Margarita Mercado Echegaray and Katiuska Bolaños Lugo of DLA Piper (Puerto Rico) LLC.