Officials: PREPA-LUMA deal will not result in layoffs, although current benefits are not guaranteed

By The Star Staff

Fiscal Agency and Financial Advisory Authority Director Omar Marrero and other officials, including the chairman of the Puerto Rico Electric Power Authority’s (PREPA) board, said Thursday that the contract between PREPA and LUMA Energy for the management of the utility’s transmission and distribution (T&D) system will not result in layoffs.

Marrero, however, said the government cannot guarantee the permanence and benefits provided through PREPA’s Employees Retirement System because the utility is in bankruptcy and such issues depend on the U.S. District Court. PREPA has a $4.3 billion debt with the retirement system, which pays benefits to 11,000 former employees.

Regarding the jobs of PREPA workers, at a House Energy Committee hearing on Thursday, Rep. Víctor Parés made reference to a memo sent to employees with wording that did not appear to support job permanence. LUMA Energy has said it will hire employees, and those wishing not to work for LUMA Energy will be given other jobs. The contract only covers the portion of PREPA’s 5,000 workers who work in T&D and not those assigned to the power plants.

Marrero, however, said the memo was worthless because Puerto Rico’s energy public policy already states that PREPA’s transformation can’t result in job losses.

Public-Private Partnerships Authority Executive Director Fermín Fontanés said at the public hearing held by the House Economic Development, Planning, Telecommunications, Public Private Partnerships and Energy Committee, regarding the contract with LUMA Energy that “[g]iven the multiple challenges and limitations that have characterized the performance of PREPA over the past decades, the Legislative Assembly promoted Law 120 with the aim of transforming the energy system into a modern, sustainable, reliable, efficient, cost-effective and resilient one.”

“To achieve this goal, the Legislature determined that the mechanism of public-private partnerships “provides the transparency and flexibility necessary for a negotiation that results in a financially viable energy system that focuses on the welfare of the consumer,” Fontanés said, reading from a prepared statement.

At the beginning of his presentation, Fontanés told the committee that “the bidding process culminating in the announcement of LUMA Energy’s selection as the new operator of the transmission and distribution system of electric power in Puerto Rico was a competitive process, highly rigorous and complex.”

“This process, in turn, began with a market study (known in English as ‘market sounding’), whose input was taken as the basis for publishing the Request for Qualifications for the project (RFQ),” he said.

Likewise, Fontanés said that on Feb. 1, 2019, the companies on a short list were given a request for proposals and answered more than 700 questions.

Two of the four qualified proponents submitted proposals, which were evaluated and analyzed by a partnership committee.

“Among the criteria that we can highlight as those that had the highest weight for the LUMA Energy selection are: higher understanding of the context of PREPA and community approach adapted to Puerto Rico, lower costs and more favorable trade terms, more experience in the acquisition, management and use of federal funds, greater commitment to significant improvements, greater guarantee and indemnification under the contract, a collaborative approach to working with the Energy Bureau, and a comprehensive initial transition plan that includes the specific hours per main task to be performed during the period of transition,” Fontanés said in his statement.

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