Oversight board creates its own $1 billion fund for PREPA to pay LUMA Energy

By The Star Staff

The federal Financial Oversight and Management Board has approved its own budget for the Puerto Rico Electric Power Authority (PREPA) containing a $1 billion allocation for a reserve fund that will be used to pay LUMA Energy, the utility’s transmission and distribution (T&D) system operator.

The oversight board’s move was announced in writing to the government on Wednesday, the same day lawmakers rejected, after a debate that lasted hours, a resolution allocating $750 million from the government’s General Fund to the reserve fund and after the Electrical Industry and Irrigation Workers Union (PREPA’s main labor union) held a 24-hour protest against the contract with LUMA.

The contract appears to be moving forward even though LUMA appears not to be ready to start operations. For instance, the company has yet to complete regulations for operating the system.

The Fiscal Agency and Financial Advisory Authority, meanwhile, consulted the oversight board recently about a proposed administrative order establishing a voluntary transition program (VTP) for PREPA workers.

The oversight board answered the May 7 letter stating that after reviewing the proposed administrative order, it approved the order but with conditions, including the availability of funding.

The proposed VTP is based on a six-month salary payment, along with a $600 payment for health-related expenses, to employees who opt to enroll in the program.

“The administrative order must provide that, upon a determination by the Appointing Authority (as such term is defined in the Administrative Order) that the amount allocated in PREPA’s then-currently certified budget for the VTP is insufficient to make full payment of the VTP benefits (as established in the administrative order) to any remaining eligible PREPA employees who have opted into the VTP, the Appointing Authority shall adjust the VTP benefits to a level consistent with the remaining budgeted amount,” the oversight board wrote.

Furthermore, the proposed administrative order’s implementation and enforceability will be contingent upon a budget amendment approval by the oversight board expressly for such purposes.

“Please note the Oversight Board’s review is solely limited to the proposed Administrative Order’s compliance with the applicable Fiscal Plan and no other matters,” the federal entity wrote. “For the avoidance of doubt, the review performed by the Oversight Board does not cover a legal review under applicable laws, rules, and regulations, both federal and local, including without limitation, compliance with any applicable labor laws, rules and regulations.”

As part of the takeover of PREPA’s T&D system by LUMA Energy on June 1, PREPA employees who do not go to work for LUMA will have the option of working at other government agencies. But many workers were sent to non-existent jobs.

PREPA workers charged on Thursday that public funds are being used by LUMA Energy for an orientation effort at the Sheraton Hotel on Monday as part of recruitment. The event was convened by LUMA Human Resources Officer Milena Carino to collect personal information from workers. LUMA Energy officials have said they need 3,800 workers to operate the T&D system.

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