PDP lawmaker vows House probe of LUMA-PREPA deal
By The Star Staff
Citing revelations regarding its costs, Popular Democratic Party (PDP) Rep. Luis Raúl Torres Cruz vowed Tuesday to thoroughly investigate the contract that the Puerto Rico Electric Power Authority (PREPA) and the Public-Private Partnerships Authority (P3A) signed with LUMA Energy for the firm to manage the bankrupt utility’s transmission and distribution system.
PREPA requires $894 million in funds from the government to execute the contract with LUMA Energy because the utility only has $10 million, Financial Oversight and Management Board mediation documents released over the weekend show.
“It is becoming increasingly clear that there are too many reasons to be attentive to and scrutinize every detail of the contract that PREPA and the P3A awarded to the LUMA Energy Company,” Torres Cruz said in a statement. “After the information on the high annual costs that this contract will cost the people of Puerto Rico, the lack of guarantees to avoid increases in electric power service rates for PREPA subscribers and the lack of protection of the labor rights of the thousands of that Public Corporation’s workers and pensioners, now we have more very sensitive information coming to light that leads us to mistrust even more the supposed benefits of that public-private alliance.”
“In a confidential report that the Government presented to the creditors of Puerto Rico’s public debt on the existence of cash in the government and the conditions of its use, and which was made public through a filing in the Electronic Municipal Market Access System (EMMA), as written on page 24 of the document, it is effectively established that for the business with LUMA, the central government of Puerto Rico needs to lend $894 million to PREPA in order to put the contract into effect,” the legislator added. “For the $904 million that the contract costs, PREPA only has $10 million. The supposed reason for this strategy is to avoid rate increases.”
The report to which Torres Cruz referred reads: “If not funded through a loan from the Commonwealth, PREPA would need to fund reserves via alternate means, such as a rate adjustment that would dramatically increase electricity rates in the short term (ie, the expected period between now and when the reserves will need to be funded).”
“This confirms what we are saying, in that PREPA does not have the capacity to assume this contract and it may be detrimental to our people,” Torres Cruz said.
“The new House Speaker, Rafael (Tatito) Hernández Montañez, has requested that this be the first investigation committee of the Economic Development, Planning, Energy, Telecommunications and P3A [Committee], which he will assign me to chair to comply with our commitment to safeguard the best interests of our country, and we will do so,” the PDP lawmaker said.