• The Star Staff

Pierluisi urges renegotiation of PREPA-LUMA deal

By The Star Staff

Pedro Pierluisi, one of two candidates seeking the gubernatorial nomination under the New Progressive Party ticket, called on Monday for a renegotiation of the contract between the Puerto Rico Electric Power Authority (PREPA) and LUMA Energy to ensure that the labor rights of PREPA workers are protected and that utility rates remain reasonable.

“The transformation of PREPA is crucial for the economic development of Puerto Rico and it is necessary to complete the process of restructuring its debt,” Pierluisi said in written remarks.

“The contract announced by the Governor between PREPA and LUMA suffers from the same defect of many of the actions that have tarnished [the power utility’s] administration, the lack of transparency. We learned the agreement was signed without providing an opportunity for the public to review it and to provide opinions on its terms and clauses that compromise the future of our electricity system.”

The former two-term resident commissioner criticized the noted lack of transparency in the process.

“The main intention of transforming PREPA is to lower the cost of electricity and provide a more efficient and reliable service to our people,” Pierluisi said. “It is extremely worrying that the contract anticipates increases in the electricity rates that we will all pay, even though Act 120-2018, the Law for the Transformation of the Puerto Rico Electrical System, is clear in its intention to avoid any increase and to lower the cost of power.”

The law also states that the rights of PREPA’s workforce must be respected, as established in the applicable collective bargaining agreements, he said.

“However, this agreement allows the opposite and, as expected, it will bring us legal disputes that are unnecessary and delay our mission of having the electrical system that Puerto Rico deserves, a modern and resilient one,” Pierluisi said.

The gubernatorial hopeful said he supports the use of public-private partnerships to modernize the power grid.

“However, this should only be done if it is to improve service to our people, provide more accessible and cheap energy, promote the diversification of our energy sources and help comply with public policy in favor of renewable energy as established by law,” Pierluisi said. “This is what must be done, and it must be done now.”

On June 22, PREPA entered into a 15-year agreement in which LUMA Energy will manage its transmission and distribution (T&D) for a service fee and incentive fees payable to the company after achieving certain performance milestones. The fixed fee starts at $70 million in year one and increases to $105 million for years four through 15, but with the incentives the total would end up costing $125 million per year. The contract requires the reorganization of PREPA into two operating companies. One is GridCo, which will retain ownership of the T&D system, and the other is GenCo, which will own PREPA’s generation assets.

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