PR Supreme Court strikes down LUMA’s liability shield, opening door for consumer claims
- The San Juan Daily Star
- 3 hours ago
- 3 min read
Private operator warns decision could impact electrical system costs
By THE STAR STAFF
In a landmark decision, the Puerto Rico Supreme Court on Monday unanimously declared unconstitutional a contractual clause that had shielded LUMA Energy from liability for damages caused by power fluctuations and voltage irregularities.
The ruling dismantles a controversial immunity provision that critics say left consumers without recourse for losses tied to Puerto Rico’s fragile electrical grid.
The case, CT-2025-0003 – Department of Consumer Affairs v. LUMA and Others, stems from a lawsuit filed by the Department of Consumer Affairs (DACO) challenging Section 4.1(g) of LUMA’s Operation and Maintenance Agreement. That clause, approved by the Puerto Rico Energy Bureau (PREB) in 2021, exempted the private operator of the island’s transmission and distribution system from responsibility for damages to electrical appliances -- even in cases of negligence.
DACO argued that the immunity was granted administratively without legislative approval, violating constitutional principles and stripping consumers of basic protections. During public hearings earlier this year, LUMA admitted to rejecting 1,828 consumer claims for damaged appliances, citing the contested clause. DACO maintained that such immunity “places a private company above the people” and undermines accountability for essential services.
The Supreme Court agreed, concluding that the PREB exceeded its authority and that the exemption violated the separation of powers doctrine.
“Consumers cannot be deprived of their right to seek compensation when harm occurs,” DACO Secretary Valerie Rodríguez Erazo said after the ruling.
The decision restores the ability of Puerto Rico residents and businesses to pursue legal claims for damages linked to outages and voltage fluctuations. For thousands of households that have faced costly appliance failures, the ruling marks a significant shift. Before LUMA assumed control of the electrical grid in 2021, the Puerto Rico Electric Power Authority (PREPA) accepted such claims -- a practice eliminated under the immunity clause.
LUMA Energy has warned that removing the liability shield could lead to higher electricity rates, citing increased exposure to claims and potential requirements to establish compensation funds.
The private grid operator said in a statement after Monday’s ruling that: “We regret and disagree with the Puerto Rico Supreme Court’s decision regarding the release of liability for PREPA and LUMA. Releases of liability are a common practice and exist for electrical utilities worldwide. The Energy Bureau granted this release considering the state of the system after decades of neglect and mismanagement by the Puerto Rico Electric Power Authority.”
“We are evaluating the scope and impact of this decision on our customers and our next steps,” the statement continued. “We reiterate that any change to the release of liability could affect the cost and operation of Puerto Rico’s electrical system, the current legal framework, and PREPA’s fiscal plan. Meanwhile, we remain focused on working hard every day to improve system reliability and support our nearly 1.5 million customers.”
The company, which manages PREPA’s transmission and distribution system under a 15-year contract, has faced mounting criticism over service reliability, transparency and customer service. Outages remain common despite billions in federal funding for grid reconstruction following Hurricane Maria.
The ruling comes amid growing scrutiny of Puerto Rico’s energy sector and calls for modernization. Advocates argue that the decision could spur reforms, including stronger consumer protections and investment in distributed renewable energy solutions. Meanwhile, legislators and regulators will need to address how liability costs are managed without burdening ratepayers.