By The Star Staff
A prehearing on an investigation ordered by the Puerto Rico Energy Bureau (PREB) into LUMA Energy’s claims that the Puerto Rico Electric Power Authority (PREPA) has failed to fund its service accounts as required under the operation and management contract, is slated for Friday, Nov. 8.
The prehearing was ordered by examiner Scott Hempling, a Georgetown University Law Center professor and lawyer with expertise in public utility law, who has worked as an adviser to the PREB.
On Oct. 16, the PREB issued a resolution ordering PREPA to respond to the regulator’s questions about LUMA’s current system liquidity. The order also directed PREPA to address LUMA’s allegations that PREPA has “chronically failed” to fully fund LUMA’s Service Accounts, as required -- according to LUMA -- by the Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement and the Puerto Rico Thermal Generation Facilities Operation and Maintenance Agreement.
On Oct. 25, PREPA filed a document titled “Motion in Compliance with Resolution and Order of October 16, 2024,” contending that its obligations to fund LUMA’s service accounts are “contingent” on the availability of sufficient liquidity within PREPA’s accounts. Those accounts, PREPA asserted, are sourced primarily from funding sources within LUMA’s control.
PREPA contended that LUMA has been ineffective in accessing Federal Emergency Management Agency (FEMA) funds and in collecting payments from customers. Liquidity issues were also highlighted in a confidential communication to the PREB from Omar Marrero Díaz, the island secretary of state and executive director of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF).
The communication underscored the urgency of PREPA’s liquidity challenges and the imminent need to address those cash constraints with short- and long- term solutions that would allow PREPA to adequately fund service accounts under transmission and distribution operation and maintenance. AAFAF urged the PREB to “take all actions deemed necessary” to ensure that PREPA has sufficient liquidity to carry out its functions, including the replenishing of the service accounts.
On Oct. 30, the PREB issued a resolution and order designating Hempling as hearing examiner to evaluate the “critical liquidity issues.”
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