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PREPA creates GenCo, GridCo amid LUMA takeover, low energy reserves and claims of violence


By The Star Staff


The Puerto Rico Electric Power Authority’s Board (PREPA) created the public subsidiaries GenCO for generation and GridCo for transmission and distribution (T&D) but kept PREPA as a separate entity in preparation for LUMA Energy’s takeover of the T&D on June 1, a date that coincides with the start of the hurricane season, high energy demand and low energy reserves.


The creation of the subsidiaries was approved in a unanimous vote at the PREPA board meeting last week. PREPA’s consumer representative at the board, Tomas Torres, said the use of “subsidiaries” guarantees the public nature of PREPA’s assets. At the same time, PREPA remains a separate entity to ensure a structure is there for the back-end transition at the end of the 15-year contract with LUMA Energy. The creation of the subsidiaries is part of the contract but the original proposal said the entities were going to be created as private entities and not as public entities, the STAR learned from sources.


“Although under the contract, the Public Private Partnership Authority supervises LUMA, all of the transmission and distribution assets through the creation of the subsidiaries belong to PREPA within the new entity, ensuring they remain public,” he said.


During the meeting last week, it was revealed that some of the managers, such as the heads of customer service and energy management, were moving to LUMA Energy, which is taking over when there are only 400 megawatts in energy reserve, the equivalent of the power provided by a single unit in a power plant, during the peak summer months.


William Rodriguez Mena, an official in the generation department, said there were several units undergoing repair, including Unit 2 in the Aguirre Power Plant. The situation caused concerns among board members because it means that if there is a power outage, there are insufficient energy reserves to replace it. Asked about the situation, which would impact energy distribution, at a news conference Sunday, LUMA Energy President Wayne Stensby said the matter was best referred to PREPA.


At the meeting it was revealed that PREPA’s generation operation was hiring some 127 PREPA workers from the transmission and distribution area to help operate plants.


Stensby said at the PREPA board meeting that the firm was ready for the takeover Tuesday but he had spent significant efforts on security planning for June 1 given the “inappropriate behavior” that LUMA Energy recruits have been facing inside PREPA and off PREPA facilities.

“The behavior has been escalating. We are aware of vandalism, and sabotage in PREPA facilities across the last month…This behavior is illegal…This is critical infrastructure. None of us should tolerate vandalism, violence and sabotage,” he said.


Later in the meeting, Jose Sepulveda, a PREPA manager, answered in the negative when Torres said if there was evidence the power outages were caused by sabotage. About 15 minutes later, he called back the virtual meeting to report an alleged sabotage in Utuado in which some fuses were removed and could have caused a power outage.


Stensby also said LUMA has received over 60,000 applications and that 2,100 people have accepted offers, including 1,100 from PREPA. A human resources official told PREPA’s board that some 800 workers have tendered their resignations to PREPA.


In the past Stensby has said he needs about 3,800 workers to operate the T&D. On Sunday, in a round table with reporters, Stensby said he had 350 linemen.


Stensby said he expects to continue recruitment during the summer and over the next 15 years. Training of workers was taking place over the weekend.


On the other hand, an official with customer service told the PREPA board members at their meeting last week that LUMA Energy was creating a “key account” area to collect the estimated millions of dollars in delinquent payments from government agencies.


PREPA is owed about $207 million by public corporations, $16.3 million by local agencies as well as $9.4 million by federal agencies as of March.

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