PREPA draws scrutiny after stripping LUMA of say-so on federal grants

By The Star Staff

The Puerto Rico Electric Power Authority (PREPA) is facing scrutiny from the hearing examiner charged with reviewing rates after it yanked from LUMA Energy the authority to approve the transmission and distribution reconstruction projects.

PREPA’s board repealed resolution 5020 by approving Resolution 5183. Resolution 5020 authorized and gave consent to LUMA to act as the sole entity allowed to manage grant applications related to the projects, which are funded through federal sources.

Resolution 5183 adds that “[t]he Executive Director [of PREPA] shall ensure compliance with all federal and local regulations governing the management of federal funds . . . and shall have the capacity to delegate this authority if necessary. However, LUMA, as the Operator, remains responsible for executing transactions in compliance with federal requirements, as established under Section 5.9” of the operation and management agreement, the document says.

Hearing Examiner Scott Hempling, who is overseeing the rate case, has ordered PREPA to provide an explanation for the change and address concerns about potential impacts on electricity rates in Puerto Rico.

The hearing examiner emphasized that any shortfall in federal funds could lead to increased rates for consumers. PREPA has been given until July 3, to submit the requested information, along with its revenue requirement and accompanying testimony.

The development comes as Puerto Rico continues to navigate the complexities of its energy sector, including the ongoing bankruptcy proceedings and the transformation of its power generation infrastructure.