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  • The San Juan Daily Star

PREPA workers’ job security appears uncertain under proposed PPP for operation of power plants

Public-Private Partnerships Authority Executive Director Fermín Fontanés Gómez


As details of the transaction have been kept in the dark, Public-Private Partnerships Authority (P3A) Executive Director Fermín Fontanés Gómez said Monday that the contract that would create a public-private partnership for the Puerto Rico Electric Power Authority legacy power plants does not contemplate “employer successorship,” which means PREPA workers’ jobs are uncertain.

“We have achieved better benefits for Authority employees than have been achieved in the past, so we are going to promote, as always, that these employees move to the private [sector],” Fontanés said during a radio interview, without going into much detail.

The employer successorship doctrine states that when a business owner buys another business assets, he or she also assumes all obligations, including those with respect to the workers. When the government contracted LUMA Energy to operate PREPA’s transmission and distribution system, the workers were required to apply for jobs with the private operator or move to other public agencies. Most of the workers transferred to other agencies because they did not want to lose their PREPA pensions.

In a televised interview, Fontanés said the job guarantees of PREPA workers were protected but did not say whether those rights included the ones established in the workers’ collective bargaining agreement.

Ángel Figueroa Jaramillo, the president of the Electrical Industry and Irrigation Workers Union (UTIER by its Spanish acronym), had warned last week about the importance of having a successor employer that guarantees the rights of workers.

On Sunday, the P3A announced that its board of directors unanimously approved the proposed public-private partnership (PPP) that would put legacy power plants under private management.

Fontanés declined to provide details of the contract, which at press time still needs to be approved by the Puerto Rico Electric Power Authority board, the Puerto Rico Energy Bureau and the Financial Oversight and Management Board.

“That is a legal requirement,” Fontanés said. “Act 120 [of 2018, the Law to Transform the Electrical System of Puerto Rico] requires that the generation assets of the Electric Power Authority be transferred to private hands. In other words, we are in compliance with the law.”

STAR sources have said the contract was awarded to a consortium headed by New Fortress Energy.

The P3A director could not say what the private investment of the company in the island would be, the start date of the work or if the affected employees will be welcomed under a collective agreement that guarantees their acquired rights.

“When a private investment is made, that investment is recovered through the rate [...],” Fontanés said. “Nobody invests without recovering.”

The consumer representative on the PREPA board, Tomás Torres Placa, also drew attention to the lack of transparency in the meeting of the P3A. PREPA’s board is holding its ordinary meeting on Jan. 25 and as of press time had not announced the meeting to approve the PPP.

Torres Placa said now is not the right time to privatize generation as the cost of imported fuel is slated to go up, which will further increase consumer rates, which are expected to be impacted by the transaction with a generation operator.

The conflict between Russia and Ukraine has impacted the supply chain, he said, noting that the geopolitical scenario may become worse if Finland and Sweden join NATO later this year, a move that would be opposed by Russia, he said.

Torres Placa also expressed concern over the impact on energy customers, who have experienced multiple blackouts due to failures in the transmission and distribution system, which is operated by LUMA Energy. He asked why PREPA’s generation service, which has not presented many problems compared to the performance of LUMA Energy, should be privatized.

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