Queremos Sol touts short-term benefit of canceling LUMA contract
By John McPhaul
The coalition Queremos Sol proposed on Monday that a rate hike of five cents per kilowatt-hour (KWh) can be circumvented in the short term if the cancellation of the LUMA Energy contract proceeds.
The increase, which is due to rising fossil fuel costs, could be offset by money Puerto Rico continues to spend on the LUMA Energy contract, the coalition says.
“Under the LUMA Energy contract, we have paid $115 million this year to cover the profits and high salaries of the company’s executives. On top of this, LUMA exceeded its budget by $40 million in the first three quarters of this fiscal year,” said Ingrid Vila Biaggi, president of CAMBIO PR and spokesperson for Queremos Sol, in a written statement. “Comparing these [costs] with the increase of $183 million, it is evident that we would have a lower rate without LUMA Energy.”
The engineer added that the LUMA Energy contract has also cost the island more than $1 billion allocated to the reserve funds for LUMA Energy and in its expenses during the transition year prior to June 1, 2021. That money would have been available today to mitigate rate increases as a result of rising fossil fuel prices, she said.
In addition to the direct costs of the LUMA Energy contract, the coalition pointed to the fragmentation of power system management resulting from privatization. “The fight between LUMA Energy and the Electric Power Authority [PREPA] is producing worse service for the country,” said Adriana González of the Sierra Club and also a spokesperson for Queremos Sol.
“Right now, LUMA Energy and the Electric Power Authority cannot agree on the budget for next year, which could result in yet another rate increase,” she added. “And the lack of coordination has also delayed access to federal funds for the electrical system.”
According to the coalition, the only way to achieve a stable and affordable rate is large-scale investment in renewable energy to end dependence on fossil fuels. That has also been recognized by the Financial Oversight and Management Board in the latest fiscal plans for PREPA, although neither LUMA Energy nor PREPA proposes to use any part of the billions of dollars in funds from the Federal Emergency Management Agency for renewable energy or storage.
CAMBIO PR has conducted modeling that demonstrates the feasibility of reaching 75% distributed renewable energy within 15 years with modest improvements to the distribution system. The modeling, which used PREPA’s own data, revealed that if $9.6 billion in federal funds is used for the mass installation of battery-powered rooftop solar panels, a stable rate of about 15 cents per KWh could be achieved.
“As long as this alternative of installing photovoltaic systems on roofs with batteries continues to be ignored, it will continue to be at the expense of the uncertainty in the costs of fossil fuels,” said Ruth Santiago, another spokesperson for Queremos Sol. “And if we do not use federal funds for a massive investment in rooftop renewable [solar] energy panels to provide resilience and lower system costs, we will end up with two unequal electrical energy systems: one based on those who can acquire their own photovoltaic systems and another centralized and vulnerable on which low-income people and communities will depend, who do not have the resources to install the [solar] systems on their own.”