Senate committee chair: LUMA not ready to take over PREPA T&D

By The Star Staff

Senate Strategic Projects and Energy Committee Chairman Javier Aponte Dalmau expressed concern on Monday that there is no document from the Federal Emergency Management Agency (FEMA) stating that it will reimburse the Puerto Rico Electric Power Authority (PREPA) for capital infrastructure projects under the contract with LUMA Energy, the private operator of PREPA’s transmission and distribution (T&D) system.

“The people who have sat here to testify, none can guarantee and recognize that there is a document by which FEMA is going to reimburse the funds from this transaction. We are talking about $10 billion, of which the chairman of the [Puerto Rico] Energy Bureau has recognized that FEMA is not within the contract [between PREPA and LUMA],” Aponte Dalmau said. “And at the end of the day, the payment for all those projects, if FEMA does not reimburse them in full, will require a rate review and the people of Puerto Rico will pay for it.”

FEMA informed the panel that if it wanted to summon the federal agency to testify, the committee would have to go to court because FEMA is not obligated to testify under the sovereign immunity doctrine. The senator said the process was not an adversarial one but rather an investigative one.

Puerto Rico Energy Bureau (PREB) Chairman Edison Avilés-Deliz and Tomás Torres Placa, the consumer representative on PREPA’s governing board, testified in Monday’s hearing.

Torres Placa charged that the PREB certified LUMA Energy as an operator and granted it the Energy Compliance Certificate without participation or public discussion.

He asked the Legislature to “take the necessary measures to postpone the commencement date and evaluate modifications of the contract in question, in order to achieve the transformation of Puerto Rico’s electrical system, on which the economy does not depend solely, but lives on, and [so that] we have a world quality system for the benefit of all consumers.”

In its presentation, the PREB presented the legal and procedural framework that applies to Public-Private Partnership (P3) contracts and the role that the PREB plays in terms of the contract awarded to LUMA Energy. One of the functions of the PREB is to assist the P3 Authority in the supervision process during the implementation of the contract. However, that supervision is limited since the PREB “does not have the authority to alter or amend the alliance contract or the sales contract and will not interfere with operational or contractual matters,” said Avilés-Deliz, the PREB chairman.

“Regarding the role of the Energy Bureau in the evaluation of the Partnership Contract, it is necessary to clarify that the Energy Bureau: did not approve the Partnership Contract, did not pass judgment on the procedure followed by the P3 Authority regarding it or regarding those aspects that are not related to the public energy policy and the regulatory framework, such as, for example, labor aspects,” Avilés-Deliz said. “In short, the Energy Bureau limited itself to determining, through an administrative process, which is not adjudicative in nature, that the Preliminary Contract complies with the public energy policy and the current energy regulatory framework.”

LUMA Energy has several processes pending before the PREB, including the approval of a budget and performance metrics.

Following the testimony of Avilés-Deliz, Aponte Dalmau expressed concern that LUMA was not ready to take over PREPA in June of this year.

“The information released by the Energy Bureau shows that of the four main documents that LUMA has to deliver, only one has been delivered, [while] the other three are in the process of delivery,” the senator said. “The chairman of the Energy Bureau has shown us his reservations that [LUMA] will comply with all the time they have had. What they have left to comply with the documentation is 40 days; it is a lot of information that LUMA has to supply and that the Energy Bureau has to evaluate.”

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