Supreme Court to evaluate DACO’s suit seeking damages for customer broken appliances

By The Star Staff

The Puerto Rico Supreme Court will review a petition from the Department of Consumer Affairs (DACO) to overturn a liability waiver granted by the energy regulator, which exempts LUMA Energy from compensating customers for damages to their appliances.

LUMA Energy President Juan Saca expressed concerns on Saturday that if the Supreme Court revokes the consortium’s immunity from liability for damaged appliances, it will lead to an increase in power rates.

“We appreciate the opportunity to demonstrate to the Supreme Court that the proposal from the Department of Consumer Affairs (DACO) could significantly affect our customers. If liability limits are reversed, customers will face higher electricity rates. This could be due to increased exposure to claims or because the Puerto Rico Energy Bureau (PREB) may establish a fund to compensate for property damages. Both scenarios will inevitably result in higher costs for customers. Courts in the United States have upheld the inclusion of liability limits for electric companies, affirming that regulatory agencies like the PREB have the authority to extend these liability limits,” Saca stated in a written statement.

The case was filed by DACO in July against LUMA Energy, the Puerto Rico Energy Bureau (PREB), and the Puerto Rico Electric Power Authority (PREPA).

“The Supreme Court has approved our appeal, meaning this case, which is of significant public interest, will be heard on its merits. At DACO, we are committed to fighting for and protecting consumer rights. This administration is dedicated to upholding a fundamental right that has existed for decades: the right to file a claim when harm occurs,” stated DACO Secretary Valerie Rodríguez Erazo in a written statement.

Rodríguez emphasized that allowing consumers to suffer losses without any recourse will not be tolerated. “We are prepared to present our legal arguments and clearly demonstrate that the privilege granted to LUMA to avoid liability for the damages it causes has no place in our legal system. This attempt to circumvent civil liability and place a private company above the people will not be allowed,” she added.

The Supreme Court has granted DACO 15 days to submit its brief, with the respondents receiving a similar timeframe to file their initial briefs. Additionally, the court approved LUMA’s requests for permission to exceed the page limit in its briefs, to submit supplementary appendices in digital format, and to file requests for judicial review.

DACO stressed that this case seeks not only to resolve a specific controversy but also to uphold the principle that every person has the right to claim and receive compensation when they suffer harm from those providing essential services. The suit cited a recent LUMA statement at a public hearing, indicating that the company has rejected 1,828 claims. “It’s time for LUMA to be fully accountable to Puerto Rican consumers,” the statement read.

The action against LUMA was filed as a whole in July because the law exempts LUMA’s employees and contractors from claims filed by customers under a partial liability immunity granted by Puerto Rico’s Energy Bureau in 2021.

In 2021, then LUMA’s Vice President for Regulatory Affairs, Mario Hurtado, testified before the Puerto Rico Energy Bureau, stating that proposed terms of service with limited economic liability were part of the LUMA Energy operation and management agreement.

Hurtado asserted at that time that the Proposed Liability Waiver protects ratepayers from higher rates, serves the public interest, and is essential for remediating the transmission and distribution (T&D) system. He claimed that the liability waiver would help prevent a rate hike and reduce the utility’s insurance premiums. However, the Puerto Rico Energy Bureau (PREB) rejected LUMA Energy’s petition for a full liability waiver and instead amended the T&D contract to provide for a partial liability waiver.

PREB determined that without any liability for PREPA and/or LUMA, these entities would still have the right to disconnect or otherwise curtail, interrupt, or reduce service to customers whenever they reasonably determine it is necessary for the construction, installation, maintenance, repairs, replacement, or inspection of any of PREPA’s facilities. This includes circumstances attributable to third parties or related to hazardous situations, such as emergencies, forced outages, potential overloading of PREPA’s transmission and/or distribution system, sabotage, strikes, unauthorized acts by employees, or force majeure events.

PREB’s decision also exempted PREPA, its directors, officers, employees, agents, and contractors, including LUMA Energy, LLC, and LUMA Energy Servco, LLC, as well as their directors, officers, employees, agents, and contractors, from liability arising in connection with the operation of the T&D system and the provision of electric power, including interruptions, irregularities, or defects in electric service due to force majeure events or pre-existing deteriorated conditions, as well as other causes beyond the control of the released parties.