Swain will review LUMA Energy’s petition to stop DACO’s suit

Judge Laura Taylor Swain

By THE STAR STAFF

Judge Laura Taylor Swain, who oversees the Puerto Rico Electric Power Authority bankruptcy case, will review LUMA Energy’s petition to stop the Department of Consumer Affairs’ lawsuit that seeks to overturn a liability waiver that exempts the private operator from compensating customers for damage caused to their appliances.

Swain ordered the parties to file responsive papers to the petition by October 2. Reply papers must be filed by October 9.

LUMA Energy filed the urgent motion and memorandum of law last week seeking an order, enforcing the automatic stay and directing the Department of Consumer Affairs (DACO) to withdraw the writ for Intrajurisdictional Certification filed before the Puerto Rico Supreme Court and a complaint filed before the San Juan Court of First Instance.

LUMA wants the court to order DACO to cease its prosecution of the Commonwealth Court Litigation in violation of the automatic stay imposed in the federal bankruptcy case.

“The stay is intended to protect the interests of creditors as well as debtors, and [t]hose persons whom Congress has designated as beneficiaries of the stay have standing to assert[] its violation,” LUMA Energy said.

DACO sued LUMA Energy, the private operator of PREPA’s transmission and distribution system, to declare null and void a portion of its operation agreement that exempts LUMA from having to pay customers for appliances damaged because of blackouts.

The Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement (T&D OMA) dated June 22, 2020 is a critical post-petition contract between LUMA, the PREPA, and the Puerto Rico Public-Private Partnerships Authority.

Since execution of the agreement over five years ago, LUMA says various parts of the government have sought to undermine and undo it.

“Now, the Government (through DACO) is once again trying to undermine and undo the T&D OMA. This time, the Government is not attempting to void the entire T&D OMA. Instead, the Government now seeks to void one key provision in the T&D OMA, a liability waiver provision, recognizing that this provision is a material part of the T&D OMA and hoping that its removal will trigger a cascading series of events that ultimately will achieve the Government’s desired end result – termination of the T&D OMA and insider operation of the T&D System once again,” LUMA Energy said.

The Government’s new tactic seeking to only void a section of the T&D OMA for allegedly violating Puerto Rican law, and not the entire T&D OMA, is a distinction without a difference, the private operator said.

On July 22, 2025, DACO filed the Commonwealth Court Litigation against PREPA, LUMA, and the PREB in the San Juan Court of First Instance.

The complaint also requests that all citizens be allowed to file claims for damages caused by negligence and fluctuations in electrical service with LUMA. DACO estimates that more than 1,800 claims could be filed.

On August 8, 2025, DACO requested that the Supreme Court of Puerto Rico take the case out of the hands of the lower court by filing a Writ for Intrajurisdictional Certification. On August 22, 2025, the Supreme Court of Puerto Rico issued the Writ for Intrajurisdictional Certification filed by DACO.