Puerto Rico’s private power utility to raise costs amid criticism of unreliable service
LUMA Energy’s contract with the Puerto Rican government is set to go into effect on Oct. 15, following a months-long probationary period.
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Costly electric utility bills loom over Puerto Ricans as LUMA Energy moves forward with more inflated tariffs announced in June 2022 as they become the subject of increased scrutiny for unreliable service by local government and citizens.
The latest increase is the third time this year in which the for-profit consortium put the onus on consumers, citing necessary monetary adjustments to repair the island’s deteriorating power grid that LUMA has failed to address since its takeover in 2021.
Currently, Puerto Ricans pay a hefty electricity cost only comparable to the state of Hawaii, at 34 cents per kilowatt. However, these lucrative prices seldom reflect the state of Puerto Rico’s circumstances when it comes to reliability and usage, with continuing lags in service resulting in island-wide blackouts, all of which LUMA blames on previous mismanagement.
After a tumultuous start to the probationary period before the contract’s enforcement date of Oct. 15, Puerto Rican residents were subject to numerous instances of random outages across the island. April, May, July, and August were the toughest for clients, with larger-scale blackouts resulting in hundreds of thousands of households without electricity.
Explosions in central power plants caused total blackouts in the nation unexpectedly, which is LUMA’s groove regarding the overall replacement and repair plan.
These issues stem back to the beginning of the pre-contract period in 2021, and have only worsened in the last few months.
In LUMA’s 2021 reliability report, research showed it took 323 minutes or 5.4 hours to restore service, an almost 50% increase from the previous year. There is no updated reliability report for 2022, but clients say it took nearly two days for electricity to run in their households.
Preliminary reports have backed this up, suggesting a steady increase in response time to restore service.
But LUMA has maintained throughout pointed criticisms that Puerto Rico’s Power Authority, the previous public utility managed by the government, was to blame for crass mismanagement at sites across the island.
“Since LUMA assumed responsibility for the electric grid, we’ve focused on replacing, not just repairing, the deteriorated components in the system. This approach in managing these issues exhaustively has provoked longer durations of service interruptions but will result in a more reliable and resilient service,” LUMA told El Nuevo Día.
Given the current performance, scrutiny surrounding LUMA has only increased.
Waning conditions have frustrated the nation, prompting protests in LUMA headquarters and demanding a cancellation of the incoming agreement. Most recently, global superstar, Bad Bunny, slammed the energy utility in his latest sold-out performance following an outage.
“Out of all my concerts around the world, Puerto Rico is the only place I need to account for generators to prepare,” he said during the show.
In a letter, Puerto Rico Gov. Pedro Pierluisi issued a statement reflective of the general sentiment of dissatisfaction at the governmental level.
“It is obvious to me that [LUMA] must make changes in their plan of execution to improve the service they offer our people significantly,” he said.
In many instances, the sudden and unexpected loss of service has put the life of Puerto Ricans at risk as some outages strike more vulnerable buildings like hospitals. Auxilio Mutuo, one of the hospitals that provide advanced surgical care and receive the highest input of patient volume, suffered blackouts following a week of continuing outages that damaged the auxiliary generator.
Around 9:10pm the pediatric wing at Auxilio Mutuo in Hato Rey, private hospital in Puerto Rico, lost 💡.— David Begnaud (@DavidBegnaud) August 22, 2022
This comes after a week of non stop power outages. According to a person at the hospital the constant outages have damaged the auxiliary generator.pic.twitter.com/Umrnmghfj2
Experts have noted that the commonwealth’s utility is worse off than before, and residents are concerned. If LUMA’s contractual obligations are enforced by the legislature come Oct. 15, with no opposition, the government will enter into a 15-year agreement with the consortium.
Yet LUMA’s future with Puerto Rico remains increasingly uncertain as more public officials join the outcry to null the contract. Jennifer González, the commonwealth’s Resident Commissioner in Washington D.C., called for immediate cancellation of the contract, a bold move from the governing party’s leading voice on Capitol Hill.
Moreover, Rep. Raúl Grijalva, Chairman of the Natural Resources Committee, has asked for all documentation regarding LUMA’s paperwork for review, though no further directives have come from D.C.
Since its inception in 2020, LUMA’s affairs have also been the subject of legal scrutiny. After weeks of legal wrangling between the Puerto Rican legislature and LUMA over missing paperwork, a San Juan judge found them to be in contempt of the court.
The missing documents included receipts, time sheets for the month, as well as emails, texts, and general correspondence with government officials about the deal, according to the court order. The documents revealed that Wayne Stensby, LUMA CEO, takes home a salary of $1 million.
AL DÍA NEWS reached out to LUMA for comment but has not received a response.