Energy Central News

Curated power industry news from thousands of top sources.

News

IEEFA Update: T&D Agreement for Puerto Rico Power Grid Sets Off Alarm Bells

Source: 
Targeted News Service (Press Releases)

CLEVELAND, Ohio, Aug. 5 -- The Institute for Energy Economics and Financial Analysis issued the following news release:

In testimony submitted to the U.S. House Committee on Natural Resources, IEEFA's director of finance Tom Sanzillo warned of significant problems with a recent agreement for LUMA Energy to take over transmission and distribution (T&D) of Puerto Rico's electric power grid.

The agreement fails to address three major challenges, according to Sanzillo: ensuring affordable rates for island residents, meeting legislatively established green energy targets, and building productive relations with organized labor.

"Puerto Rico's Electric Power Authority (PREPA) agreement with LUMA Energy Services does nothing to address the legacy of dysfunction and mismanagement of the island's electric system. The agreement provides no accountability mechanism for LUMA to meet either ratepayer savings or renewable energy goals. This, in fact, will likely only exacerbate the problems faced by an already struggling energy sector and economy," said Sanzillo.

First, Sanzillo said, Puerto Rico's households and businesses need affordable and stable electricity rates. While the Public Policy Act of 2019 established a goal of 20 cents per kWh rate and PREPA's recent fiscal plan shows this to be operationally achievable, the LUMA Agreement includes no incentives for meeting, or penalties for failing to meet, this critical economic goal

Second, Puerto Rico has established a goal of 100% renewable energy by 2050. By overbuilding natural gas capacity and failing to adopt a more ambitious green investment plan, the LUMA contract is a critical missed opportunity.

Third, PREPA and the Financial Oversight Management Board (FOMB) have decided to disregard collective bargaining agreements at PREPA. Sanzillo calls this move "singularly shortsighted" and one that will prove costly over time.

Further, failing to contain rate increases would cause a cascade of new problems for households and businesses, including potentially life-threatening hardship for families with no or severely limited access to electricity.

"The LUMA agreement replicates many of the flaws of PREPA's past contracting failures," Sanzillo testified. "The underlying problems of corruption, poor management and lack of contract oversight would be better resolved by the appointment of an Independent Private Sector Inspector General to monitor the use of federal funds within PREPA and to prevent waste, fraud and abuse."

Full testimony: Testimony to U.S. House Committee on Natural Resources hearing on Puerto Rico T&D agreement by Tom Sanzillo, August 4, 2020 https://ieefa.org/wp-content/uploads/2020/08/US-House-Comm-Nat-Res-hearing-on-T-and-D-Luma-Energy-TSANZILLO-IEEFA-08042020.pdf

Discussions

No discussions yet. Start a discussion below.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »