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Puerto Rico re-examining private grid deal, calls off bondholder talks

September 20, 2022

Wall Street Journal ($):

Puerto Rican officials are re-examining a controversial deal to put private operators in charge of electricity service, people familiar with the matter said, as the island territory’s power system faces another costly reconstruction and renewed fights with investors.

Hurricane Fiona’s damage to the electrical grid in Puerto Rico puts new pressure on Luma Energy LLC, the private venture hired last year to take over energy distribution from the government’s bankrupt, mismanaged power authority.

The storm, which caused an island-wide blackout before even making landfall, comes at a perilous moment for Luma and the public officials who hired it, following a series of earlier outages, price hikes and missteps.

Utility brigades were working across Puerto Rico on Monday to respond to Hurricane Fiona, Luma said. However, public support for the venture and its privatization of power service has been flagging for months, while Gov. Pedro Pierluisi and other officials who backed its hiring turn increasingly critical of its performance.

Puerto Rico also called off mediated debt-restructuring talks last week with banks and bondholders, sparking a fresh legal battle about the energy system’s $9 billion in debt ahead of likely negotiations between the government and Luma, a joint venture between Quanta Services Inc. and Atco Ltd.

[Andrew Scurria and Alexander Gladstone]

More: Puerto Rico Re-Examines Plan to Fix Power Grid as Fiona Cuts Electricity

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