June 21, 2021 Read More →

IEEFA: Puerto Rico’s electric grid suffers series of setbacks under Luma Energy management

Power outages and services delays should raise alarms for the future

More than two weeks into its management of Puerto Rico’s electrical system, private contractor LUMA Energy is not off to a good start.

Frequent power outages and service delays have tested the patience of an already over-burdened customer base since LUMA Energy took control of the island’s electric system in a privatization switchover on June 1st.

Luma’s management has had predictable consequences

The severe service breakdowns can be attributed to the Puerto Rican government’s and LUMA Energy’s backwards approach to labor relations that resulted in the company not hiring the workforce it needs to operate the system. As of mid-June, LUMA states that it has 2,300 employees, a little more than half of the 4,200 that the Puerto Rico Electric Power Authority had previously relied on in the areas that were privatized. According to PREPA’s executive director, fewer than 120 of the authority’s linemen (of which there about 800 previously) had gone to work for LUMA. Although LUMA hired some workers from outside of PREPA, it clearly does not have the trained and experienced labor force that it needs.

This has had predictable consequences.

Recent news from Puerto Rico highlights widespread complaints regarding customer service, outages and voltage fluctuations that have caused thousands of dollars in damages. Four municipalities (Trujillo Alto, San Lorenzo, Isabela and Aguadilla) have declared states of emergency because of prolonged power outages and slow response times. A news account quotes the president of the Puerto Rico Association of Mayors as saying that he has spoken with all the island’s mayors and “there are many complaints. There are delays in answering, they [LUMA] say they don’t have brigades, they don’t have trained personnel to do the more technical jobs, and people call Customer Service and no one answers.” Several mayors have assembled local, independent workforces to work on power lines, and one mayor (a former lineman) reportedly used his own equipment to restore service to a neighborhood. The mayor of San Sebastian, who has activated his own municipal brigades to respond to outages, predicted that LUMA “will not last even six months in Puerto Rico.”

All of this has occurred without any major storms in Puerto Rico.

All this has occurred without any major storms in Puerto Rico

LUMA Energy recently announced that it is bringing 100 workers from one of its parent companies, Texas-based Quanta Energy Services, to work in Puerto Rico. In hearings last month before the Puerto Rico Energy Bureau, LUMA described procedures it would follow to ensure that its affiliate companies did not gain an advantage in LUMA procurement processes. But there is no indication that LUMA followed any competitive process in deciding to bring these additional workers from Quanta. Nor is there any public information on the cost of salaries, transportation and housing for these workers.

The situation is all the more absurd because, at the same time that LUMA is bringing additional employees from the mainland, experienced Puerto Rican linemen and other former electrical workers are performing unrelated government jobs on the island. Puerto Rican law provided that PREPA employees would not lose their jobs as a result of the transaction, meaning that employees who did not go to work for LUMA were reassigned to other government positions.

The federal Financial Oversight and Management Board for Puerto Rico (FOMB) championed privatization as a way to bring savings and efficiencies to the electrical system, but thus far the new system only seems to be burdening Puerto Ricans with higher costs.  Municipalities are having to absorb the costs and risks of having non-LUMA workers repair power lines. The commonwealth government is footing the bill for former electrical workers to work in other jobs, while ratepayers will pay the elevated costs of LUMA bringing additional employees from the mainland.

The FOMB should reevaluate its disastrous approach to workforce management and withdraw its support for the LUMA contract.

 

Traducción en español: La red eléctrica de Puerto Rico sufre una serie de reveses bajo la gestión de LUMA Energy

Author: Cathy Kunkel ([email protected]) is an IEEFA energy analyst.

 

Related items:

Paying for Failure: High Fees for Finance Consultants Shortchange Puerto Rico Electrical Grid, April 2021

We Want Sun and We Want More: 75% Distributed Renewable Generation in Puerto Rico is Achievable and Affordable, March 2021

Biden Administration Has Opportunity To Rebuild Puerto Rico’s Electrical Infrastructure, January 2021

Contract Between Puerto Rico, LUMA Energy Sets up Full Privatization, Higher Rates for Island Grid, October 2020

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