November 22, 2021 Read More →

Op-ed: Puerto Rico electric grid continues to fail residents and ratepayers

Service interruptions and outages continue to plague grid under LUMA Energy management

Commentary by Tom Sanzillo and Alexer Valencia*

Recently a Puerto Rico judge found Wayne Stensby, CEO of the private company LUMA Energy that took over operation of Puerto Rico’s electrical grid this summer, in contempt of court and ordered his arrest due to LUMA’s continued refusal to provide information to the Puerto Rico legislature.

For those who have followed LUMA’s performance in Puerto Rico, this latest development is consistent with the company’s poor management decisions and lack of transparency.

The two of us writing this op-ed have never met in person. One of us has spent his life laboring in the mountains of Puerto Rico. The other is a longtime financial analyst and former acting comptroller of New York state. But we are joined by our shared concern over the perfectly avoidable disaster continuing to unfold in Puerto Rico.

Privatization was designed to be a cash cow for LUMA executives and their mainland consultants

I, Tom, have closely followed Puerto Rico’s grid privatization and transformation process for years. It is more than evident that the privatization process that created the current mess was never about solving the very real problems plaguing Puerto Rico’s electrical system. Rather, this was deliberately designed to be a cash cow for LUMA executives and their mainland consultants.

FROM THE BEGINNING, THE WAY THE CONTRACT WAS AWARDED WAS INDEFENSIBLE. A five-member committee evaluated the bids, selected LUMA — a joint venture between Texas-based Quanta Energy Services and Canada-based ATCO — and negotiated the contract. This evaluation committee reviewed both technical and financial metrics.

What raises questions is that four of the five members of that committee arrived at identical numerical scores in 37 of the 38 categories used to evaluate the bids. Three of the members even made the same numerical error in tallying their scores. How did this happen? No one has answered our questions.

LUMA failed to hire the majority of PREPA’s skilled, experienced electrical workers, who were instead transferred to unrelated positions in the Commonwealth government. The contract has cost the bankrupt Commonwealth hundreds of millions of dollars annually to pay for these transfers while LUMA itself remains understaffed and deeply inexperienced. This entire situation is being underwritten with billions of dollars of FEMA grid reconstruction funds — taxpayer money. The company has none of its own money at risk, and stands to profit from subcontracting federal funds to its affiliate companies.

OVERSIGHT PROVISIONS IN THE CONTRACT ARE WEAK. And LUMA Energy’s CEO had to be threatened with jail time to provide public information requested by the Puerto Rican legislature.

Nonetheless, every hour of every day, LUMA makes almost $12,000 an hour.

What has this meant for the people of Puerto Rico and former electrical system workers? Let’s turn to the reality that I, Alexer, can share.

Multiple island mayors have declared states of emergency over LUMA’s unacceptable service

I worked 24 years for the Puerto Rico Electric Power Authority (PREPA), and was one of two people trained to operate a specialized piece of heavy, cable-laying equipment in our remote, mountainous communities. Yet I — and more than 3,000 other former PREPA workers — have now been displaced from our jobs and randomly transferred to other government agencies that have no use for us. I can now only watch as our neighbors and families are hit with power outages that last for days, while unpredictable power surges fry home appliances and start house fires.

LUMA’s service is so bad that multiple island mayors declared states of emergency this summer over unacceptable electric power service. And that’s without any major storms this hurricane season.

WHEN HURRICANE MARIA HIT FOUR YEARS AGO, my colleagues and I were the ones who went weeks without seeing our families, working to restore service to the island. Now, I sit in a parking lot every day all day with several dozen of my colleagues; we have been provided no equipment and no training for our new jobs with the Puerto Rico Department of Transportation. The situation has taken a real toll on our mental health and our families. This is an inexplicable waste of talent, resources and money.

LUMA’s abysmal service would never be tolerated in cities like Miami, New York, Chicago, or Los Angeles, and yet every U.S. taxpayer is underwriting this disaster as U.S. citizens go unhelped. Congress has oversight powers. It’s time for our elected representatives to intervene and help provide Puerto Rico with answers and reliable power.

*Tom Sanzillo is director of financial analysis at the Institute for Energy Economics and Financial Analysis. Alexer Valencia worked for the Puerto Rico Electric Power Authority for 24 years. He was recently forcibly transferred to another government agency because of the privatization of PREPA.

This op-ed was published in the Orland Sentinel on November 19, 2021: Puerto Rico electrical grid mismanagement is a disgrace

Related items

IEEFA Letter to Biden Administration: Invest FEMA funds in resilient Puerto Rico electric grid

IEEFA U.S.: Hearing on Puerto Rico grid plans fails to ask question: Why?

IEEFA U.S.: Delays, damages and poor service: LUMA Energy’s first two months highlight privatization flaws


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