November 16, 2021 Read More →

Worsening Puerto Rico grid privatization fiasco draws more attention

The Washington Post ($):

A phalanx of armed deputies wearing bulletproof vests descended on the corporate offices of the company hired to fix Puerto Rico’s antiquated power grid. They were looking for Luma Energy chief executive Wayne Stensby, who had been labeled a fugitive by local lawmakers for refusing demands to turn over documents related to the company.

The deputies didn’t find Stensby, and the warrant that had been issued for his arrest was suspended after he handed over a memory drive with thousands of documents that leaders of the territory’s House of Representatives are reviewing as part of a probe into Luma’s use of public money. But the drama that unfolded last week was the latest chapter in the almost-biblical saga of the island’s efforts to fix its failing infrastructure as its more than 3 million residents face increasing extreme-weather events.

“It’s a story that goes back forever, involves thousands of players, involving many sins and many calls to ‘come to Jesus,’” said Tom Sanzillo, director of financial analysis for the nonprofit Institute for Energy Economics and Financial Analysis, which has studied the island’s power grid.

The hiring of Luma last year marked a new beginning for the island: a 16-year, $1.5 billion experiment with privatization. Luma, a venture created by two energy companies — Alberta, Canada-based ATCO and Houston-based Quanta Services — was contracted to distribute electricity to 1.5 million customers and make badly needed upgrades to the power grid. The Federal Emergency Management Agency has allocated nearly $10 billion in taxpayer funds for the effort. The Puerto Rico Electric Power Authority (PREPA), the state-run utility provider, now only manages the generation of electricity.

But in the five months it has been in charge, problems have worsened, by many measures, including numerous sustained power outages and rate increases that have infuriated customers and lawmakers.

[Arelis Hernandez and Douglas MacMillan]

More: An arrest warrant, a fugitive CEO: Puerto Rico’s effort to privatize its electrical grid is off to a rocky start

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