Senate hearing raises questions about Luma contract, projected savings and rate impacts

Summary

Experts at a March 26, 2021 Senate hearing told senators that the Luma contract’s claimed savings rest on hypothetical assumptions, that additional unlisted fees and passthroughs could raise costs, and that public funds and a proposed $894M financing play a central role; witnesses also say Luma reportedly made no upfront capital investment.

A Senate public hearing on March 26, 2021 examined the operations and maintenance contract between the Puerto Rico Electric Power Authority (Autoridad de Energía Eléctrica, AEE) and the private operator Luma. Witnesses who worked at AEE or reviewed the contract told the Senate the agreement depends on hypothetical savings projected by consultants and shifts many costs to ratepayers.

Héctor Rosario, who said he worked at AEE for about 34½ years, summarized documentary evidence and exhibits and warned that “es un contrato de adhesión que protege a los intereses de Luma más a los del pueblo y los clientes de la autoridad.” He told the committee that the contract’s claimed efficiencies derive from hypothetical assumptions in consultant reports rather than from a documented sensitivity analysis.

Rosario and other witnesses pointed to specific numbers in the contract and related documents: they said Luma was set to receive $136.4 million in 2021 and had requested an additional 11.5 percent increase (about $15.65 million). The witnesses said fixed payments of roughly $83 million appear for 2022 and that payments plus incentives cited for later years could sum to $445 million…

Senate hearing raises questions about Luma contract, projected savings and rate impacts

Summary

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