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Senate hearing presses LUMA contract oversight, transparency and reimbursement rules
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Summary
Lawmakers questioned the LUMA contract’s reimbursement rules, bonuses and potential hidden revenues, heard an estimate of roughly $1 million to staff oversight, and recessed the hearing for follow-up; officials disagreed over whether reimbursements could become income.
Speaker 2 pressed officials at a Senate hearing on March 26, 2021 about who will enforce environmental and contract requirements under the new agreement with LUMA, saying federal regulators ‘‘la EPA los la EPA los va a multar.’’ Speaker 1 replied that enforcement is shared among the regulator, the authority owner and administrators and described their own role: “yo soy abogado ambiental y de energía” and offered to participate in oversight.
The session focused on two central lines of inquiry: how much it will cost to provide technical oversight of the operator and whether the contract’s reimbursement rules allow LUMA to generate additional income. When asked how much a peritaje or oversight team would cost, Speaker 1 estimated “alrededor de un millón de dólares más” in payroll to staff the organization’s oversight functions, saying plazas are open and candidates are being recruited.
Speaker 2 questioned the contract’s scope and raised specific transparency concerns, citing possible intra-company transactions and a ‘‘cherry service agreement’’ that could channel revenues: they referenced figures ‘‘setenta y ocho a ochenta millones’’ as an example of amounts discussed during the hearing. Speaker 2 also said bonuses paid to the operator could be sizable, pointing to amounts “entre trece y veinte millones,” and urged public disclosure of salaries paid with public funds.
Speaker 1 defended the contract structure, saying LUMA ‘‘no recibe ningún ingreso bajo este contrato que no sea su pago fijo y su bono’’ and that other payments are reimbursements made ‘‘al costo,’’ not profit. To illustrate the distinction, Speaker 1 used a mechanic example: parts are reimbursed at cost, while the service is charged separately.
Both speakers acknowledged the scale of prior spending by the authority — Speaker 1 cited hundreds of millions in consultant and contractor contracts and linked long outages after hurricanes to significant economic and human costs for Puerto Rico’s residents. Speaker 1 framed the contract and the broader transformation under ‘‘la ley ciento veinte’’ as responses to those costs.
The hearing concluded with Speaker 1 and Speaker 2 agreeing to continue communications to clarify outstanding issues. Speaker 2 announced the session would be recessed under “la resolución del senado número uno,” and the commission will reconvene or issue follow-up as needed.
Next steps: the commission said it will resume work the Monday after Easter and will notify parties if it needs to recall witnesses or hold additional public or executive sessions to resolve remaining questions about the contract, reimbursements and disclosure of salary information.
