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(Bloomberg) — Puerto Rico filed a notice against Luma Energy, the US-Canadian consortium that manages the island’s troubled power grid, in what is seen as an initial step toward modifying or breaking the contract.
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“Puerto Rico’s electric customers have endured nearly four years of rolling outages, ballooning costs, and broken promises — even as billions in federal reconstruction dollars sit idle,” the Public-Private Partnerships Authority wrote to Luma. “Despite repeated written notices and good faith attempts to secure voluntary compliance, Luma continues to flout its most basic obligations.”
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The US territory has some of the most expensive and least reliable power systems in the nation, fueling anger toward Luma Energy, which took over transmission and distribution management in 2021. The government has been on a mission to scrap its contract, with the latest letter outlining a laundry list of performance failures.
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The agency said the company has wracked up $3 billion in operational costs since taking over and has only tapped $345 million of approximately $10 billion in federal reimbursements that were earmarked to repair transmission and distribution lines.
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Luma, a consortium of Atco Ltd. and Quanta Services Inc., working with Innovative Emergency Management Inc., took over grid management from the Puerto Rico Electric Power Authority, or Prepa. It is slated to become a 15-year, $1.5 billion contract once Prepa emerges from bankruptcy.
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Tuesday’s letter initiates a dispute-resolution process that could lead to changes and modifications “including, if necessary, termination of the agreement,” the government said.
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In an emailed statement, Luma said it welcomed the negotiation process. “We remain steadfast and committed to Puerto Rico and the transformation of our electric system,” the company said.
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