Puerto Rico extends contract with LUMA Energy

LUMA Energy was initially awarded a contract from the Puerto Rican government in June 2021, giving them control of the Puerto Rico electrical grid. Initially, residents were happy to have a private company in control of electricity instead of the typical state-run system. However, since then, the territory has experienced frequent power outages, causing Puerto Ricans to be unsatisfied with LUMA. In addition to power outages, residents have experienced multiple price hikes even though LUMA has only spent a small portion of the money it had promised to invest in improving the infrastructure. Even Puerto Rico’s governor Pedro Pierluisi has criticized them, noting that their control of the grid was unsatisfactory. 

However, despite all this public criticism, the Puerto Rican government decided to renew its contract with LUMA on a 4-1 decision made by the Puerto Rico Electric Power Authority’s board. Pierluisi announced that while LUMA had made mistakes in the past, they were planning on improving and rebuilding the grid. He also explained that finding a new company would take far too much time and resources. Government officials also noted that the costs of canceling the contract could be up to $600 million, which would be hugely detrimental to Puerto Rico as they are already in a lot of debt. Fermín Fontanés, executive director of Puerto Rico’s Public-Private Partnerships Authority (P3A), explained that LUMA’s failures were largely due to preexisting problems with the energy infrastructure in Puerto Rico, meaning it was not completely their fault. 

LUMA will receive $122 million in addition to the $115 million they received last year. In response to the extension, they publicly celebrated their progress despite many obstacles along the way. They mention that they have implemented various infrastructure changes aimed at improving the reliability of the electricity system throughout the first part of their contract. Puerto Rican residents can only hope to see progress in the future and avoid power outages with the improved infrastructure.