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    Puerto Rico extends contract with electric utility despite protests


    December 7, 2022 - CE Noticias Financieras

     

      San Juan, Nov. 30. Puerto Rico on Wednesday extended the contract with the electric company LUMA Energy, alleging that the consequences of not doing so would be very negative, despite the frequent blackouts and popular protests calling for its cancellation.

      The contract, which was set to expire today, was endorsed by the Electric Power Authority (Prepa) Board by a vote of four in favor and one against, after its prior approval by the Public-Private Partnerships Authority (PPPA).

      "The extension of the supplemental agreement obligates LUMA to continue managing and improving the power transmission and distribution system in Puerto Rico until the Puerto Rico Electric Power Authority (PREPA) completes its debt restructuring process," Governor Pedro Pierluisi explained in a statement.

      The governor insisted that they hope that "the reconstruction and modernization" of the power grid will be expedited and that both LUMA and Prepa "improve their performance to have a more stable electric service."

      "We all want to achieve the transformation of our electric system to a modern, resilient and renewable energy-based system," he said.

      The authorities defend that the cancellation of the contract would have negative economic implications for Puerto Rico, with estimated costs of between $300 million and $600 million, which the island, just out of bankruptcy, cannot assume.

      In addition, PPPA Board of Directors Chairman Omar Marrero said it is essential that LUMA remain in place to get PREPA's $9 billion debt restructuring on track.

      "Without LUMA, the appointment of a receiver is highly likely. This trustee would have the power to exercise the right to request rate increases in amounts sufficient to pay PREPA's debt in full," he said.

      In the same vein, LUMA President Wayne Stensby affirmed that the extension allows the company "to continue working to transform and improve the island's electric system while restructuring PREPA's debt.

      LUMA took over the transmission and distribution of electricity on the island in June 2021, while PREPA remains in charge of generation.

      Numerous political and social sectors have opposed the renewal of the contract, citing the frequent blackouts and increases in the price of electricity.

      In recent days, different groups have staged several demonstrations in San Juan to demand the cancellation of the contract.

      Aware of the discontent, the Governor reminded today that even with this extension, the contract can be cancelled if LUMA substantially fails to comply with its obligations.

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