Since LUMA began operations on the island, blackouts have become more frequent, several of them wide-scale, and electric rates have increased seven times.
LUMA will continue to run Puerto Rico’s power grid, despite constant outages, poor service, and high prices.
Gov. Pedro Pierluisi announced on Thursday the extension of the contract of the private US company, which has been in charge of the transmission and distribution of power on the island since June 2021.
The contract extension came amid protests and criticism due to LUMA’s poor service. The day before, hundreds of people gathered at La Fortaleza, the governor’s mansion, to demand that Pierluisi cancel the contract.
The government was faced with the decision after LUMA’s 18-month temporary contract expired on Nov. 30.
LUMA Energy obtained the extension following a 4-1 vote by the Puerto Rico Electric Power Authority’s (PREPA) board. A member representing the public’s interest cast the only dissenting vote.
The contract is a temporary one that will remain in effect until PREPA comes out of bankruptcy. The public company holds some $9 billion in debt, which is the largest debt held by any local government agency.
With the contract extension, LUMA will be paid $122 million next year, in addition to the $115 million it has received so far.
The extension will go into effect even though blackouts have become more frequent, several of them wide-scale, and electric rates have increased seven times on the island ever since LUMA took over the power grid.
Pierluisi said on Wednesday, during a press conference, that canceling LUMA’s contract makes no sense right now, because it is already working on projects to rebuild the grid, and that finding a different company would further delay the work.
“We all want the transformation of our electrical system to a modern, resilient one based on renewable energy sources, to be achieved. We all want to expedite the reconstruction and modernization of our electrical network so that we have reliable service. We all want both LUMA and the Electric Power Authority to improve their performance in order to have a more stable electric service. We all want the large-scale solar power projects that are in the pipeline to come to fruition, so that we have enough power generation from renewable sources,” the governor said.
Government officials warned that canceling LUMA’s contract could cost up to $600 million, an amount that the island can’t afford since it just came out of the biggest municipal bankruptcy in US history.