Stop privatizing Puerto Rico!

 July 12, 2021

The U.S.-imposed Fiscal Control Board continues to try to impose all possible neoliberal policies of privatization on the people and island of Puerto Rico. The people have continued to fight back, most recently against LUMA Energy, the private contractor that took over operation of Puerto Rico’s electrical grid June 1. 

The letter to the U.S. Congress outlines the reasons for demanding an investigation of LUMA. The letter was released with the following statement by Amigos Río Guaynabo, Asociación de Empleados Gerenciales AEE, CAMBIO, Coalición de Organizaciones Anti-incineración, Comité Diálogo Ambiental, El Puente, Institute for Energy Economics and Financial Analysis (IEEFA), Sierra Club de PR, UTIER [Unión de Trabajadores de la Industria Eléctrica y Riego] and other organizations.

In San Juan, Puerto Ricans protested the privatization of energy under LUMA Energy, June 1. Credit: Alejandro Granadillo

We are living in the ravages of poor service and thousands of Puerto Ricans without electricity on a daily basis, because LUMA does not have enough personnel with the necessary experience. In addition, the policies of continuing to depend on fossil fuels are part of the business policy of LUMA and its parent companies Quanta Services and ATCO Group.

We have prepared a letter to the U.S. Congress, requesting an investigation about the allocation of billions of federal funds to this company. We ask all organizations, institutions — and all people who can — to endorse the letter at this link:

The Honorable Raúl Grijalva, Chair

House Natural Resources Committee

1324 Longworth House Office Building

Washington, DC 20515
July 20, 2021

Dear Representative Grijalva:

We urge the House Natural Resources Committee to undertake an urgent investigation into LUMA Energy, the private contractor that took over the operation of Puerto Rico’s electrical grid on June 1 and will be responsible for managing more than $14 billion in FEMA funds for the rebuild of the grid.

The first month of LUMA’s operations in Puerto Rico have been a disaster. LUMA is a joint venture of  Texas-based Quanta Energy Services and Alberta-based ATCO. LUMA did not hire the majority of the previous workforce of the Puerto Rico Electric Power Authority (PREPA).

As a result of failing to hire a trained and experienced workforce, LUMA has been unable to properly manage the grid, putting lives and property at risk due to prolonged outages and voltage fluctuations that have caused fires and tens of thousands of dollars in damages. Under the contract, LUMA receives a fixed fee of more than $100 million per year to manage the grid, regardless of its performance.

LUMA has disrespected the Puerto Rico legislature, forcing the legislature to go to court to try to compel LUMA to provide information on how many linemen the company has, where its Puerto Rico call centers are located and other basic information. As you know, LUMA also failed to appear to testify at a June 30 House Natural Resources subcommittee hearing on the AES coal plant in Puerto Rico.

This debacle would not be occurring if not for the influx of billions of dollars in FEMA and HUD CDBG [Community Development Block Grant] funds to Puerto Rico. Under its contract, LUMA Energy will manage and subcontract the federal funds without having to invest any of its own money into the grid.

The allocation of more than $14 billion in federal funding to Puerto Rico’s electrical system presents a historic opportunity to transition towards a reliable, decentralized grid based in rooftop solar, as community, environmental and labor organizations in Puerto Rico have long advocated. However, LUMA has shown no interest in moving in this direction, instead focusing its plans on rebuilding a hardened, centralized system like the one that collapsed during Hurricane Maria.

LUMA’s lack of transparency and its inability to provide reliable electric service raise several urgent questions, including:

  • What is the current status and level of training of LUMA’s workforce?
  • Is LUMA prepared to manage more than $14 billion in FEMA and HUD funds?
  • What actions will FEMA and HUD take to ensure that its funds are used to further Biden administration climate policy and to prevent the contracting process for such funds becoming a boon to LUMA’s corporate affiliates? What agreements have already been reached between FEMA, HUD, LUMA Energy and/or PREPA?
  • Why does the federal Financial Oversight and Management Board for Puerto Rico continue to support this contract, which has increased costs for the Commonwealth government and does not further the island’s renewable energy goals?
  • How did this unknown consortium win the contract to operate Puerto Rico’s grid against other bidders with greater expertise in managing electrical systems? What role did Quanta Energy Services’ federal lobbying play in the award of the contract?

We hope that your committee will undertake an urgent investigation to provide the people of Puerto Rico with answers to these questions.