Under strike threat from unions, Puerto Rico privatizes electric power supply

RIO DE JANEIRO, BRAZIL – Surrounded by controversy, protests, and rejection by the unions, which are threatening a general strike, private company LUMA Energy takes over the distribution of electricity in Puerto Rico, previously in the hands of the monopoly of the Electric Power Authority (PREPA), bankrupt and with a millionaire debt, starting today and for the next 15 years.

PREPA had been the main electricity supplier in Puerto Rico for its 3.2 million inhabitants and is also one of the two largest public electric utilities in the United States by customer base.

And as a way to show their rejection, the unions have already announced street actions to demand the government’s revocation of LUMA’s contract. The demonstrations registered in recent days have continued this Tuesday.

On the first day protests have been held at AEE Palo Seco facilities – where there was an altercation after the company changed a padlock on the entrance gate -, Toa Baja; Ponce; Utuado; Mayagüez; Central Termoeléctrica de Aguirre, Salinas; Guayama; Caguas; Aibonito; Aguadilla, San Sebastián and Ponce -where three workers were detained.

If the contract is not revoked, which they believe will increase rates, displace workers and allow them to leave the island in the event of a major natural disaster, the unions will go on general strike.

They also believe that LUMA does not have enough personnel to take over the service island-wide and that many jobs will be left up in the air.

Read also: Puerto Rico Senator fears new crisis due to worker discontent in electricity sector

LUMA begins operating Puerto Rico’s electric transmission and distribution system on June 1 under the Operation and Maintenance Agreement signed with the Puerto Rico Electric Power Authority (PREPA) and the Puerto Rico Public-Private Partnerships Authority (PPPA) nearly a year ago.

“LUMA was built for Puerto Rico, and today, concretely, it begins to provide the customer-focused, reliable and resilient service that people deserve. The transformation that begins today is not about poles and wires, it’s about people. The people who depend on electricity to light their homes and businesses and the brave people who have joined LUMA to make it happen,” said Wayne Stensby, president and chief executive officer of LUMA.

The company has hired a workforce of thousands of Puerto Ricans to serve the people of Puerto Rico. LUMA employees operate the transmission and distribution system, performs system maintenance and connects customers to new service, he added.

He also recalled that LUMA would be accountable through the Public-Private Partnerships Authority, the contract administrator. The company will also be subject to oversight by the Puerto Rico Energy Bureau, the island’s independent energy regulator.

In preparation for the start of service, LUMA has said it conducted an extensive analysis of the system’s current state to produce comprehensive plans, budgets that do not require rate increases, and performance metrics, all of which were submitted to the Energy Bureau.

The company comes with the thumbs up from a portion of the private sector for no other reason than the fact that it is confident it will be more efficient than PREPA.

Hurricane Maria in 2017 destroyed much of PREPA’s already deteriorated infrastructure, leaving customers without power for up to five months or more.