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By DÁNICA COTO, Associated Press
SAN JUAN, Puerto Rico (AP) – A private company on Tuesday resumed transmission and distribution operations from the Puerto Rico Power Authority, which has battled power outages and bankruptcies, corruption and mismanagement .
Luma Energy’s buyout under a 15-year contract coincided with the onset of hurricane season in the Atlantic, with many Puerto Rican residents concerned about the transition and the new company’s capacity. to manage a violent storm. The American territory is still struggling to recover from Hurricane Maria, which destroyed most of the electricity grid in September 2017.
“It is extraordinarily fragile and in very poor condition,” warned Wayne Stensby, CEO of Luma, a consortium of Atco, based in Calgary, Alta., And Quanta Services Inc. of Houston.
However, Stensby said the company, which will serve all of the island’s roughly 1.5 million customers, has enough resources to handle a Category 2 hurricane and can bring in more equipment and workers if one more violent storm hits.
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The agreement approved by the territory government and a federal control board asks Luma to spend billions of dollars to modernize the failing system – most of that money coming from the United States Federal Emergency Management Agency – while receiving hundreds of millions of dollars to run the system.
Officials are betting the private operator can do better than the island’s Electric Power Authority, which has struggled to restore the storm-damaged power grid and maintain power while trying to cope with debt $ 9 billion – more than that of any other government agency in Puerto Rico.
Even with privatization, most analysts expect the government and the supervisory board to be forced to agree to a possible increase in electricity tariffs to meet the demands of bondholders.
Meanwhile, the new company will inherit unresolved blackouts, with more than 30,000 customers without power in recent weeks.
“We don’t want to go into June 1 with a big backlog of blackouts, but that will be what it will be,” Stensby said.
Puerto Rico chose Luma in June 2020 to operate and modernize the island’s transmission and distribution system.
Governor Pedro Pierluisi said the company is committed to reducing power outages by 30%, outage duration by 40% and workplace accidents by 50%.
“We have had a bankrupt (and) incompetent utility for too long,” he said. “The transformation underway will make the difference. “
But critics called on the government to cancel the deal. A Texas-based nonprofit, the Institute for Energy Economics and Financial Analysis, complained that Luma would not be penalized for failing to save money or meet renewable energy goals. .
He said the supervisory board “turns a blind eye to some of the same tax practices that led the Commonwealth to bankruptcy,” wrote Tom Sanzillo, the association’s director of financial analysis. Commonwealth entities, lack of clarity and accountability for budget savings initiatives, inability to prioritize renewables, and costly and short-sighted workforce management.
The Puerto Rico-based Center for a New Economy, a non-partisan think tank, also criticized the deal, saying, “There is no guarantee that the process of modernization and transformation (the power authority) will be successful.
But the Federal Council said the effort must go forward. If the Electric Power Authority is not transformed, the economy will contract, said David Skeel, chairman of the board.
“Some people are not happy, but this is the way to go,” he said of the contract. “It’s absolutely essential, in my opinion.”
Puerto Rico’s power generation units are on average 45 years old, double those in the Americas, and a federally approved tax plan projects that Luma will spend some $ 3.85 billion until the exercise 2024 to reorganize the transmission and distribution system.
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