Puerto Rico Gov. Jenniffer González Colón filed a lawsuit seeking to end the island's contract with LUMA Energy as provider of electrical transmission and distribution services, adding another unknown factor to the Puerto Rico Electric Power Authority bankruptcy.
"Meetings were held with LUMA executives, as well as with [its parent companies] ATCO and Quanta, to demand
"Given this situation, and after exhausting all responsible options, resorting to the courts became the only viable way to address this issue in a serious and orderly manner," the governor continued.
Puerto Rico's electrical system suffered extensive outages before LUMA took over the transmission and distribution system in summer 2021, but González Colón said
"Nobody knows" how the governor's action will affect the PREPA bankruptcy, now in its eighth year, said John Mudd, an attorney in Puerto Rico and analyst. "It will depend on whether the government has a company the [Oversight] Board will approve that can take over from LUMA."
The governor, through the Puerto Rico Authority for Public-Private Alliances and PREPA, filed two legal actions Thursday — one in the Puerto Rico Court of the First Instance in San Juan seeking to have the court annul a contract extension with LUMA signed in 2022. The second asks the Puerto Rico Supreme Court to immediately start consideration of suit.
LUMA said it was reviewing the filings but remained committed to Puerto Rico's energy transformation.
"Unfortunately, the politics that lead to PREPA's failure have resurfaced, so it is no surprise that the P3A has expressed their intent to invalidate LUMA's contract regardless of the real and measurable progress that has been made to stabilize the system, which includes clearing vegetation, replacing electric poles, installing new transformers and breakers, maintaining substations, replacing damaged transmission lines and investing more than $2.4 billion in federally-funded projects," LUMA added. "Even with PREPA's lack of proper funding, all of these efforts are helping revitalize and strengthen the electric grid following decades of mismanagement and neglect."
"Attempts to invalidate the contract at this point or change the terms of a legally binding contract send a troubling message to any company considering doing business in or investing in Puerto Rico," LUMA said.
Mudd said he didn't think the Puerto Rico Supreme Court would take up the case immediately "since there are issues of fact to resolve. But if they do, they will likely find in favor of" the government.
In the suit, the government argues various omissions in the contract approval process that render it invalid.
The struggle over LUMA comes as the status of the Oversight Board, which has power in the bankruptcy, remains unclear. In the summer President Donald Trump dismissed all but one of the board's seven members.
Three of the dismissed members sued to regain their positions and a
The Oversight Board said it was reviewing the governor's legal action.
