Police provide guards near protesters blocking the entrance to the Luma Energy facility at the Puerto Rican (Prepa) Palo Seco Power Plant in Toa Baja, Puerto Rico, Friday, June 4, 2021.
Xavier Garcia | Bloomberg | Getty Images
When Hurricane Fiona hit Puerto Rico in September, Felipe Perez was ready.
Perez, owner of local sandwich chain El Meson, has outfitted his stand-alone locations with power generators and water tanks in case of prolonged power outages like the one that followed Hurricane Maria, the devastating storm that swept the island in 2017.
His work was one of the lucky ones. Many businesses were forced to close for weeks after Hurricane Fiona hit. Even for some companies that got electricity quickly, Perez said, “the cost of operations was so high that they would prefer to shut down.”
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Puerto Rico’s power grid has been a sore point for many businesses and residents on the island, leading to a backlash against Luma Energy — which the company brought in to operate and improve the grid after Hurricane Maria.
seize Luma
Luma Energy officially acquired the island’s power grid in June 2021 for Puerto Rico Electric Power Authority, or PREPA. The company, a joint venture between Houston-based Quanta Services and Calgary-based ATCO, is tasked with operating, maintaining and modernizing the dilapidated island network.
I got off to a rough start.
A report by the Institute for Energy Economics and Financial Analysis found that in the first two months of Loma’s operation on the island, Puerto Rico experienced “longer payback periods, voltage fluctuations, and poor customer service.”
Improvements since then appear to have been slow to emerge, with blackouts becoming the norm even before Hurricane Fiona, according to residents and media reports, apparently fueling growing discontent with Loma. In September, a Puerto Rican resident told local news station WAPA TV, “Here, you blow out a birthday candle and the electricity goes out.”
“Where [Hurricane] “Maria, they just reconnected the wires, fixed some transmission plants, and the basic generating system remains the same,” said Tom Sanzillo, director of financial analysis at IEEFA. That means we’re kind of out of place, and basically nothing has been invested in the network.”
The islanders also protested against Luma’s services. In July, about two months before Hurricane Fiona hit Puerto Rico, hundreds of residents marched to Governor Pedro Pierluisi’s home in Old San Juan, demanding that Loma’s contract be rescinded.
Pierluisi told local newspaper El Nuevo Día that he has asked Luma to make some management changes so that the company can better handle the situation. Luma did not comment on those remarks but said the network — which serves more than 1.4 million customers — has been mismanaged for decades by its predecessor, PREPA, and that “more than 3,000 men and women at LUMA are focused on restoring strength to every customer affected by Category 1 Hurricane Fiona.” and building and transforming the electrical system of the future.”
“When we took over about 16 months ago, the power grid situation was 60% worse than the worst facility in the fourth quarter in the country,” said Shai Behramirad, senior vice president of engineering asset management and capital programs at Luma Energy.
Behramirad said that in those 16 months, the blackout rate dropped by about 30% to 7.6 per year from about 10.6 per customer. The company also said on October 10 that electricity was restored to 99% of customers affected by Hurricane Fiona. After Hurricane Maria, power was cut off to some parts of the island for about a year.
High electricity costs
But while power may be restored across much of the island, customers still need to bear the higher energy costs.
Data from the US Energy Information Administration shows that commercial customers in Puerto Rico are paying an average of 29.4 cents per kilowatt-hour as of June 2022. This is more than double the US average of 12.9 cents per kilowatt-hour. Meanwhile, residential customers pay an average of 27.68 cents per kilowatt-hour, while the average in the US is about 15 cents per kilowatt-hour.
Behramirad of Luma said the company “has nothing to do with increasing electricity costs,” adding that this is mainly due to rising energy costs around the world. Energy prices have risen this year in part because of Russia’s invasion of Ukraine.
But IEEFA’s Sanzillo believes this disparity could have been mitigated at least by improving the network infrastructure.
“If you had changed large amounts of the system, you would still have high prices — you can’t change everything overnight — but at least you would have struggled a bit,” Sanzillo said.
Perez said at El Meson that he has not received the electricity bill for September yet but will not pay for “electricity that has not been consumed.”
All of this comes as Puerto Rico’s economy struggles to recover. FactSet data shows that Puerto Rico’s real GDP has declined in nine of the past 10 years. Furthermore, Puerto Rico’s population declined 11.8% from 2010 to 2020, while the total US population grew 7.4% in that time, according to Census Bureau data.
“The displacement has been massive, especially between [young adults]“Al Jazeera needs young people who can take leadership roles on the island,” Perez said.
Originally published at San Jose News Bulletin
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