Puerto Rico Will Not Go Quietly Into the Dark

This month a massive outage left over 350,000 customers in San Juan, P.R., without power, including my 96-year-old grandmother and 75-year-old mom. Amid a record-breaking heat wave, my mom struggled to keep my grandmother cool with a battery-operated fan. The frustration and fear in my mother’s voice as we spoke on the phone was palpable, and when the call ended, I found myself blinking back tears of rage.

In 2020 the Puerto Rican government transferred management of the electric grid to a newly minted Canadian-American private company, Luma Energy. It promised to bring clean, reliable energy to Puerto Rico after the state-owned Puerto Rico Electric Power Authority filed for bankruptcy and Hurricane Maria knocked out the island’s ailing electric grid.

So why is it that four years later, my mom is still cursing in the dark?

Puerto Rico’s power crisis illustrates the consequences of putting essential services in the hands of a private entity. Reliable electricity is not just a convenience; it is essential for economic stability and public health. Yet residents are paying exorbitant rates for a service that repeatedly fails them. Enough is enough. Puerto Ricans deserve a power grid that works for them, not against them.

After Puerto Rico declared bankruptcy in 2017, the fiscal control board, charged with managing the island’s debt restructuring and finances, began pushing to sell off its assets, but since PREPA couldn’t be sold while undergoing debt restructuring, the government opted for a public-private partnership model in which it retained ownership of the assets — and the debt — while outsourcing operations.

In such arrangements, the partners have a vested interest in the project’s success through shared risks, rewards and performance incentives. The upside in this structure is that unlike with full privatization, the public sector retains responsibility and accountability for ensuring that services are delivered properly. But in Puerto Rico, that has not been the case.

The contract awarded to Luma is outrageously generous. It receives a fixed management fee regardless of whether it keeps the lights on, is guaranteed federal funds for repairs and can charge PREPA for any unexpected operational costs. Luma has even threatened to charge residents more if they seek compensation for appliances damaged by outages and surges. Additionally, until PREPA’s debt restructuring is resolved, Luma is operating under an interim contract that nearly doubles its fee, to $115 million from $70 million.