Carlos “Charlie” Delgado Altieri, PPD gubernatorial candidate, said yesterday that one of his first government actions -if elected- would be to cancel the LUMA Energy contract for the transmission and distribution of energy.
“We understand that there are good legal and procedural elements that are sufficient to cancel the contract without penalties for the government,” said Delgado Altieri in a press conference held outside the headquarters of the Puerto Rico Electric Power Authority (PREPA) in Santurce.
He argued, however, that even paying cancellation penalties would be less expensive than maintaining the contract for 16 years, as established in the agreement.
The cancellation could represent $5 million per month over the first 12 months, plus reimbursing expenses that, according to the bills already submitted, could be around $14 million per month, said Delgado Altieri.
“It costs less for Puerto Ricans to cancel the contract than to end up paying $540 million or more over the next 4 years,” said the mayor of Isabela, who has been in office for 20 years.
The cost of the 16-year contract is nearly $2 billion. This agreement gives LUMA Energy the power to manage federal reconstruction funds to rebuild the power grid without contributing money for the investment.
The PPD candidate recalled that the contract also leaves 6,000 PREPA employees and 11,000 retirees without fringe benefits or pensions, respectively.
In front of a group of unionized workers and retirees, Delgado Altieri mentioned that his stance is against “neoliberalism which believes that privatization is a panacea for all ills”.
However, he added he believes in privatizing the energy generation infrastructure since the government has no borrowing margin or liquidity to assume that investment.
Delgado Altieri created a committee to review this contract including former Labor Secretary Frank Zorrilla, former PREPA employee Ivelisse Sánchez, union leader Pedro Irene Maymí, certified public accountant Héctor Rosado, attorney Jesús Rabell and engineer Guillermo Riera who were at the press conference with him.
Delgado Altieri said he will create a group of experts and professionals to revisit the transactions and design a merit-based recruit process.
New Progressive Party (PNP) gubernatorial candidate Pedro Pierluisi Urrutia reacted by saying that canceling the contract would have consequences for the business environment and the “good name of Puerto Rico”.
“What we must do is identify the areas that need to be modified,” said the former Washington Resident Commissioner.
He added he will demand no rate increase, to respect the rights of workers, protect the pension system, and will also ask that local businesses participate in the reconstruction.
Meanwhile, the director of the Public-Private Partnerships Authority (P3), Fermín Fontanés, defended the contract his office negotiated by assuring that it seeks to fight “one of the problems we´ve faced historically: the lack of managerial stability due to changes in government”.
“From the White House and Congress, everyone is very happy that this happened. PREPA has no credibility in Congress or (federal) agencies because of its record,” he added.
The PPD candidate argued that this lack of credibility before the federal government stems from the fact that "the government itself pictures the island (abroad) as “chaos”.