Puerto Rico power company gives T&D reins to private firms

SAN JUAN, Puerto Rico (AP) — Puerto Rico officials said Monday that a consortium of Canadian and U.S. firms will take over the transmission and distribution system of the island’s public power company in a long-awaited announcement involving one of the largest public utilities in a U.S. jurisdiction.

The deal marks the first time those operations will be privately managed since Puerto Rico’s Electric Power Authority was founded in 1941 and became a public utility in 1979, raising hopes that a company long accused of corruption, mismanagement and inefficiency could be reformed and modernized, leading to fewer outages and improved service.

“You have a titanic challenge before you,” said Omar Marrero, executive director of Puerto Rico’s Fiscal Agency and Financial Advisory Authority.

The message was directed to LUMA, a consortium made up of Canadian firm ATCO Ltd. and U.S.-based companies Quanta Services Inc. and IEM. It was awarded a multimillion-dollar contract for 15 years that will allow the island’s power company to retain ownership of the transmission and distribution system as part of a public-private partnership, the third for Puerto Rico in recent years.

“We understand the significance of this announcement,” said Wayne Stensby, LUMA’s president and CEO, who promised to deliver a modern, affordable and reliable system. “This is not our first rodeo.”

The company will initially be paid $70 million followed by $90 million the second year and $100 million the third year as part of a contract approved by a federal control board that oversees Puerto Rico’s finances. It will receive $105 million for each of the remaining years, with a possible $20 million total in bonuses.

The contract does not call for an increase in rates, which will require approval by Puerto Rico’s Energy Commission,...