Oversight Hearing: Transformation of the Puerto Rico Electric Power Authority (PREPA), House Natural Resources

Summary

An oversight hearing on the transformation of the Puerto Rico Electric Power Authority (PREPA) before the Committee on Natural Resources, U.S. House of Representatives, on July 23, 2020, with Hon. Raúl M. Grijalva presiding as Chairman of the Committee. The contents list statements by witnesses including José Ortiz, Executive Director of the Puerto Rico Electric Power Authority (PREPA), and Ruth Santiago, Member of the Queremos Sol Coalition, with prepared statements and questions submitted for the record. Additional materials submitted for the record include a letter from Wayne Stensby, LUMA Energy President and CEO, dated July 22, 2020.

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Issuer: Congressional materials
Document type: Congressional Hearing
Case: Chrg Chrg 116Hhrg41341 Chrg 116Hhrg41341

Cite this document

“Oversight Hearing: Transformation of the Puerto Rico Electric Power Authority (PREPA), House Natural Resources.” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-chrg-116hhrg41341-chrg-116hhrg41341/, SHA-256 260a5ce0a0161adc321a4d40895e4300026472d46f12e37b0011d7ba07c0372d.

Full text

THE TRANSFORMATION OF THE
PUERTO RICO ELECTRIC POWER
AUTHORITY (PREPA)

OVERSIGHT HEARING
BEFORE THE

COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION

Tuesday, July 23, 2020

Serial No. 116–39

Printed for the use of the Committee on Natural Resources

(

Available via the World Wide Web: http://www.govinfo.gov
or
Committee address: http://naturalresources.house.gov

U.S. GOVERNMENT PUBLISHING OFFICE
41–341 PDF WASHINGTON : 2020
COMMITTEE ON NATURAL RESOURCES

RAÚL M. GRIJALVA, AZ, Chair
DEBRA A. HAALAND, NM, Vice Chair
GREGORIO KILILI CAMACHO SABLAN, CNMI, Vice Chair, Insular Affairs
ROB BISHOP, UT, Ranking Republican Member

Grace F. Napolitano, CA Don Young, AK
Jim Costa, CA Louie Gohmert, TX
Gregorio Kilili Camacho Sablan, CNMI Doug Lamborn, CO
Jared Huffman, CA Robert J. Wittman, VA
Alan S. Lowenthal, CA Tom McClintock, CA
Ruben Gallego, AZ Paul A. Gosar, AZ
TJ Cox, CA Paul Cook, CA
Joe Neguse, CO Bruce Westerman, AR
Mike Levin, CA Garret Graves, LA
Debra A. Haaland, NM Jody B. Hice, GA
Joe Cunningham, SC Aumua Amata Coleman Radewagen, AS
Nydia M. Velázquez, NY Daniel Webster, FL
Diana DeGette, CO Liz Cheney, WY
Wm. Lacy Clay, MO Mike Johnson, LA
Debbie Dingell, MI Jenniffer González-Colón, PR
Anthony G. Brown, MD John R. Curtis, UT
A. Donald McEachin, VA Kevin Hern, OK
Darren Soto, FL Russ Fulcher, ID
Ed Case, HI
Steven Horsford, NV
Michael F. Q. San Nicolas, GU
Matt Cartwright, PA
Paul Tonko, NY
Jesús G. ‘‘Chuy’’ Garcı́a, IL
Vacancy

David Watkins, Chief of Staff
Sarah Lim, Chief Counsel
Parish Braden, Republican Staff Director
http://naturalresources.house.gov

(II)
CONTENTS

Page
Hearing held on Tuesday, July 23, 2020 ............................................................... 1
Statement of Members:
Bishop, Hon. Rob, a Representative in Congress from the State of Utah,
prepared statement of ................................................................................... 103
González-Colón, Hon. Jenniffer, a Delegate in Congress from the
Territory of Puerto Rico ................................................................................ 4
Grijalva, Hon. Raúl M., a Representative in Congress from the State
of Arizona ...................................................................................................... 2
Prepared statement of ............................................................................... 3
Statement of Witnesses:
Avilés-Deliz, Edison, Chair, Puerto Rico Energy Bureau (PREB) ................ 44
Prepared statement of ............................................................................... 46
Questions submitted for the record ......................................................... 52
Figueroa-Jaramillo, Ángel, President, Electrical Industry and Irrigation
Workers Union (UTIER) ............................................................................... 72
Prepared statement of ............................................................................... 73
Fontanés, Fermı́n, Executive Director, Puerto Rico Public-Private
Partnerships Authority ................................................................................. 30
Prepared statement of ............................................................................... 32
Questions submitted for the record ......................................................... 35
Ortiz, José, Executive Director, Puerto Rico Electric Power Authority
(PREPA) ......................................................................................................... 5
Prepared statement of ............................................................................... 6
Supplemental testimony submitted for the record ................................. 11
Questions submitted for the record ......................................................... 14
Rossi, Josen, President, Puerto Rico Institute for Competitive and
Sustainable Economy (ICSE) ....................................................................... 83
Prepared statement of ............................................................................... 85
Santiago, Ruth, Member, Queremos Sol Coalition ........................................ 57
Prepared statement of ............................................................................... 59
Additional Materials Submitted for the Record:
List of documents submitted for the record retained in the Committee’s
official files .................................................................................................... 104
Submission by Mr. Ortiz as Supplement to Testimony
-PREPA, July 17, 2020 Letter to Kimberly D. Bose, FERC Secretary . 27

(III)
OVERSIGHT HEARING ON THE TRANS-
FORMATION OF THE PUERTO RICO
ELECTRIC POWER AUTHORITY (PREPA)

Tuesday, July 23, 2020
U.S. House of Representatives
Committee on Natural Resources
Washington, DC

The Committee met, pursuant to notice, at 3:36 p.m., in 1324
Longworth House Office Building, Hon. Chair Raúl M. Grijalva
[Chairman of the Committee] presiding.
Present: Representatives Grijalva, Napolitano, Sablan,
Lowenthal, Gallego, Cox, Haaland, Cunningham, Velázquez,
DeGette, Soto, Case, Tonko, Garcı́a; Gosar, Westerman, Graves,
Radewagen, and González-Colón.
The CHAIRMAN. Thank you. The Committee on Natural
Resources will come to order.
The Committee is meeting today to hear testimony on the
transformation of the Puerto Rico Electric Power Authority,
PREPA.
Under Committee Rule 4(f), any oral opening statements at the
hearing are limited to the Chair and the Ranking Minority Member
or designee. This will allow us to hear from the witnesses sooner
and help Members keep to their schedules.
Therefore, I ask unanimous consent that all other Members’
opening statements be made part of the hearing record if they are
submitted to the Clerk by 5 p.m. today or the close of this hearing,
whichever would come first.
Hearing no objection, so ordered.
Without objection, the Chair may also declare a recess subject to
the call of the Chair. As described in the notice, statements, docu-
ments, or motions will be submitted to the electronic repository at
HNRCDocs@mail.house.gov.
Additionally, please note that as with our solely in-person meet-
ings, Members are responsible for their own microphones. As with
our fully in-person meetings, Members can be muted by the staff
only to avoid inadvertent background noise.
Anyone present in the hearing today must wear a mask covering
their mouth and nose. The Speaker of the House and the Sergeant
at Arms acting upon the recommendations of the Attending
Physician require face coverings for all indoor gatherings over 15
minutes of length; such as, committee meetings.
Accordingly, to maintain decorum and protect the safety of
Members and the staff, the Chair will not recognize any Member
in this hearing to speak who is not wearing a mask.
According to House Rule 17 and Committee Rule 3(d), the Chair
retains the right to a recognition of any Member who wishes to
(1)
2

speak or offer a motion. This right includes the responsibility to
maintain decorum.
Please note that as is permitted by the Sergeant at Arms guid-
ance, the Chair will make limited exceptions for Members briefly
removing their mask to facilitate lip reading by viewers who are
deaf or hard of hearing.
Finally, Members or witnesses who experience technical
problems should inform the Committee staff immediately.
With that, I will now recognize myself for the opening statement.
STATEMENT OF THE HON. RAÚL M. GRIJALVA, A REPRESENT-
ATIVE IN CONGRESS FROM THE STATE OF ARIZONA
The CHAIRMAN. In May 2019, when this Committee held a hear-
ing on the status of the rebuilding and privatization of PREPA, I
stated that my primary concerns were determining the best way to
guarantee that PREPA would be rebuilt so that it can withstand
future extreme weather conditions; provide the residents of Puerto
Rico with reliable, inexpensive, and clean power; and prevent the
displacement of PREPA’s workers.
Nearly 3 years after the onset of Hurricanes Irma and Maria and
billions spent by FEMA and the Army Corps to turn the lights back
on, Puerto Rico’s electric grid, unfortunately, remains fragile and
vulnerable, in part due to recent earthquakes that have further
impacted PREPA’s infrastructure.
We will hear today from a diverse group of witnesses who will
speak to the issues currently concerning PREPA, as well as if and
when PREPA will be able to deliver reliable, inexpensive, and clean
power to the people of the island.
We can all agree that reform of PREPA is necessary to provide
clean, low-cost electricity, but is the course that PREPA has em-
barked on the correct one to accomplish these goals remains a
question.
Last year, the government of Puerto Rico adopted a mandate of
achieving 100 percent renewable energy by 2050. Currently, less
than 3 percent of Puerto Rico’s energy production comes from
renewables.
The fact is, however, that PREPA’s current contracts with com-
panies who are tied to the U.S. natural gas industry and designed
only to retool existing infrastructure can only lead one to the con-
clusion that adding sufficient renewables to the grid will be
difficult to achieve, to say the least.
Last, in the weeks leading up to today’s hearing, headlines about
PREPA, such as: ‘‘The Privatization of Puerto Rico’s Power Grid, is
Mired in Controversy,’’ and ‘‘Puerto Rico’s Troubled Utility is a
Goldmine for U.S. Contractors,’’ suggests much still needs to be
done to accomplish the goals that were outlined.
Today’s hearing will also discuss PREPA’s recently announced
privatization and long-term concession of its power generation and
distribution assets.
Questions have been raised about the lack of transparency in
finalizing the concession contract with LUMA Energy and PREPA’s
employee union, UTIER. UTIER recently sued the utility and the
government of Puerto Rico alleging that the LUMA contract
violated local laws.
3

In closing, let me welcome our witnesses and thank them for
joining us for this important hearing. The residents of Puerto Rico
deserve an electric company that is reliable and efficiently run,
does not charge excessive rates, and is operated with a mind
toward a future that generates electricity using clean and sustain-
able renewable energy.
It is our intention to do all we can to assist PREPA in achieving
these goals. The efficiency, public openness, and reliability are
essential to the economic recovery and growth of the island as well.
[The prepared statement of Mr. Grijalva follows:]
PREPARED STATEMENT OF THE HON. RAÚL M. GRIJALVA, CHAIR, COMMITTEE ON
NATURAL RESOURCES

In May 2019, when this Committee held a hearing on ‘‘The Status of the
Rebuilding and Privatization of PREPA,’’ I stated that my primary concerns were
determining the best way to guarantee that PREPA will be rebuilt so that it can
withstand future extreme weather; provide the residents of Puerto Rico with reli-
able, inexpensive, and clean power; and prevent the displacement of PREPA’s
workers.
Today, nearly 3 years after the onset of hurricanes Irma and Maria, and billions
spent by FEMA and the Army Corps to turn the lights back on, Puerto Rico’s
electric grid unfortunately remains fragile and vulnerable, in part due to recent
earthquakes that have further impacted PREPA’s infrastructure.
We will hear today from a diverse group of witnesses who will speak to the issues
currently confronting PREPA as well as, if and when, PREPA will be able to deliver
reliable, inexpensive, and clean power for the people of island.
We can all agree that reform of PREPA is necessary to provide clean low-cost
electricity, but is the course that PREPA has embarked on the correct one to
accomplish these goals?
Last year, the Government of Puerto adopted a mandate of achieving 100 percent
renewable energy by 2050. Currently, less than 3 percent of Puerto Rico’s energy
production comes from renewables.
The fact is, however, that PREPA’s current contracts with companies who are tied
to the U.S. natural gas industry and designed only to retool existing infrastructure
can only lead to the conclusion that adding sufficient renewables to the grid will
be difficult to achieve.
Last, in the weeks leading up to today’s hearing, headlines about PREPA, such
as: ‘‘The Privatization of Puerto Rico’s Power Grid is Mired in Controversy’’ and
‘‘Puerto Rico’s Troubled Utility is a Goldmine for U.S. Contractors’’ suggests much
still needs to be done to accomplish the goals I outlined.
Today’s hearing will also discuss PREPA’s recently announced privatization and
long-term concession of its power generation and distribution assets.
Questions have been raised about a lack of transparency in finalizing the conces-
sion contract with LUMA energy, and PREPA’s employee union, UTIER, recently
sued the utility and the Government of Puerto Rico alleging that the LUMA
contract violated local laws.
In closing, let me welcome our witnesses and thank them for joining us for this
important hearing.
The residents of Puerto Rico deserve an electric company that is reliably and
efficiently run, does not charge excessive rates, and is operated with a mind toward
a future that generates electricity using clean and sustainable renewable energy. It
is our intention to do all we can to assist PREPA in achieving these goals.

The CHAIRMAN. With that, I now yield to the Ranking Member
designee for her opening statement, Ms. Colón.
4
STATEMENT OF THE HON. JENNIFFER GONZÁLEZ-COLÓN, A
DELEGATE IN CONGRESS FROM THE TERRITORY OF
PUERTO RICO
Miss GONZÁLEZ-COLÓN. Thank you, Mr. Chairman. In 2017,
Hurricane Maria completely destroyed the power grid, and it took
almost a year to restore its service to every citizen.
Earlier this year, a series of earthquakes in the southwestern
region of the island severely damaged and took out the Costa Sur
power plant which used to generate approximately 25 percent of
the island’s electricity and is still off line.
The transformation of Puerto Rico Electric Power Authority, or
PREPA as we know it, is long overdue. We need a modern, resilient
energy system that can recover quickly from natural disasters.
We need to pursue policies to at-risk high electricity costs that
hinder economic growth including efforts to reduce our dependence
on foreign oil imports and to lower environmental impact. And we
need to improve management practices to increase reliability and
provide better services to our customers.
I look forward to hearing from today’s witnesses about the steps
PREPA and the government of Puerto Rico have pursued to
achieve these and other necessary changes.
I know that recently a contract was awarded to LUMA Energy
to manage and operate utilities transmission and distribution
systems for the next 15 years. I have long argued that private part-
nership investment is crucial to transform Puerto Rico’s energy sys-
tem if properly executed. So, I expect to hear more about this
agreement and their implications.
Moreover, Federal support has and will continue to be crucial for
PREPA’s transformation. As Members of Congress, we must con-
duct oversight on how Federal funds to rebuild and modernize the
island electrical system have been spent to date.
However, we must also ensure funding allocated in the aftermath
of Hurricane Maria is no longer delayed by bureaucratic processes
and finally reaches the island. This includes the $1.9 billion in
CDBG funds provided under the bipartisan Budget Act of 2018 to
improve the electrical power system that are not yet there after 2
years.
I want to hear from witnesses about the status of these and
other Federal funds, including recent efforts and conversations
with HUD, FEMA, the Department of Energy, and other important
stakeholders. I will also ask what recommendations will the panel
make as how Congress can help facilitate the modernization of
Puerto Rico’s energy system.
Last, I must state that we are moving in the direction of a sus-
tainable energy—right now, we need to be able to provide reliable
electricity to enable the recovery of Puerto Rico’s economy, but we
need to ensure reliable electricity until we get there. There is a
long way to go, and we must be able to use all resources available.
According to the U.S. Energy Information Administration for
Fiscal Year 2019, the sources of electricity in Puerto Rico were
petroleum, 40 percent; LNG, 39 percent; coal, 18 percent; and
renewables, 2.3 percent.
Industry in Puerto Rico has the potential to contribute to our
national supply chain for medical products and devices. We also
5

need to ensure providing our people’s residential needs for having
a reliable system. And that requires a reliable supply. We must not
deny ourselves fixed line alternatives. I look forward to testimony
and questioning of witnesses.
With that, I yield back my time.
The CHAIRMAN. Thank you very much. Let me now turn to our
panel and the witnesses that have come, and like I said earlier, I
want to thank you very much for taking the time. It is an impor-
tant subject.
Given everything else that is going on and the difficulties of
being able to get together to have these kinds of oversight hear-
ings, I appreciate your presence and the presence of all my
colleagues that are joining us today.
Let me begin now with 5 minutes each for your oral presen-
tation. Anything that was submitted as your written testimony is
all made part of the record. Let me begin with Mr. José Ortiz, the
Executive Director of the Puerto Rico Electric Power Authority.
Mr. Ortiz, the floor is yours.

STATEMENT OF JOSÉ ORTIZ, EXECUTIVE DIRECTOR, PUERTO
RICO ELECTRIC POWER AUTHORITY (PREPA)
Mr. ORTIZ. Thank you, Chairman Grijalva. PREPA has made a
good deal of progress on several fronts despite the devastation of
Hurricanes Irma and Maria, the massive damage by multiple
earthquakes, and the near shutdown of the Puerto Rico economy
due to COVID-19.
The utility is better positioned and in compliance with the
requirements of PROMESA, as evidenced by the recent certification
of PREPA’s 2020 Fiscal Plan by the Financial Oversight and
Management Board of Puerto Rico. Some highlights of this poten-
tial progress toward achieving the operational initiatives and
projects are included in the certified fund.
And those are as follows: (1) the selection of an independent T&D
operator to assume responsibility for operating, maintaining, and
improving PREPA’s transmission and distribution system. That
operator, LUMA Energy, is a Puerto Rico company owned by two
experienced utility sector companies, ATCO and Quanta Services,
working with the Innovative Emergency Management for its
Federal funding expertise.
Under a public-private partnership, LUMA will work to imple-
ment the energy sector transformation required by the bipartisan
supported laws. LUMA also brings an experienced leadership team
and a comprehensive plan for the operation, maintenance, and
renewal of PREPA’s modern grid system.
The completion of the work of converting the San Juan power
station to a dual field capability and commissioning of the liquified
natural gas handling facility allows PREPA to achieve significant
reductions in greenhouse gas and particulate emissions, both
providing important public health benefits.
In addition, their increased availability enhances the security
and reliability of electricity supply in a metropolitan region. The
conversion project should save PREPA and its customers around
$280 million during the 5-year term of the contract.
6

Another point is the renegotiation of a power purchase and oper-
ating agreement with EcoEléctrica and of a long-term gas supply
agreement with Naturgy, approved by the FOMB, the Energy
Bureau, and granted by the Federal District Court presiding over
PREPA’s PROMESA 523 proceeding. Combined both contracts are
estimated to reduce PREPA’s net cost by approximately $100
million annually through September 2032.
Another point is the renegotiation of 23 purchase and operating
agreements with 7 operational and 16 new renewable generating
project developers, totaling 600 megawatts, achieving 30 to 40
percent lower contract pricing then under the original contract and
10 percent contract pricing discount with the operational projects
as well.
Substantial progress in the repair of PREPA’s Costa Sur gener-
ating facility after significant damages from January’s earthquake
have been achieved. The 820 megawatt generating facility unit,
Unit 5, should be completed by early August 2020. The more heav-
ily damaged Unit 6 is expected to be operational before year end.
Development and submission of a new integrated resource plan,
which has undergone extensive technical, evidentiary, and commu-
nity hearings, is currently before the Energy Bureau for approval.
This will enable PREPA to pursue the rapid uptake of renewable
and energy storage systems while preserving options that would
permit it to procure natural gas-fired, generating resources as well.
Still, Federal support is needed. PREPA expects to reach an
agreement with FEMA on a fixed cost estimate on all permanent
repair and reconstruction work very soon.
We have already prepared a 2-year plan which starts addressing
various individual projects, including distribution energy resources,
microgrids, and a robust system to critical assets such as hospitals,
shelters, and water services. The target is to make Federal funding
available to reconstruct a more modern and resilient energy grid.
In conclusion, PREPA has made significant progress in rebuild-
ing Puerto Rico’s electric system and restructuring PREPA itself.
We have undertaken these efforts with real financial constraints
during the transformation of Puerto Rico’s energy sector, a truly
complex challenge.
The Federal Government support remains critical to our success,
and we continue to look forward for ways to expediate the flow of
Federal funds. Efforts to achieve the resolution of PREPA Title III
restructuring under PROMESA were temporarily suspended earlier
this year at FOMB’s request given the uncertainties COVID-19 has
created for PREPA and its customers.
Thank you for the opportunity to appear before this honorable
Committee and to provide this testimony.
[The prepared statement of Mr. Ortiz follows:]
PREPARED STATEMENT OF JOSÉ F. ORTIZ VÁZQUEZ, EXECUTIVE DIRECTOR AND CHIEF
EXECUTIVE OFFICER, PUERTO RICO ELECTRIC POWER AUTHORITY
Chairman Grijalva, Ranking Member Bishop, and members of the Committee,
thank you for the opportunity to appear before you today to discuss the current
status and ongoing transformation of the Puerto Rico Electric Power Authority
(‘‘PREPA’’).
As the Committee knows, following Hurricane Marı́a, Puerto Rico embarked on
an historic effort to transform its energy system and to reform itself. At the same
7
time, PREPA tackled the enormous task of restoring a severely damaged trans-
mission and distribution system, improving system reliability and addressing gener-
ating resource adequacy issues. That work has continued, even as Puerto Rico and
PREPA have had to recover from massive damage caused by multiple earthquakes
and, more recently, have had to contend with the near shutdown of Puerto Rico’s
economy to address the threats posed by the COVID-19 virus.
PREPA has made a good deal of progress on several fronts despite the devastation
of Hurricanes Irma and Marı́a, massive damage caused by multiple earthquakes
and the near shutdown of the economy due to the COVID-19 emergency. The utility
is better positioned than it has been for many years to confront the many challenges
it faces. And we have done this in compliance with the requirements of the Puerto
Rico Oversight, Management, and Economic Stability Act (‘‘PROMESA’’), as
evidenced by the recent certification of PREPA’s 2020 Fiscal Plan by the Financial
Oversight and Management Board for Puerto Rico (‘‘FOMB’’).
During FY2020, PREPA has made substantial progress toward achievement of the
12 operational initiatives and 27 projects included in PREPA’s certified FY2020
Fiscal Plan. Among the major milestones PREPA has achieved over the past several
months are:
• renegotiation of existing power purchase and operating agreements (‘‘PPOAs’’)
with the owners of the large EcoEléctrica gas-fired generating facility and
with the developers of numerous operating and planned renewable generation
projects, reducing the cost of energy PREPA will purchase from these
suppliers;
• renegotiation of a natural gas purchase and sale agreement with Naturgy
under which the EcoEléctrica facility and PREPA’s Costa Sur generating
plant acquire their gas supply, achieving better pricing, more quantity flexi-
bility and the ability to accommodate renewable generation additions as they
occur;
• the conversion of San Juan Power Plant Units 5 & 6 to natural gas
(preserving the ability to use diesel fuel), which will yield significant
emissions reductions, cost savings and grid reliability improvements;
• advancement of several customer service initiatives (including private out-
sourcing and increased customer access to e-billing platforms) that have
achieved significant reductions in customer call wait times and improvements
in PREPA’s revenue collections;
• the completion and filing of a revised Integrated Resource Plan (‘‘IRP’’) that
establishes an Action Plan for the acquisition of new generation resources
that will enable PREPA to accelerate the transformation of Puerto Rico’s grid
to one that is more reliable, cleaner, efficient and sustainable; and
• completion of an historic transmission and distribution (‘‘T&D’’) operation and
maintenance outsourcing process, with the selection of a world-class
consortium to assume responsibility for operating, maintaining and renewing
the PREPA grid.
With some pride, I note that PREPA achieved these and other significant mile-
stones within the context of Puerto Rico’s and PREPA’s bankruptcy in 2017, ongoing
economic uncertainty, very limited liquidity, a shrinking employee pool, two dev-
astating hurricanes in 2017, earthquakes in 2019–2020, continued uncertainty
regarding the availability and timing of Federal funding commitments for grid
reconstruction and, most recently, a worldwide pandemic that has severely affected
our island’s economy.
Recent PREPA Accomplishments
PREPA has achieved a great deal over the past year and even in the past few
months. I want to emphasize that much of what PREPA has done has been intended
to improve customer service, reduce costs, improve efficiency, enhance reliability,
support the legally mandated move toward renewables, and reduce generating facil-
ity air emissions. At the same time, PREPA has had to respond to the unexpected,
including substantial earthquake-induced damage to its largest generating facility
early this year and a major decline in demand following the shutdown of economic
activity to address the COVID-19 pandemic. It has worked in all of this to satisfy
the requirements of PROMESA Section 201(b) relating to the identification of oper-
ational improvements, and to implement guidance provided by the FOMB as
ultimately reflected in PREPA’s certified Fiscal Plan.
8
Among PREPA’s key accomplishments for FY2020 have been:
• The selection of an independent T&D operator to assume responsibility for
operating, maintaining and improving PREPA’s transmission and distribution
system. That operator, LUMA Energy LLC (‘‘LUMA’’), is a Puerto Rico com-
pany owned by to experienced utility sector companies, ATCO Ltd. and
Quanta Services, Inc., working with Innovative Emergency Management, Inc.
for its Federal funding expertise. LUMA has entered into a public-private
partnership with PREPA and Puerto Rico’s Public Private Partnership
Authority (the ‘‘P3 Authority’’) under which it will work to implement the
energy sector transformation required by Act 120–2018 and Act 17–2019.
LUMA brings to the task of operating, maintaining and improving the T&D
system an experienced leadership team and a comprehensive plan for the op-
eration and renewal of PREPA’s grid system going forward. I will defer for
additional details on this historic transaction to my fellow witness, Fermı́n
Fontanés, the Executive Director of the P3 Authority, who was deeply
involved in the LUMA negotiations.
• The completion of the work of converting PREPA’s San Juan Power Station
Units 5 and 6 to dual fuel capability and the commissioning of the NFEnergı́a
LLC (‘‘NFE’’) liquified natural gas (‘‘LNG’’) handling facility. PREPA’s agree-
ment with NFE required NFE to convert the Unit 5 and 6 combustion
turbines to run on natural gas as well as diesel and to supply natural gas
through a new LNG receiving and regasification facility adjacent to the San
Juan Power Plant in San Juan Harbor. NFE is now supplying natural gas
to Units 5 and 6, PREPA’s most efficient generating facilities. NFE can also
transfer LNG through the facility to trucks that can deliver LNG to other
energy users throughout Puerto Rico. NFE obtained all local and Federal
environmental and U.S. Coast Guard approvals required for the construction
and operation of its LNG handling facility and the transit of LNG carriers
through San Juan Harbor. PREPA secured a modification to its air emissions
permit for San Juan Units 5 and 6 that reflects their capability to consume
natural gas.
Now that it is consuming natural gas in San Juan Units 5 and 6, PREPA
is achieving significant reductions in greenhouse gas and particulate emis-
sions. PREPA’s ability to run these units more economically and more of the
time while reducing air emissions offers important public health benefits. The
increased availability of the Units will enhance the security and reliability of
electricity supply in the San Juan metropolitan region. As of the time the
FOMB and the Puerto Rico Energy Bureau approved the NFE-PREPA Fuel
Sale and Purchase Agreement, FOMB projected on the basis of then-current
market prices for natural gas and diesel that the conversion project could
save PREPA and its customers between $180 and $280 million during the 5-
year term of the contract.
A question has arisen as to whether NFE was required to obtain Federal
Energy Regulatory Commission (‘‘FERC’’) authorization to site, construct and
operate its LNG handling facility; that question is currently before the FERC
for resolution in response to an Order to Show Cause FERC issued in June
2020. NFE concluded on the basis of its analysis of prior FERC decisions and
informal discussions it held in 2017 and 2018 with FERC Staff representa-
tives that FERC authorization would not be required. PREPA’s independent
discussions with FERC Staff on this subject in 2018 led PREPA to conclude
that NFE’s position was correct. I have summarized the controversy and
PREPA’s position concerning it in a letter PREPA filed with FERC on July
17, 2020, which I attach to this testimony for the Committee’s information.
• Renegotiation of a Power Purchase and Operating Agreement with
EcoEléctrica and of a long-term gas supply agreement with Naturgy. Earlier
this year, PREPA completed the renegotiation of the EcoEléctrica PPOA and
a long-term natural gas supply agreement with Naturgy for the supply of
natural gas both to EcoEléctrica and PREPA’s adjacent Costa Sur generating
facility. This was the culmination of extensive discussions with the
counterparties that started in 2018. The FOMB and the Energy Bureau both
approved PREPA’s execution of these agreements, and in June of this year
the Federal District Court presiding over PREPA’s PROMESA Title III pro-
ceeding granted PREPA’s motion to assume them. The renegotiation of the
EcoEléctrica PPOA and Naturgy gas supply agreement is critical in providing
a reliable platform for efficient and more economic electricity in Puerto Rico
for the next 12 years as PREPA launches its mandated transformation plans.
9
PREPA estimates that the revised EcoEléctrica PPOA will generate average
customer savings of $71 million annually. PREPA estimates that changes in
the Naturgy agreement will result in average savings in the cost of gas con-
sumed in the Costa Sur Facility of approximately $29 million. Combined, the
renegotiated EcoEléctrica and Naturgy contracts are expected to reduce
PREPA’s net costs of power and fuel by approximately $100 million annually
through September 2032.
• Renegotiation of PPOAs with operational and non-operational renewable
generating project developers. Beginning in 2010, in order to comply with
Puerto Rico Act 82–2010, PREPA undertook a large-scale renewable procure-
ment process to increase renewable power capacity in Puerto Rico. Over the
course of several years, PREPA entered into 64 PPOAs for over 1,000 MW of
renewable generation with average year-1 contract prices of 15–16 cents per
kWh and 1–2 percent annual price escalation. As of the beginning of FY2020,
11 of these projects were operational and currently provide energy at an aver-
age cost of 18 cents per kWh, after factoring in several years of price esca-
lation. Against the backdrop of the ongoing bankruptcy proceedings under
PROMESA, PREPA has been working to renegotiate or cancel agreements
with the remaining non-operational renewable contract holders. Following
concerted efforts and negotiations on financial and technical engineering
matters, PREPA was able to revise these PPOAs for the benefit of its
customers.
To date, PREPA has advanced discussions and commercially agreed to terms
with developers of 16 projects, totaling approximately 500 MW, achieving 30–
40 percent lower contract pricing than was provided under the original
contract. PREPA has also renegotiated PPOAs with most of the operational
projects to achieve a 10 percent contract pricing discount. It has recently ini-
tiated proceedings before the Energy Bureau for approval of the renegotiated
PPOAs and will seek Title III Court approval to reject PPOAs covering
projects that are not operational and as to which contract renegotiation has
not been successful. The process of obtaining new and amended renewable
PPOAs will continue into FY2021.
• Substantial progress in the repair of PREPA’s Costa Sur generating facility.
Seismic activity that occurred between December 28, 2019 and January 15,
2020 inflicted significant damage on the Costa Sur power plant, an 820 MW
generating facility that has been converted to consume natural gas. Repairs
of Costa Sur Unit 5 are ongoing and expected to be completed by early August
2020, at an estimated cost of $25.2 million. The more heavily damaged Costa
Sur Unit 6 is in the early stages of being repaired, and the current expecta-
tion is that these repairs could be completed before year end 2020.
• Development and submission for Puerto Rico Energy Bureau review and
approval of a new Integrated Resource Plan. Under the PREPA enabling act,
Act 57–2014 and Act 17–2019, PREPA is required to adopt an IRP for a 20-
year planning period. The IRP is to be revised every 3 years. The proposed
IRP which PREPA submitted to the Energy Bureau on June 7, 2019 has
undergone extensive technical, evidentiary and community hearings and is
currently before the Energy Bureau for approval.
The Proposed IRP offers a comprehensive and robust analysis of the chal-
lenges and opportunities PREPA faces in planning and executing on a funda-
mental transformation of Puerto Rico’s electric power system. The preferred
resource plan that emerged from this analysis—the Action Plan—will guide
Puerto Rico as it moves toward a future of increased reliance on renewable
sources of energy and improved energy efficiency. The Action Plan also pro-
vides leeway to manage variable future costs of generation and storage
resources. If approved and implemented, the Action Plan will enable PREPA
to pursue the rapid uptake of renewable and energy storage systems while
preserving options that will permit it to procure natural gas-fired generating
resources as necessary given the pace of other resource development efforts.
The result of the implementation of the Action Plan will be an energy system
that will be able to meet electrical demand at all times in an efficient,
environmentally responsible way.
10
The Proposed IRP recommends the adoption of three fundamental changes to
the Puerto Rico electric system:
— Increasing the share of renewable generation, including the additions of new
solar PV generation, energy storage, natural-gas-fueled generation and sup-
ply infrastructure, and retiring or converting all existing coal-fired and
heavy fuel oil-fired generation;
— Enhancing grid resilience, including capital investment in the transmission
and distribution system to support establishment of minigrids and
microgrids that can be separated and independently restored and operated
following grid disturbances; and
— Enabling customer choice, including changes to the system that will
support the incorporation of rooftop solar photovoltaic installations and
new energy efficiency and demand response programs, allowing the
customer to play a meaningful role in Puerto Rico’s electricity grid.
Critical Initiatives PREPA Is Currently Pursuing
I would also like to highlight several actions PREPA is taking to build on its
recent successes and to advance the goal of rebuilding Puerto Rico’s electric grid and
achieving a sustainable energy future. These include:
• The impending launch, in conjunction with the P3 Authority, of a solicitation
for proposals for needed new generation resources, much of which we antici-
pate will be renewable in compliance with Puerto Rico energy policy and law.
• Commencement of multiple grid reconstruction projects. This year PREPA has
completed a ‘‘T&D roadmap’’ that defines transmission and distribution sys-
tem reconstruction projects that are necessary to improve the grid’s reliability
and resiliency following catastrophic events. The T&D roadmap will enable
PREPA to optimize and streamline the process for designing, developing, and
constructing T&D projects. It is intended to ensure that the most important
projects are constructed in the most efficient way possible so that PREPA can
make optimal use of scarce resources, including anticipated FEMA funds, and
ensure accountability for the use of public funds.
In addition to its pursuit of Federal funding, PREPA is currently engaged
with its insurers to adjust its Hurricane Maria claim and a claim arising out
of the 2020 earthquake. To date, PREPA has received $100 million in ad-
vance funding, not including the $25 million deductible with respect to the
Hurricane Maria claim, and has requested $25 million in advances related to
the earthquake claim.
• Continued efforts to achieve enhanced operational efficiencies, through
procurement of new generation capacity, implementation of generating resource
economic dispatch, enhanced vegetation management programs and T&D
infrastructure improvements. Success in these efforts will enable PREPA to
realize overall generation cost reductions. While we are making progress on
a number of these fronts, that progress has been slowed by the need to
respond to the recent earthquakes and measures required to respond to the
COVID-19 pandemic.
• A renewed effort to achieve resolution of PREPA’s Title III restructuring under
PROMESA. PREPA, the FOMB, a group of PREPA creditors and the Puerto
Rico government reached agreement last year on elements of a consensual
debt restructuring agreement and early this year developed proposed legisla-
tion that would implement this agreement. Efforts to obtain passage for this
legislation and to complete the process of Title III restructuring were sus-
pended earlier this year at the FOMB’s request given the uncertainties which
the COVID-19 pandemic and response measures have created for PREPA and
its customers. PREPA is hopeful that a renewed effort to achieve a resolution
of the Title III proceeding can be mounted early in 2021.
Federal Support Is Still Needed
As a result of the 2017 hurricanes, PREPA qualified for Federal funding support.
PREPA, the Federal Emergency Management Agency (‘‘FEMA’’) and the Central
Office of Recovery, Reconstruction, and Resiliency (‘‘COR3’’) have been working to
define the universe of necessary T&D reconstruction projects, estimate costs, and
determine the path toward making Federal funding available to reconstruct the
energy grid.
11
PREPA’s main sources of Federal funding are: (1) FEMA’s Public Assistance
Program; and (2) the Federal Department of Housing and Urban Development’s
(‘‘HUD’’) Community Development Block Grant-Disaster Recovery (‘‘CDBG-DR’’)
Program. Funds may also be available through HUD’s Community Development
Block Grant Mitigation (‘‘CBDG-MIT’’) program.
PREPA remains eligible for FEMA disaster relief funding and for funding of
permanent works. To date, a total of $20.2 billion in CDBG-DR and CDBG-MIT
funding has been apportioned for Puerto Rico, including approximately $1.9 billion
specifically designated for energy-related projects. PREPA is required to meet a 10
percent cost share requirement for its FEMA-funded permanent work projects, to
which it plans to apply CDBG-DR and CDBG-MIT program funds, as they become
available. Access to CDBG funds, however, is subject to various HUD actions. The
current Fiscal Plan assumes CDBG funds will cover the cost share required for
Federal funding. If these funds are not available, PREPA will need to find savings
elsewhere or will have to seek to adjust rates to cover the cost share obligation.
Through April 2020, PREPA had received $1.42 billion in FEMA public assistance
funds. Additionally, PREPA expects to receive a portion of the $20.2 billion in post-
hurricane assistance appropriated to Puerto Rico through HUD-approved CDBG-DR
and CDBG-MIT grants to be used for matching or cost share purposes.
PREPA has been actively working with FEMA on a cost estimate since 2018 in
a collaborative effort to reach estimates for each asset classification. PREPA expects
to reach an agreement with FEMA on a fixed cost estimate for all permanent repair
and reconstruction work very soon. A FEMA team has worked directly with
PREPA’s Disaster Funding Management Office (‘‘DFMO’’) project formulation team
to finalize all cost estimates. At FEMA’s request, PREPA’s DFMO prepared a 2-year
plan which presents an initial estimate addressing various individual projects,
rolled up by asset classification, that may be prioritized by PREPA. The 2-year
cumulative cost included in the estimate totals $1.4 billion across five asset
categories (T&D, distribution, Distributed Energy Resources and microgrids,
technology, and other).
The successful transformation of Puerto Rico’s energy system will require signifi-
cant capital investment over the next 10 years. Federal funding will play a critical
role in mitigating the burden of the cost of these investments on ratepayers. With
adequate Federal funding, the overall impact on energy rates would be minimal. If
adequate Federal funds were not to be made available, Puerto Rico would have to
choose between increasing energy rates to meet unfunded capital investment needs,
or forgoing the implementation of the grid repairs and system modernization called
for in the IRP, PREPA’s T&D roadmap, and PREPA and Commonwealth Fiscal
Plans. Moreover, a lack of Federal funding would have serious consequences for the
reliability and resiliency of Puerto Rico’s electric system and would impede the
achievement of PREPA’s long-term energy vision. Federal funding support is also
critical for delivering on system improvements necessary for resiliency and environ-
mental compliance, including deployment of microgrids, distributed generation, and
renewable resources.
Conclusion
PREPA has made significant progress in rebuilding Puerto Rico’s electric system
and restructuring PREPA itself, with the support and cooperation of AAFAF, the
P3 Authority, COR3, the FOMB and the Energy Bureau. PREPA has undertaken
these efforts within real financial constraints during the transformation of Puerto
Rico’s energy sector—a truly complex challenge. The Federal Government’s support
remains critical to our success, and we continue to look for ways to expedite the flow
of Federal funds.
Thank you for the opportunity to appear before this Honorable Committee and to
provide this testimony.

SUMMARY STATEMENT OF JOSÉ F. ORTIZ VÁZQUEZ
Chairman Grijalva, Ranking Member Bishop, and members of the Committee,
thank you for the opportunity to appear before you today to discuss the current
status and ongoing transformation of the Puerto Rico Electric Power Authority
(‘‘PREPA’’).
PREPA has made a good deal of progress on several fronts despite the devastation
of Hurricanes Irma and Marı́a, massive damage by multiple earthquakes and the
near shutdown of the Puerto Rico economy due to the COVID-19 pandemic. The
utility is better positioned than it has been for many years to confront the many
12
challenges it faces. And we have done this in compliance with the requirements of
the Puerto Rico Oversight, Management, and Economic Stability Act (‘‘PROMESA’’),
as evidenced by the recent certification of PREPA’s 2020 Fiscal Plan by the
Financial Oversight and Management Board for Puerto Rico (‘‘FOMB’’).
RECENT PREPA ACCOMPLISHMENTS

During FY2020, PREPA has made substantial progress toward achievement of the
12 operational initiatives and 27 projects included in the certified FY2020 PREPA
Fiscal Plan. Among PREPA’s key accomplishments are:
• The selection of an independent T&D operator to assume responsibility for
operating, maintaining and improving PREPA’s transmission and distribution
system. That operator, LUMA Energy LLC (‘‘LUMA’’), is a Puerto Rico com-
pany owned by two experienced utility sector companies, ATCO Ltd. and
Quanta Services, Inc., working with Innovative Emergency Management, Inc.
for its Federal funding expertise. LUMA has entered into a public-private
partnership with PREPA and Puerto Rico’s Public Private Partnership
Authority (the ‘‘P3 Authority’’) under which it will work to implement the en-
ergy sector transformation required by Act 120–2018 and Act 17–2019. LUMA
brings an experienced leadership team and a comprehensive plan for the op-
eration, maintenance and renewal of PREPA’s grid system. I expect that you
will hear more on this from my fellow witness, Fermı́n Fontanés, the
Executive Director of the P3 Authority, who was deeply involved in the
LUMA negotiations.
• The completion of the work of converting PREPA’s San Juan Power Station
Units 5 and 6 to dual fuel capability and the commissioning of the NFEnergı́a
LLC (‘‘NFE’’) liquified natural gas (‘‘LNG’’) handling facility. PREPA’s agree-
ment with NFE required NFE to convert the Unit 5 and 6 combustion tur-
bines to run on natural gas as well as diesel and supply natural gas through
a new LNG receiving and regasification facility adjacent to the San Juan
Power Plant in San Juan Harbor. NFE is now supplying natural gas to Units
5 and 6, PREPA’s most efficient generating facilities. NFE can also transfer
LNG through its facility to trucks that can deliver LNG to other energy users
throughout Puerto Rico.
Now that it is consuming natural gas in San Juan Units 5 and 6, PREPA
is achieving significant reductions in greenhouse gas and particulate emis-
sions. The ability to run these units more economically and more of the time
while reducing air emissions provides important public health benefits. In
addition, their increased availability enhances the security and reliability of
electricity supply in the San Juan metropolitan region. The conversion project
should save PREPA and its customers between $180 and $280 million during
the 5-year term of the contract.
• Renegotiation of a power purchase and operating agreement with EcoEléctrica
and of a long-term gas supply agreement with Naturgy. Earlier this year,
PREPA completed the renegotiation of its power purchase agreement with
EcoEléctrica. At the same time it renegotiated a long-term agreement with
Naturgy for the supply of natural gas both to EcoEléctrica and PREPA’s adja-
cent Costa Sur generating facility. The FOMB and the Energy Bureau both
approved PREPA’s execution of these agreements, and last month the Federal
District Court presiding over PREPA’s PROMESA Title III proceeding grant-
ed PREPA’s motion to assume them. PREPA estimates that the revised
EcoEléctrica agreement will generate average customer savings of $71 million
annually. PREPA expects that savings in the cost of gas consumed in the
Costa Sur Facility will amount to approximately $29 million per year.
Combined, the renegotiated EcoEléctrica and Naturgy contracts are estimated
to reduce PREPA’s net costs of power and fuel by approximately $100 million
annually through September 2032.
• Renegotiation of 23 power purchase and operating agreements with
operational and non-operational renewable generating project developers. To
date, PREPA has advanced discussions and commercially agreed to terms
with developers of 16 renewable generation projects, totaling approximately
600 MW, achieving 30–40 percent lower contract pricing than was provided
under the original contract. PREPA has also renegotiated power purchase
agreements with most of the operational renewable projects to achieve a 10
percent contract pricing discount. PREPA has recently initiated proceedings
before the Energy Bureau for approval of the renegotiated agreements.
13
• Substantial progress in the repair of PREPA’s Costa Sur generating facility.
Seismic activity between December 28, 2019 and January 15, 2020 inflicted
significant damage on the Costa Sur power plant, an 820 MW generating
facility that has been converted to consume natural gas. Repairs of Costa Sur
Unit 5 are ongoing and should be completed by early August 2020, at an esti-
mated cost of $25.2 million. The more heavily damaged Costa Sur Unit 6 is
in the early stages of being repaired, and the current expectation is that these
repairs could be completed before year end 2020.
• Development and submission of a new Integrated Resource Plan (‘‘IRP’’).
PREPA is required by law to adopt an IRP for a 20-year planning period.
PREPA’s proposed IRP, which it submitted on June 7, 2019, has undergone
extensive technical, evidentiary and community hearings and is currently be-
fore the Energy Bureau for approval. If approved and implemented, the IRP
Action Plan will enable PREPA to pursue the rapid uptake of renewable and
energy storage systems while preserving options that will permit it to procure
natural gas-fired generating resources as necessary given the pace of other
resource development efforts. The result will be an energy system that will
be able to meet electrical demand in an efficient, environmentally responsible
way.

CRITICAL INITIATIVES PREPA IS PURSUING

PREPA is taking several steps now to build on its recent successes. These include:
• The impending launch of a solicitation for proposals for new generation
resources, which PREPA and the P3 Authority will handle jointly. We expect
that this solicitation will yield proposals for the addition of substantial
amounts of renewable generation in compliance with Puerto Rico energy
policy.
• Commencement of multiple grid reconstruction projects. This year PREPA has
completed a ‘‘T&D roadmap’’ that defines transmission and distribution sys-
tem reconstruction projects that are necessary to improve the grid’s reliability
and resiliency following catastrophic events. PREPA is currently engaged
with its insurers to adjust its Hurricane Marı́a claim and a claim arising out
of the 2020 earthquakes. To date, PREPA has received $100 million in
advance funding for system reconstruction.
• Continued efforts to achieve enhanced operational efficiencies. These efforts
include procurement of new generation capacity, implementation of gener-
ating resource economic dispatch, enhanced vegetation management programs
and T&D infrastructure improvements.
• A renewed effort to achieve resolution of PREPA’s Title III restructuring under
PROMESA. Efforts to obtain passage of legislation and to complete the proc-
ess of Title III restructuring were suspended earlier this year at the FOMB’s
request given the uncertainties COVID-19 has created for PREPA and its cus-
tomers. PREPA is hopeful that a renewed effort to achieve resolution of the
Title III proceeding can be mounted early in 2021.

FEDERAL SUPPORT IS STILL NEEDED

As a result of the 2017 hurricanes, PREPA qualified for Federal funding support.
PREPA, the Federal Emergency Management Agency (‘‘FEMA’’) and the Central
Office of Recovery, Reconstruction, and Resiliency (‘‘COR3’’) have been working to
define the universe of necessary T&D reconstruction projects, estimate costs, and
determine the path toward making Federal funding available to reconstruct the
energy grid.
PREPA expects to reach an agreement with FEMA on a fixed cost estimate for
all permanent repair and reconstruction work very soon. PREPA has been actively
working with FEMA on a cost estimate since 2018. A FEMA team has recently been
working directly with PREPA’s Disaster Funding Management Office project formu-
lation team to finalize all cost estimates. At FEMA’s request, this Office prepared
a 2-year plan which presents an initial estimate addressing various individual
projects, rolled up by asset classification, that may be prioritized by PREPA. The
estimated 2-year cumulative cost totals $1.4 billion across five asset categories
(T&D, distribution, Distributed Energy Resources and microgrids, technology, and
other.) Federal funding support is also critical for delivering on system improve-
ments necessary for resiliency and environmental compliance.
14
CONCLUSION

PREPA has made significant progress in rebuilding Puerto Rico’s electric system
and restructuring PREPA itself, with the support and cooperation of AAFAF, the
P3 Authority, COR3, the FOMB and the Energy Bureau. PREPA has undertaken
these efforts within real financial constraints during the transformation of Puerto
Rico’s energy sector—a truly complex challenge. The Federal Government’s support
remains critical to our success, and we continue to look for ways to expedite the flow
of Federal funds.
Thank you for the opportunity to appear before this Honorable Committee and to
provide this testimony.

QUESTIONS SUBMITTED FOR THE RECORD TO MR. JOSÉ ORTIZ

GOVERNMENT OF PUERTO RICO
PUERTO RICO ELECTRIC POWER AUTHORITY

September 1, 2020
Hon. RAÚL GRIJALVA, Chairman,
House Committee on Natural Resources,
1324 Longworth House Office Building,
Washington, DC 20515.
Re: Committee on Natural Resources Hearing on The Transformation of the Puerto
Rico Electric Power Authority held July 23, 2020—PREPA’s Responses to
Committee Member Questions
Dear Chairman Grijalva:
On behalf of the Puerto Rico Electric Power Authority (‘‘PREPA’’), I write in my
capacity as Interim Executive Director to respond to questions directed to my
predecessor, José Ortiz, following up on his testimony before the House Committee
on Natural Resources on The Transformation of the Puerto Rico Electric Power
Authority on July 23, 2020. Those questions included several asked of Mr. Ortiz
during the hearing as well as questions which you and members of the Committee
included in your letter to Mr. Ortiz of August 6, 2020.
In the following pages I summarize or reproduce each of the questions directed
to Mr. Ortiz. I then offer PREPA’s response. Please note that several of the ques-
tions directed to Mr. Ortiz inquire about matters that are principally the responsi-
bility of the Puerto Rico Public-Private Partnerships Authority (the ‘‘P3 Authority’’);
as to these questions I defer to Fermı́n Fontanés Gómez, the P3 Authority’s
Executive Director, whose separate responses are provided as an Addendum to this
letter.

Questions Asked to Mr. Ortiz During the July 23, 2020 Hearing
Question 1. Resident Commissioner González asked PREPA to submit a list
detailing all Federal funds appropriated and utilized by PREPA to date and a list
of future or pending Federal funds still to be utilized/implemented and those funds’
uses. She asked for similar information concerning the $1.9 billion in CDBG-DR
funds.
Answer. We provide below the requested list and follow it with additional
explanation.

Federal Funding Source Appropriated/Obligated Funded Expenses Incurred

FEMA Public Assistance (‘PA’) Emergency Work $2,078.6M $1,422.8M $2,372.0M

FEMA Public Assistance (‘PA’) 428 Permanent Work $0 $0 $0

CDBG-DR $1.9M $0 $0

404 HMGP $0 $0 $0
15
Federal Emergency Management Agency (‘‘FEMA’’) Public Assistance (‘PA’)
Emergency Work—To date, FEMA has obligated $2,078.6M in Federal funding, of
which PREPA has received $1,422.8M. There are various administrative adjust-
ments FEMA has proposed to certain emergency Project Worksheets (‘‘PWs’’). Once
the adjustments are processed, PREPA will be able to request the additional
funding.
FEMA Public Assistance (‘PA’) 428 Permanent Work—PREPA and FEMA have
tentatively agreed to a fixed cost estimate for permanent work repairs which is con-
tinuing to move through the FEMA required approval processes. PREPA is working
to identify projects to commence in the first 2 years, scheduling collaboration meet-
ings with FEMA, the Central Recovery and Reconstruction Office of Puerto Rico
(‘‘COR3’’) and LUMA Energy, LLC (‘‘LUMA’’) to initiate design work required to
develop Requests for Proposals (‘‘RFPs’’) and to draw down Federal funding.
CDBG-DR—As of the date of this communication the Puerto Rico Housing Depart-
ment is still waiting for the U.S. Department of Housing and Urban Development
to publish the program guidance and thus determine PREPA’s project eligibility.
PREPA expects to use Community Development Block Grant Disaster Recovery
(‘‘CDBG-DR’’) funds, as and to the extent they become available, to satisfy its obliga-
tion to fund 10% of the cost of permanent work projects funded by FEMA. PREPA’s
current Fiscal Plan assumes that CBDG-DR funds will cover all of this cost share
requirement. PREPA does not anticipate redirecting CBDG-DR funds from grid re-
construction support to the financing of individual consumer-owned rooftop solar
installations, which would not qualify as grid reconstruction activities for which
FEMA or HUD CDBG-DR funds could be committed consistent with applicable law
and regulations.
404 HMGP—PREPA is actively working with COR3 on the project formulation for
various hazard mitigation projects. FEMA Hazard Mitigation Grant Program
(‘‘HMGP’’) projects totaling $1.5 billion in the aggregate have been submitted and
are currently awaiting FEMA’s final determination. A summary of these projects
submitted appears below.

El Yunque Line Undergrounding $35,000,000
Early Warning System 100,000,000
Palo Seco Generation Plant 571,432,000
Gas Turbines 280,822,500
Patillas Dam 558,530,000

Total $1,545,784,500

Question 2. Rep. Cox asked PREPA to submit a worksheet outlining all PREPA
contractors that have not been paid to date and a schedule of when they can expect
their payments.
Answer. The Excel files accompanying this letter provide the requested
information first at a summary level and then at a detailed level.
Question 3. Rep. Velázquez questioned Mr. Ortiz over the contract PREPA
awarded to New Fortress Energy to build a natural gas project in San Juan. She
criticized PREPA for failing to identify potential conflicts of interest held by specific
consultants to the PREPA board who, she stated, are also consultants to the
SoftBank Group, which acquired ownership of New Fortress Energy affiliate
company, Fortress Investment Group, in 2017. Rep. Velázquez asked Mr. Ortiz if the
relationship among New Fortress, McKinsey, and SoftBank is appropriate, and then
submitted documents said to describe the alleged conflicts of interest for the record.
She requested that Mr. Ortiz be provided the documents and be directed to respond
to the Committee in writing, which the presiding Chairman, Rep. Tonka, ordered.
Answer. PREPA recently obtained from this Committee’s Staff the documents
which Rep. Velázquez introduced into the record, and which she apparently had in
mind when questioning Mr. Ortiz during the July 23, 2020 hearing on The
Transformation of the Puerto Rico Electric Power Authority. These documents
include:
• a pleading entitled ‘‘Sixth Interim Fee Application of McKinsey & Company,
Inc. Washington D.C. as Consulting Services Provider to the Financial
Oversight and Management Board for Puerto Rico, as Representative of
16
Debtor, Puerto Rico Electric Power Authority (‘PREPA’) for the Period from
February 1, 2019 through May 31, 2019,’’ filed on July 15, 2019 in the United
States District Court for the District of Puerto Rico in the PROMESA Title
III proceeding styled In re: The Financial Oversight and Management Board
for Puerto Rico, as Representative of Puerto Rico Electric Power Authority
(‘‘PREPA’’), Debtor, Case No. 17–04780 (LTS), including a Summary Sheet
and supporting documentation (the ‘‘McKinsey Fee Application’’);
• a pleading entitled ‘‘Declaration of Dmitry Krivin in Support of WLB Debtors’
Application for Entry of an Order (I) Authorizing the Retention and Employ-
ment of McKinsey Recovery & Transformation Services U.S., LLC and
Certain of its Affiliates as Performance Improvement Advisors for the WLB
Debtors Effective Nunc pro Tunc to the Petition Date and (II) Granting
Related Relief,’’ filed on July 3, 2019 in the United States Bankruptcy Court
for the Southern District of Texas, Houston Division, in the matter styled In
re: Westmoreland Coal Company, et al., Reorganized Debtors, Case No. 18–
35672 (DRJ), including Exhibits and Schedules;
• a pleading entitled ‘‘Declaration of Dmitry Krivin in Support of the Debtors’
Application Pursuant to 11 U.S.C. §§ 363(b) and 105(a) for Authority to Enter
Into, Perform Under and Make Payments Under Certain Consulting
Contracts with McKinsey & Company Inc. United States,’’ filed on February
26, 2020 in the United States Bankruptcy Court for the Northern District of
California, San Francisco Division, in the matter styled In re: PG&E
Corporation and Pacific Gas and Electric Company, Debtors, Bankruptcy Case
No. 19–30088 (DM), including disclosure schedule;
• a link to a Fortress Investment Group LLC Web page which presents a
description of New Fortress Energy; and
• a link to a Fortress Investment Group LLC Web page which contains a press
release entitled ‘‘SoftBank Group Completes Acquisition of Fortress
Investment Group’’ dated December 27, 2017.
The McKinsey Fee Application sought an order of the PROMESA Title III Court
allowing for payment for professional services performed by McKinsey & Company,
Inc. Washington D.C. (‘‘McKinsey’’), as consulting services provider to the Financial
Oversight and Management Board for Puerto Rico (‘‘FOMB’’), for the period from
February 1, 2019 through May 31, 2019. Those services were provided to the FOMB
pursuant to the ‘‘Title III Support for PREPA’’ Scope of Work set forth in the July
2017 Consulting Agreement between McKinsey Washington and the FOMB, as
amended. During the February–May 2019 period, according to the McKinsey Fee
Application, McKinsey’s work included development of PREPA’s Fiscal Plan for
eventual FOMB approval, development of submissions related to the Title III pro-
ceedings for FOMB approval, oversight of the implementation of measures for
PREPA’s transformation and analysis on behalf of the FOMB of financial and oper-
ational reports. McKinsey Fee Application at pp. 8–9. It also included, in February
2019, an analysis on behalf of the FOMB of New Fortress Energy’s contract with
PREPA to supply natural gas to San Juan Units 5 & 6 and to convert the facility
to dual fuel capability, for the purpose of ‘‘ensuring that this contract was aligned
with the Fiscal Plan and did not pose a material risk in achieving its goals.’’ Id.
at p. 9.
The two other pleadings include disclosure schedules showing that various affili-
ates of the SoftBank Group have been clients of various McKinsey & Company enti-
ties. The two links to Fortress Investment Group Web pages show that New
Fortress Energy is owned in part by Fortress Investment Group and that in
December 2017 SoftBank Group Corp. completed the previously announced acquisi-
tion of Fortress Investment Group LLC.
During the July 23 hearing, Rep. Velázquez criticized PREPA for failing to
identify what she characterized as potential conflicts of interest involving entities
she described as consultants to PREPA which, she asserted, are also consultants to
the SoftBank Group, owner of New Fortress Energy affiliate company, Fortress
Investment Group. I respectfully submit that this criticism of PREPA is unfounded,
for the following reasons:
First, McKinsey’s professional services relationship is not with PREPA, but rather
with the FOMB. The FOMB engaged McKinsey in July 2017 to advise it on various
Title III matters involving PREPA. PREPA had no participation in and was not con-
sulted in the process through which McKinsey was selected as advisor to FOMB,
PREPA did not engage McKinsey, and PREPA therefore had no role to play in iden-
tifying and evaluating any conflicts of interest McKinsey may have had. The
Consulting Agreement between McKinsey and the FOMB (attached to the McKinsey
17
Fee Application) identifies the FOMB as the ‘‘Client;’’ the Second Amended Scope
of Work for Commonwealth Title III Support states that McKinsey’s role would be
to ‘‘advise the FOMB,’’ ‘‘work alongside the FOMB,’’ ‘‘coordinat[e] with other FOMB
advisors,’’ ‘‘[p]erform scenario analyses as requested by FOMB’’ and ‘‘support FOMB
counsel.’’ McKinsey Fee Application, Exhibit B, Consulting Agreement Second
Amended, Attachment 1. McKinsey may provide advice and analysis relating to
matters involving PREPA, but its client is the FOMB, and it is therefore the FOMB,
not PREPA, that bears responsibility for identifying and evaluating conflicts of
interest involving McKinsey.
Second, McKinsey personnel were not involved in the processes by which PREPA
solicited the proposals that resulted in its selection of New Fortress’ proposal to sup-
ply natural gas to San Juan Units 5 & 6, nor were any McKinsey personnel involved
in the negotiations between PREPA and New Fortress representatives that resulted
in the Fuel Sale and Purchase Agreement which was ultimately executed. As indi-
cated above, McKinsey personnel analyzed the completed PREPA-New Fortress
agreement on behalf of the FOMB when PREPA sought the FOMB’s approval, but
that analysis and the eventual recommendation that the FOMB approve the agree-
ment did not lead to any changes to any of the agreement’s terms. That is,
McKinsey’s involvement as an advisor to the FOMB did not influence either
PREPA’s selection of New Fortress Energy or the commercial terms to which
PREPA and New Fortress Energy agreed. Therefore, any relationships McKinsey
may have had or may today have with entities affiliated indirectly with New
Fortress Energy had no bearing on the PREPA-New Fortress Energy agreement.
Finally, I want to state for the record that neither PREPA’s selection of New
Fortress Energy for the role of natural gas supplier to San Juan Units 5 & 6 nor
PREPA’s negotiation of the terms of the New Fortress Energy Fuel Sale and
Purchase Agreement were improperly influenced. PREPA followed a transparent
process in selecting New Fortress Energy, as was confirmed on administrative re-
view of that process and its results. The New Fortress Energy agreement was ap-
proved as being consistent with the Fiscal Plan by the FOMB and as being in the
public interest by the Puerto Rico Energy Bureau. No conflicts of interest affected
the process or its outcome. PREPA maintains its position that the New Fortress
Energy agreement, the conversion of San Juan Units 5 & 6 to dual fuel capability
and the ability to run San Juan Units 5 & 6 on natural gas will bring substantial
benefits to the PREPA system and Puerto Rico electric consumers.

Questions Submitted to Mr. Ortiz after the Hearing

Questions Submitted by Chair Grijalva
Question 1. The U.S. Energy Information Administration estimates that—as of
November 2019—renewables supplied only 2.3% of Puerto Rico’s energy.
1a. Why does the number continue to be so low?
Answer. PREPA has sought for many years to increase the amount of renewable
generating capacity available to serve Puerto Rico’s electricity requirements. From
2009 to 2012, PREPA made significant efforts to support renewable energy project
development, primarily through solicitations for third party development of renew-
able resources. These efforts achieved modest success, in the sense that PREPA
executed over sixty (60) long-term power purchase and operating agreements
(‘‘PPOAs’’) with renewable energy project developers (primarily developers of solar
photovoltaic (‘‘solar PV’’) generating facilities, but including some wind and landfill
generation projects). Many of these projects did not proceed past the contract execu-
tion phase into active development and, of these, only a handful were ultimately
developed, financed, constructed and placed into commercial operation. Only eleven
(11) renewable generation projects are currently operational and sell energy and/or
Renewable Energy Certificates to PREPA.1
That so few developers were successful in advancing renewable generation
projects for which PREPA executed contracts is the reason why renewable resources
currently supply only a small percentage of the electric energy produced and con-
sumed in Puerto Rico. A number of factors contributed to the stalling of many
renewables projects, including (i) the difficulties projects encountered in their efforts
to obtain financing due to PREPA’s lack of credit and bankruptcy, (ii) multiple
rounds of renegotiations necessitated by declining solar project costs and the need

1 Hurricane Marı́a destroyed one renewable generation project, the Punta Lima Wind Farm.
PREPA has ongoing negotiations relating to the reconstruction of this 26 MW project.
18
to reduce costs that would put upward pressure on PREPA’s rates, and (iii) the
general challenges of developing major projects in Puerto Rico, including the disrup-
tive impacts of natural disasters, permitting issues, and high costs. It should also
be noted that most renewables developers had not developed projects in Puerto Rico
before and needed to surmount a steep learning curve regarding local challenges.
In 2019, PREPA management reinvigorated efforts to integrate renewable energy
into the grid, while aiming to align PREPA’s finances with the objectives of
PREPA’s Fiscal Plan and reduce costs borne by Puerto Rico electricity consumers.
As part of these efforts, PREPA determined that it would be necessary to renego-
tiate nine (9) of the eleven (11) PPOAs with operating renewables projects.2 PREPA
recently reached commercial agreement with six (6) of these counterparties to
amend PPOAs covering operating renewable generation facilities amounting to more
than 260 MW of renewable capacity. The renegotiated PPOAs, if executed and per-
formed, would deliver (i) price reductions in excess of 10%, which would produce ap-
proximately $200 million in savings (non-discounted) over the remaining lives of the
amended agreements, and (ii) approximately 30 MW of new renewable generation
capacity to the Puerto Rico grid.
Of the remaining renewable projects covered by executed PPOAs, PREPA entered
into negotiations in early 2019 relating to sixteen (16) (representing over 590 MW
of new renewable generation), which PREPA or other government agencies had gen-
erally determined to be in more advanced stages of development than others. The
results of these negotiations were revised PPOAs reflecting lower pricing, changes
in the allocation of responsibility for interconnection costs and enhanced clarity re-
garding technical requirements. These revised PPOAs require approval from both
the Energy Bureau and the FOMB. Anticipating the need for these approvals,
PREPA took steps periodically to keep the Energy Bureau and the FOMB abreast
of its renegotiation efforts, project pricing and the quantity of renewable capacity
involved. In late 2019, as negotiations progressed, PREPA’s Board of Directors inde-
pendently engaged New Energy Partners (‘‘NEP’’), global experts in the development
of renewable power purchase agreements, to study the pricing levels on which the
negotiation efforts were settling. NEP found that the final pricing, which was one
half cent below a guideline price the FOMB had at one point identified, provided
both reasonable returns to the developers and savings to the ratepayers of Puerto
Rico.
By letter dated August 17, 2020, the FOMB informed PREPA that it would not
accept the price and other terms to which PREPA and its counterparties had agreed
as to 75% of the capacity that would be furnished by the renegotiated renewables
projects. As of today, the FOMB has authorized PREPA to enter into renegotiated
PPOAs amounting in the aggregate to no more than 150 MW of capacity.
The Energy Bureau, for its part, has proceeded with its own analysis of the re-
negotiated PPOAs (approaching each agreement individually rather than as a
group). As of August 30, 2020, the Energy Bureau has come to a consistent resolu-
tion on each of the seven (7) PPOAs it has considered, approving in substance all
of the PPOAs it has reviewed to date. As of this writing, PPOAs covering in the
aggregate 268.5 MW of renewable generating capacity have received Energy Bureau
sign-off.
PREPA continues to seek clarity from the FOMB and the Energy Bureau regard-
ing the path it should take going forward in renegotiating and ultimately executing
renewable project PPOAs. The balance of the projects having executed PPOAs have
not made material progress in their development and/or have not been able to reach
agreement with PREPA on price reductions on terms comparable to those agreed
with the group of projects mentioned above. Importantly, all of these projects have
contracts that include pricing terms that would impose an unnecessary financial
burden on the ratepayers of Puerto Rico. PREPA has recently terminated some of
these projects’ PPOAs and has filed to reject these agreements in its ongoing
restructuring proceeding being conducted under Title III of the PROMESA law.
With these projects having been addressed as I have described, PREPA is now in
a better position to conduct, and has commenced preparation of, a new request for
proposals (‘‘RFP’’) for the development of new renewable generation resources that
would essentially replace the projects that have not proceeded with new, competi-
tively priced projects.3

2 PREPA management determined that the two (2) landfill gas projects satisfied its pricing

requirements and accordingly those projects’ PPOAs did not need to be renegotiated.
3 Please note that PREPA does not intend to preclude any of the developers of rejected/

terminated projects from bidding into future RFPs.
19
1b. Can you provide an update about PREPA’s current numbers?
Answer. The amount of existing operational solar PV capacity under contract to
PREPA at the time PREPA commenced its PPOA renegotiation efforts was approxi-
mately 150 MW. PREPA has negotiated amendments to PPOAs covering these
projects that, if implemented, would result in the expansion of the capacity they can
supply by approximately 30 MW. An additional 95 MW is available from an oper-
ating wind generation project, but its actual output is limited by the need to comply
with applicable Minimum Technical Requirements to 75 MW. A total of 4.8 MW of
capacity is available from landfill gas generation facilities.
Currently, operational renewable generation projects under contract to PREPA
amount to total of slightly more than 250 MW of available capacity.
1c. Please provide an explanation of how PREPA plans to meet the renewable
energy goals required by Act 17–2019.
Answer. PREPA faces a number of challenges as it strives to meet the renewable
energy portfolio requirements of the Puerto Rico Energy Public Policy Act (Act 17–
2019) (‘‘Act 17’’). That law requires that 40% of the generation required to satisfy
PREPA’s requirements will come from renewable sources by 2025.
In the draft Integrated Resource Plan (‘‘IRP’’) which PREPA submitted to the
Puerto Rico Energy Bureau (‘‘PREB’’), PREPA proposed the addition of at least
2,000 MW of solar PV to meet the Act 17–2019 RPS mandate in all scenarios. Of
that amount, PREPA planned to procure up to 1800 MW of solar PV in the first
5 years of the plan (2019 to 2023). Puerto Rico Integrated Resource Plan 2018–2019,
PREB Case No. CEPR-AP-2018-0001 (submitted June 7, 2019), Main Report at
Section 10.1.1. Under the proposed IRP, 300 MW of new solar projects would be
added in 2020, and an additional 780 MW would be added in 2021. The proposed
IRP envisioned that PREPA would maximize the amount of solar PV installed in
the first 4 years of the plan (2019 to 2022) (IRP Main Report at Section 1.2.1).
PREPA’s proposed IRP envisioned the addition of as much solar PV as practical
as quickly as PREPA considered possible. In its August 24, 2020 Final Resolution
and Order on PREPA’s Integrated Resource Plan issued in Case No. CEPR-AP-2018-
0001, the Energy Bureau has rejected PREPA’s Preferred Resource Plan and
directed PREPA to pursue a Modified Action Plan that would result in the installa-
tion of significantly greater amounts of solar photovoltaic generation and battery
energy storage resources. Final Resolution and Order on PREPA’s Integrated
Resource Plan, In re Review of the Puerto Rico Electric Power Authority Integrated
Resource Plan, Case No. CEPR-AP-2018-0001 (Aug. 24, 2020) at §§ 18, 94–98, 836–
837, 847–855. The Energy Bureau has found that ‘‘maximizing the rate of adoption
of solar PV and battery storage technology is clearly indicated from the modeling
results of the Proposed IRP,’’ and has ordered PREPA to pursue a Modified Action
Plan that is intended to maximize the rate at which solar PV and battery storage
will be installed in Puerto Rico. Id. at § 855.
Assuming it can come to some form of accommodation with the FOMB on the
quantity of renewables it should seek to procure, PREPA anticipates moving for-
ward in collaboration with the P3 Authority with multiple RFPs seeking an initial
tranche of solar PV capacity promptly following PREPA’s receipt of Energy Bureau
approval to proceed.
Question 2. Why is PREPA binding public funds in long-term natural gas projects,
when the Integrated Resources Plan has not been approved by the Puerto Rico Energy
Bureau (PREB), and Act 17–2019 requires reaching a minimum of 40% renewable
energy integration by 2025; 60% by 2040; and 100% by 2050?
Answer. PREPA assumes that the ‘‘long-term natural gas projects’’ referenced in
the question include the recently completed conversion of San Juan Power Plant
Units 5 & 6 to dual fuel (natural gas and diesel) capability, the Amended and
Restated Natural Gas Sale and Purchase Agreement, dated as of March 23, 2020,
with Gas Natural Aprovisionamientos SDG, S.A. (‘‘Naturgy’’), under which PREPA
will continue to procure natural gas supplies to fuel its Costa Sur generating facility
and the adjacent EcoEléctrica L.P. cogeneration facility, and the Amended and
Restated Power Purchase and Operating Agreement, dated as of March 27, 2020,
with EcoEléctrica, under which PREPA will continue to procure generating capacity
from EcoEléctrica. Each of these generating facilities currently supplies capacity
and energy to PREPA, and PREPA relies on them (since they are among the most
efficient and lowest cost generating resources available to PREPA) to satisfy Puerto
Rico’s electric demand day in and day out.
In converting San Juan Units 5 & 6 so that they may consume natural gas,
PREPA has been able to achieve significant air emissions reductions relative to op-
eration of those units on diesel and, with these emissions reductions, has positioned
20
itself to make greater use of the two newest and most efficient baseload generating
facilities in PREPA’s fleet. As Mr. Ortiz noted in his testimony before this
Committee, PREPA’s ability to run these units more economically and more of the
time while reducing air emissions offers important public health benefits. In addi-
tion, the increased availability of San Juan Units 5 & 6 will materially enhance the
security and reliability of electricity supply in the San Juan metropolitan region.
PREPA anticipates achieving significant savings from the use of natural gas in
place of diesel, as Mr. Ortiz has stated. On the basis of then-current market prices
for natural gas and diesel, the Financial Oversight and Management Board for
Puerto Rico has estimated that the San Juan 5 & 6 conversion project could save
PREPA and its customers between $180 and $280 million during the 5-year term
of the conversion and natural gas supply contract.
By entering into the amended and restated Naturgy and EcoEléctrica agreements,
PREPA addressed the impending expiration of an existing fuel sale and purchase
agreement supporting operation of Costa Sur Units 5 and 6 and of a PPOA with
EcoEléctrica, the second-largest independent supplier of power to PREPA. As Mr.
Ortiz testified, the renegotiation of the EcoEléctrica PPOA and Naturgy gas supply
agreement is critical in providing reliable and efficient sources of electricity in
Puerto Rico for the next 12 years. The renegotiated EcoEléctrica and Naturgy agree-
ments will generate significant customer savings—on the order of $100 million
annually through 2032.
I should emphasize that given the mix of generating resources currently available
to it, PREPA must continue to call upon San Juan Units 5 & 6, the EcoEléctrica
facility and the Costa Sur generating facility to meet Puerto Rico’s electricity re-
quirements. It will need to do this for several years while renewable resources are
being developed, financed, constructed and commissioned. PREPA’s proposed IRP
and the Modified Action Plan which the Energy Bureau has recently adopted
assume that the San Juan, EcoEléctrica and Costa Sur generating facilities will con-
tinue to be available to supply capacity and energy even as the renewable genera-
tion build-out proceeds. As PREPA has documented, even with its continued
reliance on San Juan Units 5 & 6 and the EcoEléctrica facility, it should be possible
to add quantities of renewable generation that will satisfy Act 17’s Renewable
Portfolio Standard in 2025 and thereafter. IRP Main Report at Section 10.1.1. So
PREPA’s commitment to the San Juan 5 & 6 conversion and to the amended and
restated Naturgy and EcoEléctrica agreements is entirely consistent with PREPA’s
compliance with the Act 17 renewable energy integration goals cited in the question.
The Energy Bureau has approved the San Juan 5 & 6 conversion project and the
amended and restated Naturgy and EcoEléctrica agreements. In each case it found
that the proposed agreements were consistent with the public interest and with
PREPA’s proposed IRP. This is noted in the August 12, 2020 response of Edison
Avilés-Deliz, Chair of the Energy Bureau, to the same question I address in this
response. The Energy Bureau reiterates its approval of these projects in its Final
Resolution and Order on PREPA’s Integrated Resource Plan issued on August 24,
2020 at §§ 876 and 877.
Question 3. The Federal coordinator for the reconstruction of Puerto Rico, Peter
Brown, recently expressed that nuclear energy is an option to diversify Puerto Rico’s
energy sources. PREPA’s Integrated Resources Plan does not integrate nuclear energy
as an option. Will PREPA maintain this position in compliance with Act 17–2019,
which requires reaching 100% renewable energy by 2050?
Answer. PREPA did not include nuclear resources as potential sources of genera-
tion in its IRP. Nuclear energy is not listed among the sources of energy that qualify
as ‘‘renewable’’ under Act 82–2010 (Ley de Polı́tica de Diversificación por Medio de
la Energı́a Renovable Sostenible y Alterna en Puerto Rico), and therefore the addi-
tion of nuclear generation resources would not assist PREPA in achieving compli-
ance with the renewable portfolio standard imposed by Act 17. Moreover, PREPA
is not aware of any commercially proven nuclear generation technology that has
been licensed by the Nuclear Regulatory Commission that could be developed,
licensed, constructed and commissioned in Puerto Rico within the time frames envi-
sioned in the IRP’s Action Plan and the Modified Action Plan with the Energy
Bureau has recently directed PREPA to pursue.
Question 4. Puerto Rico is expecting around $1.9 billion of CDBG-DR funds for
the electric grid reconstruction. Those funds represent a great opportunity to help
low- and moderate-income families to finance rooftop solar projects in their
residences. Also, it is an opportunity to promote community energy resiliency projects.
Is PREPA committed to use these funds for these purposes?
21
Answer. PREPA is expecting that it will receive funds through the Department
of Housing and Urban Development’s CDBG-DR Program that will support recon-
struction of Puerto Rico’s electric grid. PREPA expects to use CDBG-DR funds, as
and to the extent they become available, to satisfy its obligation to fund 10% of the
cost of permanent work projects funded by FEMA. PREPA’s current Fiscal Plan
assumes that CDBG-DR funds will cover all of this cost share requirement. PREPA
does not anticipate redirecting CDBG-DR funds from grid reconstruction support to
the financing of individual consumer-owned rooftop solar installations, which would
not qualify as grid reconstruction activities for which FEMA or HUD CDBG-DR
funds could be committed consistent with applicable law and regulations.
Question 5. PREPA’s retirees and the Electrical Industry and Irrigation Workers
Union (UTIER) have expressed concerns with the possibility of PREPA’s pension
system being affected by the LUMA contract. Can you explain if the pension system
will be affected? If so, how?
Answer. As Mr. Ortiz testified in response to a similar question during the July
23, 2020 hearing, PREPA employees transferring to employment with LUMA will
have the choice as to whether to stay with their existing pension plan or transfer
to a new plan to be sponsored by LUMA. Mr. Fermı́n Fontanés offers additional
detail on this subject in a supplemental response included in the attached
Addendum.
Question 6. Have Federal agencies played a role in PREPA’s long-term concession
of its transmission and distribution system? For example, has FEMA or DOE
conditioned the disbursement of Federal disaster aid to this contract?
Answer. Please note that the process that has resulted in the execution of an
agreement with LUMA for the operation, maintenance and modernization of
PREPA’s transmission and distribution (‘‘T&D’’) system was led by the P3
Authority; PREPA played a supporting role in the process. The result of the process
was not a long-term concession, but rather a 15-year operation and maintenance
agreement.
Federal agencies were not involved in the formulation of the Request for
Proposals (‘‘RFP’’) for assumption of responsibility for the T&D system. Nor were
they involved in the process by which the P3 Authority evaluated responses to this
RFP, selected LUMA as the preferred proponent and ultimately entered into LUMA
agreement. Neither the Federal Emergency Management Agency nor the Depart-
ment of Energy has conditioned the disbursement of Federal disaster relief funds
in any way on the award of or performance under this contract. Mr. Fermı́n
Fontanés offers additional detail on this subject in a supplemental response
included in the attached Addendum.
Question 7. Why did PREPA recently award former New Jersey Governor Chris
Christie a contract, through his company Christie 55 Solutions, for $28,750 a month?
Given the limited amount of Federal disaster funds that have been disbursed to
PREPA, why is this contract appropriate? How were you put in contact with Mr.
Christie?
Answer. PREPA executed a professional services agreement with Governor
Christie in early 2020. That agreement, which has a term concluding December 31,
2020, provides that Gov. Christie and his team will provide support for PREPA in
connection with its interactions with Federal agencies including FEMA, HUD, the
Office of Management and Budget, the Department of Energy, the Department of
the Treasury, the Environmental Protection Agency and The White House. The
principal focus of Gov. Christie and his team has been in assisting PREPA in seek-
ing the timely disbursement of both FEMA settlement funds and CDBG-DR funds
and support PREPA’s efforts to secure other Federal assistance for its efforts to re-
build the Puerto Rico grid and meet renewable energy goals. They will also assist
the Puerto Rico Federal Affairs Administration in providing high-level briefings to
Trump Administration officials regarding many PREPA-related Federal issues. Both
the executive team at PREPA and the PREPA Board of Directors feel that this rela-
tionship has been beneficial to PREPA and has advanced its efforts to secure
Federal attention to its funding needs.
Governor Christie and Governor Rosselló initially met at a National Governors
Association meeting at which they discussed Puerto Rico’s needs for post-Maria
Federal support and the processes that govern the disbursement of Federal disaster
relief funds. Given his experience with both the Trump Administration and the
Federal response to New Jersey’s need for disaster recovery assistance following
Super Storm Sandy, Governor Christie was able to provide substantial advice to
Governor Rosselló. After Gov. Christie left office, he was asked by Gov. Rosselló to
22
consider providing support to PREPA as a consultant to assist primarily with
Federal funding issues. PREPA subsequently entered into discussions with Gov.
Christie to this end, and ultimately entered into the professional services agreement
I have described.
Question 8. In April, I joined my colleges in a letter to the Federal Energy
Regulatory Commission (FERC) urging them to examine New Fortress Energy’s
natural gas project in San Juan, since the company failed to ask FERC for approval.
How does PREPA justify expediting a project and making excuses to not have to com-
ply with Federal regulations, which have health, safety and environmental risks for
surrounding communities? Aren’t these factors as important as achieving lower
energy costs?
Answer. Mr. Ortiz acknowledged in his July 23, 2020 testimony that a question
has arisen as to whether NFE was required to obtain FERC authorization to site,
construct and operate the LNG handling facility through which it is supplying
natural gas to PREPA’s San Juan Units 5 & 6. As Mr. Ortiz testified before this
Committee, both New Fortress Energy and PREPA conducted informal discussions
with the FERC Staff concerning the regulatory status of the planned LNG handling
facility before PREPA selected New Fortress Energy’s proposal to convert and sup-
ply San Juan Units 5 & 6. Through those discussions, PREPA concluded, as had
New Fortress, that in FERC Staff’s view FERC siting approval for the LNG han-
dling facility would not be required. Mr. Ortiz described these discussions in the let-
ter PREPA submitted to FERC in the New Fortress show cause proceeding; a copy
of this letter was attached to the written statement Mr. Ortiz submitted to this
Committee on July 23, 2020.
PREPA sought to expedite the San Juan 5 & 6 conversion project because it
offered, and has delivered, significant reductions in greenhouse gas emissions that
will yield public health benefits for communities surrounding the San Juan Power
Plant, for the San Juan region and for Puerto Rico generally. The availability of
natural gas should enable PREPA to run San Juan Units 5 & 6 at higher capacity
factors without exceeding air permit limitations, and therefore will enhance grid re-
liability. This, too, will benefit the public. Moreover, given the historic spread
between natural gas and diesel prices, the San Juan 5 & 6 conversion project prom-
ises substantial fuel cost savings, which will flow directly to electricity consumers
in the form of lower rates.
PREPA has complied with the applicable Federal and Commonwealth environ-
mental regulations governing the amendment of permits limiting air emissions from
the San Juan Power Plant. New Fortress has responsibility under its Fuel Sale and
Purchase Agreement with PREPA for ensuring compliance with Federal and
Commonwealth regulations applicable to the New Fortress LNG handling facility.
PREPA notes that New Fortress has sought and obtained required U.S. Coast
Guard authorizations relating to the transit of LNG carriers through San Juan
Harbor and the maintenance of safety zones and security around the New Fortress
floating LNG storage vessel and the New Fortress LNG handling facility. PREPA
understands that the New Fortress LNG handling facility has been designed and
constructed in accordance with applicable National Fire Protection Association safe-
ty standards, which are the basis on which the U.S. Department of Transportation’s
Pipeline and Hazardous Materials Safety Administration evaluates safety-related
aspects of LNG handling facilities. PREPA therefore believes that the New Fortress
facility does not expose surrounding communities to significant health, safety or
environmental risks.
PREPA will cooperate in any further project review or permitting proceedings
involving the New Fortress LNG handling facility that may be required.

Questions Submitted by Rep. Napolitano
Question 1. What government agencies in Puerto Rico are receiving disaster aid
from Federal agencies, such as DHS or the Army Corps of Engineers? How much is
supposed to come in to rebuild the grid and how much has been received?
Answer. Amounts that have been received to date to support grid reconstruction
are summarized in our response to the question Resident Commissioner González
asked during the July 23, 2020 Hearing (response #1 above). PREPA is not con-
fident that it can provide a complete listing of the Puerto Rico government agencies
receiving disaster aid from Federal agencies, and would refer the Representative to
COR3 for this information.
23
Question 2. What process did the Government of Puerto Rico follow for the long-
term concession of PREPA’s transmission and distribution system to LUMA? How
was the company vetted?
Answer. The P3 Authority is the Puerto Rico government entity charged with
executing the transformation of PREPA. In testimony presented to this Committee
on July 23, 2020, Mr. Fermı́n Fontanés, the P3 Authority’s Executive Director, ad-
dressed in some detail the procurement process through which the P3 Authority
sought to advance the transformation of PREPA’s T&D system. That process in-
volved the solicitation of proposals from experienced utility sector participants to
assume responsibility for the operation, maintenance and modernization of the T&D
system. I refer the Committee to Mr. Fontanés’ statement and testimony for
additional detail on the process.
Mr. Fontanés offers additional detail on the process through which LUMA was
vetted in a supplemental response included in the attached addendum.
Question 3. What process did PREPA follow to award a contract to former New
Jersey Governor Chris Christie? Was there a vetting process? Please explain.
Answer. Governor Christie was hired by PREPA, with the knowledge and assent
of PREPA’s Governing Board, after consultation with and approval by the Governor
of Puerto Rico, the Puerto Rico Federal Affairs Administration, the Puerto Rico
Fiscal Agency and Financial Advisory Authority (‘‘AAFAF’’) and the executive team
at PREPA. The Financial Oversight and Management Board for Puerto Rico
(‘‘FOMB’’) was also informed of the Christie professional services agreement. That
agreement was written and its execution overseen by PREPA’s legal department.
Governor Christie’s firm was hired to provide support for the FEMA Section 428
process for public assistance and for support of other PREPA efforts to secure
Federal disaster recovery funds. See my response to Chair Grijalva’s Question #7
above.
Question 4. Why is renewable energy in PREPA’s power generation portfolio so
low?
Answer. Please see my response to Chair Grijalva’s Question #1, above.

Questions Submitted by Rep. Costa
Question 1. There have been concerns over private energy contractors not receiving
reimbursement for emergency restoration work. In the event of another disaster, it is
critical to have all hands on deck ready to respond. For those who haven’t been
reimbursed by FEMA, what is the status of receiving the reimbursement?
Additionally, for those who haven’t received reimbursed, is there progress toward
reaching a determination in a timely manner?
Answer. The Excel files accompanying this letter provide information regarding
contractor reimbursement status both at a summary level and at a detailed level.
Please note that there are various administrative adjustments to certain emer-
gency PWs pending before FEMA. Priority is being given to those projects with
payment amounts outstanding. Once the adjustments are processed by FEMA,
PREPA will be able to request the additional funding.

Questions Submitted by Rep. Cox
Question 1. I heard some concerns from early in the disaster about how the
contract to Whitefish Energy was awarded by PREPA, but the subsequent reports we
have heard suggest that Whitefish Energy performed good work on the island. Can
you confirm whether Whitefish Energy performed good work for PREPA?
Answer. The process by which the Whitefish Energy contract was awarded and
subsequent actions relating to that contract are described in detail in a Report of
the Department of Homeland Security’s Office of Inspector General (‘‘OIG’’) entitled
‘‘FEMA’s Public Assistance Grant to PREPA and PREPA’s Contracts with Whitefish
and Cobra Did Not Fully Comply with Federal Laws and Program Guidelines’’ (OIG-
20-57), issued July 27, 2020 (available at https://www.oig.dhs.gov/sites/default/files/
assets/2020-07/OIG-20-57-Jul20.pdf). Because some issues identified in that report
remain open and unresolved, PREPA cannot comment on matters relating to
Whitefish Energy’s performance.
Question 2. From PREPA’s financial status reports, it appears that FEMA has not
yet obligated funds for some work performed immediately following the disaster,
including for the work performed by private contractors such as Whitefish Energy
and some of the mutual aid entities, which has resulted in those contractors and
24
utilities not being paid for emergency restoration work performed. What is the status
of FEMA’s review of the Project Worksheets for the work of those private contractors
and mutual aid entities, and when does PREPA expect to receive FEMA funding for
that work?
Answer. PREPA is actively engaged with FEMA and has responded to requests
for additional information relating to work performed by contractors and Mutual Aid
entities.
It is PREPA’s understanding that FEMA has advised the OIG that it expects to
complete its final determination regarding eligibility of the actual Cobra contract
costs for Federal reimbursement by May 2021. With respect to Mutual Aid contrac-
tors, FEMA is processing administrative adjustments, and PREPA has no estimate
of the timing of FEMA’s administrative process. While PREPA has been actively
working with FEMA to adjust the PWs, a definitive timeline for funding has not
been shared with PREPA.
Priority is being given to those projects with payment amounts that remain out-
standing. Currently, projects are in the final stages of project formulation and
should be versioned within the next few months. But because PREPA is not the
process owner of the project formulation task, a definitive timeline for funding is
unknown.

Questions Submitted by Rep. Velázquez
Question 1. Mr. Ortiz, during the hearing on July 23, I asked you whether PREPA
did any due diligence to ensure that consultants with access to the procurement docu-
ments did not have conflicts of interest to which you responded: ‘‘Yes, that’s a normal
procedure.’’
What were the steps that were taken as part of the normal due diligence process
that PREPA carried out to ensure that consultants with access to the procurement
documents did not have conflicts of interests during the award process of the New
Fortress Energia agreement?
Answer. Various Puerto Rico laws codify mandatory requirements for contracting
with private consultants including issues of conflicts of interest. Act 237–2004, as
amended, codifies government contracting processes and requirements between
private parties or consultants and governmental entities including public corpora-
tions like PREPA. Specifically, Article 5(G) mandates that:
No public official or employee may grant or authorize a contract with a
private person or knowing that this person, in turn, is representing par-
ticular interests in cases or matters that involve conflicts of interest or
public policy conflicts of interest between the contracting government
agency and the private interests that said private person represents.
Accordingly, every government agency shall require from every private per-
son with whom it contracts the inclusion of a contractual clause in which
said private person certifies that they are not involved in a conflict of
interest or public policy conflicts of interest as described in this subsection.
Further, the Anticorruption Code for a New Puerto Rico, Act 2–2018, Article
3.2(n), states that:
No person may contract with the executive agencies [including public
corporations] if there is any conflict of interests. Every person must certify
that they do not represent particular interests in cases or matters that
imply a conflict of interest, or of public policy, between the executive agency
and the particular interests that they may represent.
Additionally, the professional services contracts between PREPA and private con-
sultants includes dispositions which require that PREPA consultants who have
access to confidential information must take all steps necessary to keep such infor-
mation confidential and ensure that such information is not disclosed or distributed
by the consultant’s employees or agents in violation of the terms of the agreement
with PREPA.
PREPA’s Guide for Requests for Proposals (RFPs) (attached in the original
Spanish), at Section 3.5, requires PREPA advisors or consultants who assist PREPA
during the evaluation of proposals as well as during selection and negotiation of
RFP processes to comply with ethics guidelines and conflicts of interest required by
PREPA as specified in the professional services contract.
All PREPA consultants must comply with these dispositions for handling matters
for PREPA and all PREPA consultants associated with the process by which the
NFEnergı́a agreement was awarded.
25
Follow-up: Is there a PREPA regulation in place that codifies how the due
diligence process should be carried out? If yes, could you share the regulation with
the Committee?
Answer. Attached please find copies of Act 237–2004 and Act 2–2018. Please note
as well that PREPA’s standard contract with consultants includes dispositions
which require the consultant to maintain the confidentiality of PREPA documents
in accordance with the agreement.

Questions Submitted by Rep. Garcı́a
Question 1. Since the execution of PREPA’s Restructuring Support Agreement with
the FOMB and Financial Advisory Authority, in your view, it that agreement still
alive? If so, is it workable given the current economic pressures that are projected
for the island?
Answer. The Definitive Restructuring Support Agreement, dated May 3, 2019 (as
amended, the ‘‘RSA’’) remains in effect; however, (i) certain provisions are not
required to be implemented until an order is entered on a motion to approve settle-
ments in the RSA (the ‘‘9019 Motion’’) and (ii) parties to the RSA currently have
certain termination rights. On July 31, 2020, FOMB, AAFAF and PREPA (the
‘‘Government Parties’’) filed a status report before Judge Swain in PREPA’s Title
III case, informing the Court of the following:
• RSA discussions have been postponed due to uncertainty resulting from the
COVID-19 pandemic. Therefore, the Government Parties have focused on
other key initiatives that, alongside a debt restructuring, will enable PREPA
to exit Title III and provide reliable and affordable power to its customers.
These initiatives include bringing in private operators as part of a trans-
formation of PREPA’s transmission and distribution system and generation
assets; and
• It is currently not possible to propose a schedule for the continuation of
PREPA’s 9019 Motion hearing on the settlements embodied in the RSA, as
the Government Parties continue to monitor the island’s fiscal and economic
conditions amid the impact of the continuing COVID-19 pandemic and other
recent events.
In light of the above, the Government Parties asked the court to allow for the sub-
mission of an updated status report on or before September 25 to provide them addi-
tional time to assess PREPA’s performance against the PREPA 2020 Fiscal Plan
and to analyze the Oversight Board’s Commonwealth status report that is due
September 11. On August 5, 2020, Judge Swain granted the request to extend the
date to September 25 for filing a status report on PREPA’s financial condition,
proposed next steps regarding the 9019 Motion and related adversary proceedings.
The Government Parties remain committed to working with the RSA creditors, as
well as other stakeholders, to execute a plan of adjustment that allows for PREPA’s
exit from Title III.
Question 2. As the Oversight Board has certified, the contract with LUMA Energy
will put PREPA in a deficit of at least $125 million. Also, the Front-End Transition
Plan contemplates acquiring a PREB rate order. Will PREPA be requesting a rate
increase to cover that deficit? If so, when and how will the increase take place?
Answer. PREPA currently expects to fund the initial Front-End Transition costs
out of funds that are currently available, and does not believe that a rate increase
will be required. Mr. Fermı́n Fontanés offers additional detail on this subject in a
supplemental response included in the attached Addendum.

Questions Submitted by Rep. Bishop
Question 1. How has PREPA been able to respond to the concerns of those who
claim this latest deal signed with LUMA will lead to massive layoff of workers at
PREPA?
Answer. The Puerto Rico Transmission and Distribution System Operation and
Maintenance Agreement among PREPA, the P3 Authority, LUMA Energy, LLC and
LUMA Energy ServCo, LLC dated as of June 22, 2020 (the ‘‘O&M Agreement’’)
provides that LUMA Energy and LUMA ServCo (a LUMA subsidiary service com-
pany formed to provide substantially all of the services required under the O&M
Agreement) are to offer both employment and advancement opportunities to current
PREPA employees. As Mr. Fermı́n Fontanés testified before this Committee on July
26
23, 2020, the jobs of PREPA employees ‘‘are protected under existing law.’’
Statement by Fermı́n Fontanés Gómez, Executive Director of the Puerto Rico Public
Private Partnerships Authority before the House Committee on Natural Resources
dated July 23, 2020 at 4. Mr. Fermı́n Fontanés offers additional detail on this sub-
ject in a supplemental response included in the attached Addendum.
Question 2. The Committee has heard from witnesses today that claim under the
terms of the newly signed LUMA contract, LUMA would actually have veto power
of PREPA’s Title III proceedings. How do you respond to such a claim? Is that
indeed the case, that LUMA somehow under the terms of the new contract, are going
to be awarded final say over PREPA’s plan of adjustment?
Answer. The O&M Agreement does not grant LUMA Energy any control over
PREPA’s Title III proceedings. The Puerto Rico Transmission and Distribution
System Supplemental Terms Agreement among PREPA, the P3 Authority, LUMA
Energy, LLC and LUMA Energy ServCo, LLC dated as of June 22, 2020 (the
‘‘Supplemental Agreement’’), which comes into effect only if LUMA Energy takes
over prior to PREPA’s exit from Title III, provides only that PREPA’s future plan
of adjustment must be ‘‘reasonably acceptable to’’ LUMA Energy. Under PROMESA,
only the Oversight Board can propose a plan of adjustment for PREPA and this pro-
vision does nothing to give control over that task to LUMA Energy. Mr. Fermı́n
Fontanés offers additional detail on this subject in a supplemental response
included in the attached Addendum.
Question 3. Will the new T&D Operator (LUMA) be allowed to act freely without
the political interference that has plagued PREPA for years? What assurances can
you give us?
Answer. LUMA, unlike PREPA, is a private entity that will not be subject to
political interference but instead will be subject to the requirements of the O&M
Agreement. That Agreement and related Annexes and Supplemental Agreement set
forth detailed criteria that will govern LUMA Energy’s and LUMA ServCo’s per-
formance of the roles of T&D Operator. LUMA Energy and LUMA ServCo have, in
the O&M Agreement, a clearly articulated basis on which to resist political efforts
to secure treatment not consistent with the terms of that Agreement. Mr. Fermı́n
Fontanés offers additional detail on this subject in a supplemental response
included in the attached Addendum.
Question 4. Does LUMA have free reign in deciding how to staff its new
operations?
Answer. Decisions as to staffing of its operations are for LUMA Energy and
LUMA ServCo to make, but those decisions must comply with specific criteria set
forth in the O&M Agreement. Among these is the requirement that LUMA give
preference in hiring to existing PREPA employees currently engaged in T&D-related
operations. Mr. Fermı́n Fontanés offers additional detail on this subject in a supple-
mental response included in the attached Addendum.
I hope these responses adequately address the Committee members’ questions.
Please let me know if you or members of the Committee have additional questions
for PREPA.
Cordially,
EFRAN PAREDES MAISONET,
Interim Executive Director

*****
The following documents were submitted as attachments to the above responses to
questions. These documents are part of the hearing record and are being retained
in the Committee’s official files:
—Addendum providing P3 Authority Supplemental Responses
—Excel spreadsheets with Contractor Payment Summary and Contractor
Payment Detail
—GUÍA PARA PROCESOS DE ADQUISICIONES DE BIENES Y SERVICIOS
A TRAVÉS DE SOLICITUD DE PROPUESTAS (Request For Proposals) 2016
—Act 237–2004
—Act 2–2018
27

Submission for the Record by Mr. Ortiz
GOVERNMENT OF PUERTO RICO
PUERTO RICO ELECTRIC POWER AUTHORITY
SAN JUAN, PUERTO RICO

July 17, 2020
BY ELECTRONIC FILING
Ms. Kimberly D. Bose, Secretary
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
Re: Order to Show Cause Directed to New Fortress Energy LLC, Docket No. CP20-
466-000—Comments and Statement of Support of the Puerto Rico Electric
Power Authority
Dear Secretary Bose:
On behalf of the Puerto Rico Electric Power Authority (‘‘PREPA’’), I write in
response to the Order to Show Cause which the Commission issued to New Fortress
Energy LLC (‘‘New Fortress’’) on June 18, 2020 in Docket No. CP20–466–000. For
the several reasons I set forth below, I urge the Commission to conclude that New
Fortress had a legitimate basis for concluding that the liquified natural gas (‘‘LNG’’)
handling facility which its affiliate NFEnergı́a, LLC (‘‘NFE’’) has constructed on an
existing wharf in San Juan Harbor did not require this Commission’s authorization
under Section 3 of the Natural Gas Act. I also urge this Commission, if it chooses
to assert jurisdiction over any portion of the NFE LNG handling facility, to do noth-
ing to disrupt its ongoing operation, given the very substantial emissions reductions
and cost savings the facility is enabling PREPA to achieve.
PREPA is the offtaker of natural gas delivered via the liquified natural gas
handling facility which NFE has constructed in San Juan, adjacent to PREPA’s San
Juan Units 5 and 6, two combined cycle generating facilities which have been con-
verted to consume natural gas as well as diesel fuel. Units 5 and 6 are now running
on natural gas in place of diesel. Their ability to use this significantly cleaner fuel
enables PREPA to reduce its reliance on other generating units that consume heavy
fuel oil and produce significant emissions. PREPA therefore has a direct and sub-
stantial interest in the outcome of this proceeding.
In early 2019 PREPA entered into a Fuel Sale and Purchase Agreement with
NFE under which NFE undertook to convert PREPA’s San Juan Units 5 and 6 to
dual-fuel capability, and to supply natural gas to fuel the facilities. The agreement
obligates NFE to transport LNG to San Juan Harbor, where the LNG is transferred
to a floating storage vessel docked opposite the San Juan Power Station. From that
vessel, LNG is processed through vaporizers that deliver natural gas to Units 5 and
6. LNG will also be transferred via the NFE facility to onshore truck loading
facilities for transportation of LNG to industrial and commercial consumers
throughout Puerto Rico.
The conversion of Units 5 and 6 and their use of natural gas in place of diesel
will significantly reduce greenhouse gas, particulate and other air emissions from
the San Juan Power Station. Units 5 and 6 are the newest and most efficient gener-
ating facilities in the PREPA fleet and, with natural gas now available, PREPA can
take advantage of these efficiencies by running the units at higher capacity factors
without exceeding air permit emissions limits. This is important, because the San
Juan Power Station is located in the heart of the San Juan metropolitan area, the
largest load center in Puerto Rico. PREPA’s enhanced ability to run San Juan Units
5 and 6 will enhance the reliability of PREPA’s system in the San Juan area and
throughout the island. Consumption of natural gas in Units 5 and 6 should also
yield significant fuel cost savings for Puerto Rico electricity consumers, since
natural gas has historically been available at lower cost than diesel. PREPA has
projected that its delivered fuel costs will decrease substantially with the ability to
consume natural gas, even considering the costs NFE must incur to procure LNG
from non-U.S. sources given the prohibition on bulk shipments of LNG from the
U.S. mainland imposed by the Jones Act.
The Puerto Rico Energy Bureau has approved the PREPA-NFE contract as being
in the public interest. The Financial Oversight and Management Board for Puerto
Rico has approved the contract as being consistent with PREPA’s certified Fiscal
Plan. The United States Coast Guard has found that the waterways approaching
28
San Juan Harbor and leading to the wharves where the NFE LNG storage vessel
is docked are suitable for the transit of LNG, has established safety zones within
the Harbor to accommodate LNG vessels, and has accepted NFE’s security plans for
its LNG receiving and transfer operations. The U.S. Environmental Protection
Agency has recommended, and the Puerto Rico Environmental Quality Board has
made, amendments to the permits governing air emissions from San Juan Units 5
and 6 that recognize the ability of those units to burn either natural gas or diesel.
Now that natural gas is available to San Juan Units 5 and 6, PREPA will make
the most significant reductions in air emissions it has ever been able to achieve.
With the increased availability of San Juan Units 5 and 6, PREPA will be able to
rely less on generating facilities consuming more polluting heavy fuel oil, and as a
result will be well on the way to achieving compliance with the Clean Air Act’s
Mercury and Air Toxics Standard (‘‘MATS’’).
On June 18, 2020, this Commission issued an ‘‘Order to Show Cause’’ directing
New Fortress ‘‘to show cause why the liquified natural gas (LNG) handling facility
it has constructed adjacent to the San Juan Combined Cycle Power Plant at the
Port of San Juan in Puerto Rico is not subject to the Commission’s jurisdiction
under section 3 of the Natural Gas Act (NGA).’’ The order suggests that NFE’s
facilities may meet criteria that would make it subject to the Commission’s Natural
Gas Act jurisdiction. I note that the Order to Show Cause does not reach any final
conclusions regarding the jurisdictional status of the NFE LNG handling facility
and does not require the suspension of the NFE facility’s operations.
PREPA is aware that NFE is responding to the Order to Show Cause with argu-
ments why, given previous FERC decisions, the Commission should conclude that
the San Juan LNG handling facility does not require NGA section 3 authorization.
PREPA is familiar with these arguments, having discussed similar points with rep-
resentatives of the Commission’s Staff nearly 2 years ago. PREPA urges the
Commission to consider these arguments carefully before reaching any final
determination in this proceeding.
PREPA conducted a competitive procurement in early 2018 through which it
sought proposals for the conversion of San Juan Units 5 and 6 to dual-fuel
capability. In response to a PREPA Request for Proposals, several project pro-
ponents submitted proposals, some of which contemplated the supply of natural gas
derived from LNG. NFE submitted a proposal that relied on development of an LNG
handling facility in and adjacent to San Juan Harbor. While consideration of the
various conversion proposals was underway, PREPA representatives independently
analyzed the question whether FERC authorization of an LNG handling facility that
would supply natural gas to San Juan Units 5 and 6 was likely to be required. As
part of this effort, I, the then-Chairman and a member of PREPA’s Governing
Board, PREPA’s Chief Financial Advisor and PREPA counsel met on September 5,
2018 with ten representatives of this Commission’s Staff to discuss alternative LNG
receiving facility configurations that might be developed to serve PREPA generating
facilities. We specifically discussed a facility configuration that would involve deliv-
eries of LNG from a docked storage vessel via cryogenic hoses to a shoreside vapor-
izer located on an existing wharf in San Juan Harbor, with natural gas to be
delivered from the vaporizer to San Juan Units 5 and 6 through power plant piping
located entirely within San Juan Power Station property. We compared this configu-
ration with the configurations of other LNG and compressed natural gas facilities
over which the Commission had previously declined to assert jurisdiction under
NGA section 3.1
FERC Staff representatives observed that the fewer dedicated natural gas facili-
ties there are, the less likely it was that FERC would assert jurisdiction over an
LNG project. Staff representatives focused on the absence of a natural gas pipeline
extending a substantial distance from the LNG vaporizers to a natural gas trans-
mission or distribution system or to multiple end user facilities, suggesting that the
absence of such facilities would make it less likely that the Commission would
assert jurisdiction. They also deemed it significant that the proposed configuration
involving a docked LNG storage vessel did not include a large onshore LNG storage
tank. Staff representatives noted that the Commission does not assert jurisdiction
over LNG vessels, although it has asserted jurisdiction over purpose-built pier or
mooring facilities and related pipelines. They offered the view that the Commission
would probably consider the San Juan Harbor ‘‘facilities light’’ configuration we

1 Among the Commission decisions we discussed were Shell US Gas & Power, LLC, 148 FERC
§ 61,163 (2014), Emera CNG, LLC, 148 FERC § 61,219 (2014), Pivotal LNG, Inc., 148 FERC
§ 61,164 (2014), Pivotal LNG, Inc., 151 FERC § 61,006 (2015), and The Gas Company, LLC, 142
FERC § 61,036 (2013).
29
described to be one over which FERC be unlikely to claim jurisdiction under NGA
section 3.
Our meeting left us confident that, in FERC Staff’s view, the configuration which
NFE ultimately proposed made it like other LNG facilities which the Commission
had concluded did not require its authorization under the Natural Gas Act. PREPA
took comfort in the indications it received from FERC Staff, and we later concluded
that NFE had a legitimate basis for concluding that the facilities configuration it
proposed would not require NGA section 3 authorization. PREPA subsequently ne-
gotiated the terms of the NFE Fuel Sale and Purchase Agreement and obtained the
approvals required to execute it. The Agreement was executed on March 5, 2019.
PREPA entered into the NFE Fuel Sale and Purchase Agreement on the assump-
tion that FERC approval for the NFE LNG handling facility would not be required.
It did so on the basis of communications PREPA and NFE separately had at dif-
ferent times with senior members of the Commission’s Staff that involved assess-
ments of FERC precedents addressing what PREPA, NFE and the Commission’s
Staff all considered analogous LNG facilities configurations. I believe that it was
reasonable for PREPA to move ahead with the San Juan Units 5 and 6 conversion
project and for NFE to proceed with construction of the related LNG handling facil-
ity given the informal guidance PREPA and NFE separately received from FERC
Staff and the analyses we independently conducted. I ask that you take this history
into account in evaluating NFE’s response to the Order to Show Cause and in
considering what further action may be appropriate in this proceeding.
PREPA believes that the Commission should conclude that NFE did not require
authorization under the Natural Gas Act to site, construct and operate any portion
of its San Juan Harbor LNG handling facility. But the Order to Show Cause sug-
gests that the Commission could come to a contrary conclusion, and as a result
could require that NFE seek section 3 authorization. I have been advised that in
other cases in which a natural gas project developer has been found to lack a
required FERC authorization, FERC has not required the developer to cease or sus-
pend operations while the required authorization is sought. Nevertheless, I wish to
address the possibility that the Commission may consider directing NFE to cease
operation of its San Juan LNG handling facility pending its receipt of authorization
under the Natural Gas Act.
As I have stated, San Juan Units 5 and 6 are now running on natural gas. As
a direct result, the Units’ greenhouse gas emissions have been substantially
reduced, as have their emissions of particulates. These emissions reductions are par-
ticularly significant given PREPA’s longstanding inability to achieve MATS compli-
ance. Given these emissions reductions and the expectation that natural gas will be
available to the Units at lower cost than diesel, the NFE fuel supply arrangement
will enable PREPA to run Units 5 and 6 at a higher capacity factor than they have
historically. This is significant, because Units 5 and 6 are critically important as
sources of local generation in the San Juan metropolitan area. By enabling San
Juan Units 5 and 6 to be dispatched more of the time, the availability of natural
gas supplied by NFE has enhanced the reliability and resiliency of PREPA’s still-
vulnerable transmission system.
Air emissions permits governing San Juan Units 5 and 6 have recently been
amended to recognize the ability of those units to burn either natural gas or diesel.
These permits establish annual emissions limits for each air pollutant regulated
under the U.S. Environmental Protection Agency’s New Source Review program.
There are no restrictions in the hours of operation for Units 5 and 6 as long as the
Units comply with the annual emissions limits established for each pollutant. That
is, PREPA is obligated to manage actual emissions from Units 5 and 6 so that their
combined emissions remain below the annual limits on a 365-day rolling basis, on
a per regulated pollutant basis, and at any time during the initial 364 days. PREPA
can make maximum use of San Juan Units 5 and 6, given the controlling annual
emissions limits and the greater emissions that result from the combustion of diesel
fuel, only if natural gas continues to be available.
If NFE were to be directed to cease operation of its LNG handling facility, PREPA
would no longer have ability to consume natural gas in Units 5 and 6. As a
consequence, PREPA would need to reduce its dispatch of these units on diesel to
ensure that their emissions remain below the applicable annual limits. We are now
entering hurricane season, and PREPA must be able to rely on San Juan Units 5
and 6 to maintain service to the San Juan region and beyond if PREPA’s trans-
mission system again were to sustain hurricane-related damage. Moreover, given
the impacts of this winter’s earthquake activity on PREPA’s Costa Sur generating
facility, two of PREPA’s largest generating units remain unavailable, and will not
be fully available until the end of this year. This makes the continued availability
30
of San Juan Units 5 and 6 even more critical. It is, therefore, absolutely essential
that NFE be permitted to continue to supply PREPA with natural gas for use in
San Juan Units 5 and 6 during the period in which this Commission considers
NFE’s response to the Order to Show Cause, and during any subsequent proceeding
on an NFE application for Commission authorization under the Natural Gas Act,
should the Commission require it.
Thank you for your consideration. PREPA stands ready to provide any additional
information the Commission may require.
Sincerely,
JOSÉ F. ORTIZ VÁZQUEZ
CHIEF EXECUTIVE OFFICER
Puerto Rico Electric Power Authority

The CHAIRMAN. Thank you, Mr. Ortiz.
Let me now turn to Fermı́n Fontanés, Executive Director of the
Puerto Rico Public-Private Partnerships Authority.
The time is yours, sir.

STATEMENT OF FERMÍN FONTANÉS, EXECUTIVE DIRECTOR,
PUERTO RICO PUBLIC-PRIVATE PARTNERSHIPS AUTHORITY
Mr. FONTANÉS. Chairman Grijalva, Ranking Member Bishop, and
Committee members, thank you for the opportunity to appear
before you today to discuss the transformation of the Puerto Rico
Electric Power Authority.
My name is Fermı́n Fontanés. I am the Executive Director of the
Puerto Rico Public-Private Partnerships Authority. My testimony
today addresses the transformation of PREPA’s transmission and
distribution system.
As Executive Director, I am leading the efforts related to
PREPA’s transformation and over several procurement processes
that resulted in the agreement between LUMA Energy and PREPA
pursuant to which LUMA will operate, maintain, and modernize
Puerto Rico’s transmission and distribution system.
This agreement marks the culmination of a more than 18-month
procurement process and represents a historic milestone in the gov-
ernment of Puerto Rico’s objective of providing modern, affordable,
resilient, and reliable power to the island.
LUMA is a Puerto Rico company formed by ATCO and Quanta
Services which will work with Innovative Emergency Management
to assist with the administration of Federal funding.
In recent years, PREPA has faced a number of significant chal-
lenges, including: a lack of managerial continuity and long-term
planning; a dated electrical system that is in poor condition; signifi-
cant leverage, that led to the inability to access credit markets; and
a geographic mismatch between supply and demand.
PREPA’s challenges were aggravated by Hurricanes Irma and
Maria. After the hurricanes, the government sought not only to
rebuild the electric grid but to transform it into a reliable, resilient,
modern, and eco-friendly system.
The most effective way to achieve these goals was to partner
with a world-class private operator with the expertise, experience,
and know-how to complete the much-needed transformation. A
31

procurement process was designed to address a number of key
considerations.
The government was keenly focused on implementing a robust,
competitive, and transparent procurement process to identify the
private partner best positioned to accomplish the transaction’s
objectives. The process was also carried out in coordination with
the Financial Oversight and Management Board for Puerto Rico.
During the RFP proposal process, the P3 Authority provided
proponents with extensive access to information related to PREPA
and the T&D system.
LUMA’s proposal presents concrete and detailed plans and
timelines for achieving substantial gains in safety, customer serv-
ice, reliability, and resiliency. The contract also establishes clear
obligations and performance metrics which LUMA must comply
with. LUMA projects that it will be able to generate significant cost
savings throughout the life of the contract.
Between the reduction in O&M costs and the improvement in
lost energy, LUMA estimates a savings of $293 million per year in
2027. This results in significant annual and cumulative net savings
for Puerto Rico and demonstrates that the contract will pay for
itself, an estimate of $323 million in cumulative savings by 2027.
Notwithstanding these savings, critics of the transaction have ar-
gued that the customer’s rates will go up. That premise is incor-
rect. LUMA is subject to regulatory oversight of the Puerto Rico
Energy Bureau, and the contract specifically provides that all
budgets prepared by LUMA must comply with rate orders estab-
lished by PREB. The contract does not require a rate increase or
establish a minimum rate for LUMA to operate.
In addition, I wanted to make clear that no employee will lose
their job as a result of this transaction. Their jobs are protected
under existing law.
Moreover, for those employees who end up working for LUMA,
they will have access to world-class safety training and professional
development opportunities, all of which have not been available to
date for PREPA employees. PREPA’s employees are essential for
this transformation.
Finally, with LUMA we are bringing accountability to meet our
goals of a renewable energy future. LUMA’s commitment to com-
plying with and achieving the renewable energy target set forth in
these plans is evidenced in its proposal. This is a first step toward
achieving the government’s renewable energy goals.
The T&D transformation process took place against the back-
ground of unique and unprecedented challenges. Notwithstanding
these significant challenges, the P3 Authority was undeterred and
forged ahead with its vision to transform PREPA.
In partnership with LUMA, PREPA will finally deliver to the
people of Puerto Rico what they deserve, a modern, affordable, re-
silient, and reliable electric energy system that will serve as a driv-
er of economic recovery and growth. This partnership represents
the most efficient and effective way to make this transformation a
reality for Puerto Rico and its people.
Thank you.
[The prepared statement of Mr. Fontanés follows:]
32
PREPARED STATEMENT OF FERMÍN E. FONTANÉS GÓMEZ, EXECUTIVE DIRECTOR OF
THE PUERTO RICO PUBLIC PRIVATE PARTNERSHIPS AUTHORITY

Chairman Grijalva, Ranking Member Bishop and Committee Members, thank you
for the opportunity to appear before you today to discuss the transformation of the
Puerto Rico Electric Power Authority (‘‘PREPA’’). My name is Fermı́n Fontanés
Gómez and I am the Executive Director of the Puerto Rico Public Private
Partnership Authority (the ‘‘P3 Authority’’).
Created pursuant to Act 29 as a public corporation of the Government of Puerto
Rico affiliated with the Puerto Rico Fiscal Agency and Financial Advisory Authority,
the P3 Authority is the government entity charged with executing the trans-
formation of PREPA. As Executive Director of the P3 Authority, I am leading the
efforts related to the transformation and recently oversaw the successful procure-
ment process that resulted in the signing of an agreement between LUMA Energy,
LLC and PREPA pursuant to which LUMA will operate, maintain, and modernize
Puerto Rico’s transmission and distribution (‘‘T&D’’) system for a 15-year term.
The agreement with LUMA marks the culmination of a more than 18-month
procurement process and represents a historic milestone in the Government of
Puerto Rico’s objective of providing modern, affordable, resilient, and reliable power
to the island, which will help serve as a driver of economic recovery and growth.
The agreement with LUMA is also the first transaction of its kind since the Govern-
ment enacted Act 120, a new legal framework for infrastructure PPPs, in June 2018.
LUMA is a Puerto Rico company formed by Canadian Utilities Limited, ATCO Ltd.’s
energy company, and Quanta Services Inc., which will work in conjunction with
Innovative Emergency Management Inc. to assist with the administration of Federal
funding.
My testimony today will address the transformation of the T&D system and will
address the following six topics: (i) the background and goals of the transformation
that the contract with LUMA seeks to achieve, (ii) the procurement process for
selecting LUMA, (iii) the benefits that LUMA will bring to the people of Puerto Rico,
(iv) the impact of the transaction on rates, (v) the impact of the transaction on
employees, and (vi) the first step that this transaction represents in terms of
transitioning PREPA to renewable energy sources.
Background and Goals of the Transformation
PREPA serves approximately 1.5 million customers and employs approximately
6,000 people in Puerto Rico. As the sole utility for the island of Puerto Rico,
PREPA’s purpose is to provide the people of Puerto Rico with reliable electric power,
assist the sustainable development of Puerto Rico, and contribute to the general
welfare as a service provider and employer on the island.
In recent years, PREPA has faced a number of significant challenges, including:
(i) a lack of managerial continuity and long-term planning; (ii) a dated electrical
system that is in poor condition due, in part, to substandard practices and chronic
infrastructure underinvestment; (iii) significant leverage, which has led to the
inability to access credit markets for long term capital investment; and (iv) a
geographic mismatch between supply and demand since much of the generation is
located in the South of the island while a majority of the demand is in the North,
thereby exacerbating the fragility and instability of the whole system.
Puerto Rico’s dated and fragile electric system has suffered operational and
reliability challenges and has struggled to provide residents with reliable and
affordable power, as evidenced by reliability, customer satisfaction, and safety
metrics that stand well below U.S. mainland and other island utility industry stand-
ards. PREPA’s challenges were highlighted and significantly exacerbated by hurri-
canes Irma and Maria, which struck Puerto Rico within 2 weeks of each other and
led to mass destruction of PREPA’s infrastructure and a complete failure of the
electrical grid.
In the aftermaths of hurricanes Irma and Maria, the Government sought not only
to rebuild the electric grid but to transform it into a reliable, resilient, modern and
eco-friendly system and bring to bear U.S. mainland and other international best
industry practices to PREPA. The Government determined that the most effective
way to achieve these goals was to partner with a world-class private operator with
the requisite expertise, experience, and know-how to effect the much-needed
transformation of the electric system.
Procurement Process
The procurement process to select a partner for the T&D system was carefully
designed to address a number of key considerations. First, the Government was
keenly focused on implementing a robust, competitive and transparent procurement
33
process to identify the private partner best positioned to accomplish the trans-
action’s objectives. Second, from its inception, the procurement process was carried
out in coordination with the Financial Oversight and Management Board for Puerto
Rico (the ‘‘FOMB’’) given the need to align the process with the efforts to address
PREPA’s financial challenges and the Certified Fiscal Plan. Finally, given the im-
portance of Federal funding to support the transformation, the procurement process
was designed to provide potential private partners with various opportunities to
better understand the state of the recovery effort and the status of the various
applications for Federal funding.
The more than 18-month procurement process officially commenced with a market
sounding in the summer of 2018 followed by the issuance of a request for qualifica-
tion (‘‘RFQ’’) on October 31, 2018. Based on the RFQ process, four proponents were
qualified for the request for proposal (‘‘RFP’’) phase. The RFP phase was launched
on February 1, 2019 and culminated with the submission of proposals on November
25, 2019. From the end of November 2019 through the end of January 2020, the
P3 Authority worked with the partnership committed established to oversee the
process to extensively review and analyze the proposals and then to negotiate and
agree on a form of contract with LUMA as the preferred bidder. From February
through June 2020 the P3 Authority worked with LUMA to obtain the requisite
consents and approvals to sign the contract.
During the RFP process, the P3 Authority provided proponents with extensive
access to information related to PREPA and the T&D system—a data room with
approximately 18,000 documents (totaling 149,181 megabytes of data), responses to
over 700 diligence questions, and more 20 diligence calls and in-person meetings
with bidders. Proponents were given the opportunity to review and comment on
seven successive drafts of transaction documents and to discuss their comments in
person at eight meetings. The robustness of the process is evidenced by the fact that
LUMA expended over $15 million of its own funds throughout the process to both
diligence PREPA’s assets and prepare its proposal.
Benefits of Transaction to the People of Puerto Rico
LUMA’s proposal, which was largely translated into the contract, presents
concrete and detailed plans and timelines for achieving substantial gains in safety,
customer service, reliability, and resiliency, all of which result in immeasurable ben-
efit to the Puerto Rican economy, a demonstrable leap in economic competitiveness,
tangible and meaningful improvements in the every-day quality of life of Puerto
Ricans, and better work conditions for employees.
In addition, LUMA projects that it will be able to generate significant cost savings
throughout the life of the contract based on its approach to the O&M services and
the expertise and know-how that it will bring to bear in performing the services.
LUMA estimate that it will be able to reduce operational costs by fiscal year 2026
by approximately 30 percent, as compared to PREPA’s 2019 fiscal plan. This rep-
resents a net reduction in costs of approximately $100 million per year. LUMA also
intends to implement a plan to reduce technical and non-technical energy losses,
which will result in a reduction of approximately $150 million in annual energy sys-
tem costs. Between the reduction in O&M costs and the improvements in lost
energy, LUMA estimates a savings of $293 million per year in 2027, as compared
to an annual service fee under the contract of $141 million. This results in signifi-
cant annual and cumulative net savings for Puerto Rico—$323 million in cumulative
savings by 2027—and demonstrates that the contract will pay for itself.
LUMA’s approach to the O&M services is also expected to result in Federal
disaster funding dollars being obligated for PREPA more effectively and rapidly.
Indeed, the responsible management and administration of Federal dollars by an ex-
perienced and qualified private operator is key to facilitating the disbursement of
the funds, one of the most critical component to the ability to rebuild and upgrade
the electric grid.
Finally, the contract establishes clear obligations and performance metrics with
which LUMA must comply, and parent company guarantees backstop these obliga-
tions. Unlike a government entity, LUMA must perform in accordance with metric
designed specifically to improve safety, reliability and resiliency of the system or
else is held accountable for its failure to do so. Thus, LUMA is contractually
incentivized to deliver results for the people of Puerto Rico.
Impact of the Transaction on Rates
Various critics of the transaction have argued that, notwithstanding the
operational and technical savings that LUMA is able to generate, consumer rates
will go up as a result of this contract. In response to this, it is important to under-
score that LUMA is required to comply with all laws and regulations applicable to
34
its operation of the T&D system, including those related to tariffs. In addition,
LUMA is subject to regulatory oversight by the Puerto Rico Energy Bureau
(‘‘PREB’’), and the contract specifically provides that all budgets prepared by LUMA
must comply with rate orders established by PREB. The contract does not in any
way eliminate, limit or restrict PREB’s authority with respect to establishing rate
orders or exercising its regulatory oversight to protect consumers. Furthermore, the
contract does not require a rate increase or establish a minimum rate for LUMA
to operate.
It is also worth noting that the transaction was structured as a long-term O&M
contract rather than a concession, a common structure for PPPs, for a variety of rea-
sons but the most critical of which was a desire to minimize any impact on rates.
In addition to potentially jeopardizing the tax-exempt status of PREPA’s legacy and
restructured debt, which would have increased the amount of PREPA debt to be re-
paid, a concession posed greater risk to PREPA’s current and future eligibility for
Federal disaster relief funding. The Government was keenly focused on the fact that
if a concession structure were to preclude Federal disaster relief funding, it would
likely lead to increased rates. This is because a key feature of the concession struc-
ture is capital investment by the private sector participant and, absent Federal
funding, the private investor would need to raise consumer rates in order to recoup
its investment in the T&D system. With the specific view of avoiding these potential
rate increases, the Government elected to pursue an O&M contract that would not
have these effects.
Impact of the Transaction on Employees
Much has also been said about the impact of the transaction on employees. I want
to make clear that no employee will lose their job as a result of this transaction—
their jobs are specifically protected under existing law. Moreover, for those employ-
ees who end up working for LUMA, they will have access to world-class safety
training, professional development opportunities, and exciting career paths, all of
which has not been available to date for PREPA employees.
LUMA will need to hire thousands of employees, and all current PREPA employ-
ees will be given priority in hiring. The contract specifically requires LUMA to use
reasonable efforts to interview all PREPA employees and evaluate them for posi-
tions at LUMA. It is important to note that, as recently as 8 years ago, PREPA
employed about 9,000 employees and today the number is closer to 6,000. There is
no doubt that PREPA is currently understaffed, and this is without taking into
account the work that will result from the expected influx of Federal aid to rebuild
the system.
All employees hired by LUMA will benefit from LUMA’s culture of People First,
Safety Always, which ensures that every employee has the proper training, skills,
and tools for the job. In accordance with Act 120, all of the LUMA employees will
receive a compensation and benefits package that is equal to or better than the one
provided by PREPA. As part of the transition to LUMA, employees will have the
choice to stay with their existing pension plan or transfer to a new LUMA plan.
Finally, once LUMA hires its workforce, it expects to recognize the unions with
majority status in the various bargaining units, in compliance with all applicable
labor laws.
In addition, LUMA is in the process of establishing the LUMA College for
Technical Training in Puerto Rico. This facility, which is being developed and built
at LUMA’s expense, will be used to train new craft skilled labor and will be open
to anyone on the island. The curriculum and operations will be provided by the
Northwest Lineman College, an accredited technical school recognized by the U.S.
Department of Education with multiple campuses around the United States. This
job training will expose employees of PREPA to training that will make them
competitive not only in Puerto Rico but across the United States.
Any employee who elects not to join LUMA will have the right to maintain their
employment with PREPA or transfer to another government agency within Puerto
Rico. These rights are clearly established in Act 120 and cannot be taken away—
not through the contract with LUMA or otherwise. Employees continuing with
PREPA or another governmental agency will also retain their acquired rights under
applicable law and the relevant collective bargaining agreement. Nothing in the
LUMA agreement contravenes those acquired rights, and LUMA is required to
comply with all Federal and local laws.
First Step Toward Renewable Energy
Finally, with LUMA comes accountability—the accountability to meet Puerto
Rico’s goal of a renewable energy future. LUMA has demonstrated a deep under-
standing of the IRP and the Electric Grid Modernization Plan for Puerto Rico, which
35
contemplate transforming the energy system through the incorporation of more
renewables, micro-grids, and distributed energy resources. LUMA’s commitment to
complying with and achieving the renewable energy targets set forth in these plans
is evidenced by LUMA’s proposal to create (i) a detailed program to maximize the
pace and magnitude of increased solar generation, with the stated goal of identifying
opportunities that can be built in 18 to 24 months, and (ii) a transmission expansion
plan that will play a key role in prioritizing which mini-grids are developed first.
In addition, LUMA organizational structure includes the Utility Transformation
Department, a department that will be dedicated to the transformation of the T&D
System and responsible for the technical implementation of new initiatives, includ-
ing distributed and renewable generation, interconnection standards, micro-grid and
mini-grid design, and renewable energy.
LUMA’s commitment to and focus on renewable energy is a first step toward the
Government’s renewable energy goals. LUMA efforts will be supplemented by
Government initiatives aimed at PREPA’s generation assets with a view toward re-
ducing Puerto Rico’s reliance on fuel oil and increasing the availability of renewable
energy and natural gas. However, this first step with LUMA is a critical one. Puerto
Rico will have an world-class operator that will be accountable for complying with
the renewable portfolio standards and the goals of reaching 100 percent renewable
generation by 2050—something for which PREPA, as a Government-owned
monopoly, has not been accountable.
Conclusion
The T&D transformation process took place against a background of unique and
unprecedented challenges: two devastating hurricanes followed by a series of major
in late 2019 and 2020; a prolonged and, at times, contested PREPA bankruptcy
process; the delay of billions of dollars in Federal aid; an unexpected change in
government during the process; and strict shelter-in-place measures and other
restrictions in mid-March to prevent the spread of COVID-19.
Notwithstanding these significant challenges, the Government was undeterred
and forged ahead with its vision to transform PRPEA. It launched the T&D procure-
ment process with the objectives of modernizing the utility, increasing T&D
resiliency and reliability, deploying new technologies, delivering low-cost electricity,
and implementing industry best practices and operational excellence through mana-
gerial continuity and long-term planning. The Government designed a robust,
competitive, and transparent procurement process that attracted world-class
participants and resulted in the selection of LUMA.
In partnership with LUMA, PREPA will finally deliver to the people of Puerto
Rico what they deserve—a modern, affordable, resilient, and reliable electric energy
system that will serve as a driver of economic recovery and growth. This partner-
ship represents the most efficient and effective way to ‘‘build back better’’ as the
Government has promised the citizen of Puerto Rico.
Thank you.

QUESTIONS SUBMITTED FOR THE RECORD TO FERMÍN E. FONTANÉS GÓMEZ,
EXECUTIVE DIRECTOR, PUERTO RICO PUBLIC PRIVATE PARTNERSHIPS AUTHORITY
Questions Submitted by Rep. Grijalva
Question 1. Can you describe the proposal evaluations and selection process for the
long-term concession contract and what mechanisms were in place to protect its
integrity?
Answer. Pursuant to the Public-Private Partnership Authority Act, Act No. 29–
2009, as amended (‘‘Act 29’’) and the Puerto Rico Electric System Transformation
Act, Act No. 120–2008, as amended (‘‘Act 120’’), the details for the procedures for
evaluating and selecting the bidder awarded the contract for the management, oper-
ation, maintenance, repair, restoration and replacement of the Puerto Rico electric
power transmission and distribution system (the ‘‘Project’’) were established through
the Regulation for the Procurement, Evaluation, Selection, Negotiation and Award
of Partnership Contracts and Sale Contracts for the Transformation of the Electric
System under Act No. 120–2018, as amended (the ‘‘Regulation’’). The purpose of the
Regulation is to establish a procurement, evaluation, selection, negotiation and
award process for public-private partnerships (‘‘PPPs’’) with respect to any function,
service or facility of PREPA that is fair, consistent, transparent and encourages and
supports a climate of private sector innovation and investment in Puerto Rico. The
Regulation provides guidelines for selecting the entities or individuals that will
36
enter into partnership agreements, in this case the O&M Agreement, with PREPA
and negotiating the awarding of such agreements.
Further, Act 29 and Act 120 require the Partnership Committee (‘‘Partnership
Committee’’) established by the Puerto Rico Public-Private Partnerships Authority
(the ‘‘P3 Authority’’) to take into account certain specific factors in evaluating re-
sponses to the Request for Proposals (‘‘RFP’’). The P3 Authority and the Partnership
Committee developed evaluation criteria, which were set forth in the RFP, to meet
the objectives of the Project, including those objectives and requirements set forth
in Act 120, Act 29 and the Regulation, for the Partnership Committee’s use in evalu-
ating the proposals. Addendum No. 7 to the RFP, which was distributed to the pro-
ponents prior to the submission of final proposals, set out the evaluation criteria
and weighting to be applied to the proposals by the Partnership Committee during
the evaluation and selection process. Proponent’s proposals were evaluated on the
basis of three elements.
A technical proposal comprised forty-five percent (45%) of the proponents’ final
scores. As part of the technical proposals the RFP required proponents to provide
detailed plans and proposals with respect to:
• performing the operation and maintenance services;
• transitioning and handing over services and other rights and responsibilities
with respect to the T&D System;
• staffing and training of employees and subcontracting of services; and
• development of the performance metrics, which the Operator must meet or
exceed to earn an incentive fee.
An operational and financial proposal comprised fifty percent (50%) of the
proponents’ total score. As part of the operational and technical proposals the RFP
required proponents to propose certain operational and financial terms and
conditions with respect to:
• the net present value of the fixed fee and incentive fee over the term of the
O&M Agreement;
• the proposed amounts of certain operational elements;
• certain caps on liability included in the O&M Agreement; and
• the proposed target service commencement date.
A Legal proposal was graded on a pass/fail basis and required the proponents to
submit a letter confirming their acceptance of the draft O&M Agreement, save for
certain terms and conditions. Five percent (5%) of proponents’ total scores were
based on proponents’ oral presentations of their final proposals to the Partnership
Committee.
For more detailed information regarding the evaluation criteria and weighting
applied to each criteria, please see Amendment No. 7 to the RFP attached as
Exhibit A hereto and Section 5 (Process for Recommended Award) of the Partner-
ship Committee Report prepared pursuant to Act 29 (the ‘‘Partnership Committee
Report’’) and attached as Exhibit B hereto.
Prior to submission of their final proposals, the proponents were provided access
to the same information and had similar access to the P3 Authority and PREPA
management. All proponents were given access to the data room, and proponents
were able to submit any request for clarification with respect to the contents of the
RFP, the information available in the data room and other matters related to the
Project. The P3 Authority received and answered over 730 requests for clarification
throughout the RFP process and answers were made available to all proponents, un-
less a proponent requested confidentiality and the P3 Authority agreed to such
treatment. Furthermore, the proponents participated in management presentations,
site visits and were given numerous opportunities to comment on the transaction
documents. Proponents were given the same opportunity to respond to questions
and clarify their final proposals as well as amend and supplement their final
proposals after the submission deadline.
On January 11, 2020, the Partnership Committee voted by referendum, pursuant
to Act 29, Act 120 and the Regulation, to designate LUMA as the proponent chosen
to engage in exclusive discussions and negotiations with the P3 Authority in connec-
tion with the Project, pursuant to Section 5.1 of the Regulation. Each Partnership
Committee member submitted its score of the proposals, and such scores were aver-
aged to determine a final score for each proposal. The Partnership Committee grant-
ed LUMA a higher average score. Based on its evaluation of the proposals pursuant
to the evaluation criteria, the Partnership Committee determined that LUMA had
clearly demonstrated its ability and commitment to transform the Puerto Rico
37
electric transmission and distribution system (the ‘‘T&D System’’) into a modern,
sustainable, reliable, efficient, cost-effective and resilient electric system for the peo-
ple of Puerto Rico. In order to protect the integrity of the evaluation and selection
process, the Partnership Committee and P3 Authority established an evaluation and
selection process that was in line with the applicable regulatory framework, includ-
ing the limits imposed by Act 29, Act 120 and the Regulation. On May 15, 2020,
after a robust and competitive procurement process that lasted more than 18
months, the Partnership Committee determined to recommend to the board of direc-
tors of the P3 Authority that LUMA be selected to execute the O&M Agreement.
Question 2. Did political appointees participate in the decision-making process? If
so, why?
Answer. Political appointees participated in the decision-making process as
members of the Partnership Committee for the Project. The members of the
Partnership Committee served in their positions by virtue of the requirements set
forth under applicable law.
Article 8 of Act 29 requires that the Partnership Committee be composed of: (i)
the executive director of the Puerto Rico Fiscal Agency and Financial Advisory
Authority (known by its Spanish acronym ‘‘AAFAF’’) or his/her delegate; (ii) the
officer of PREPA directly concerned with the project or his/her delegate; (iii) one
member of the board of directors of PREPA, his/her delegate, or an official thereof
selected by the board of directors of the P3 Authority based on him/her having spe-
cialized knowledge pertinent to the project under consideration by the relevant part-
nership committee; and (iv) two officials from any government entity chosen by the
board of directors of the P3 Authority for their knowledge and experience in the
type of project under consideration by the relevant partnership committee.
Pursuant to Article 5(c) of Act 120, the P3 Authority must designate a Partner-
ship Committee, as required by Act 29, to evaluate and select qualified proponents
and to establish and negotiate the terms of the O&M Agreement. Furthermore, pur-
suant to Article 8(b) of Act 29, the Partnership Committee was tasked with the duty
of evaluating the proposals submitted and selecting that which is best for the
Project and the people of Puerto Rico. The members of the Partnership Committee
made all decisions based on the criteria provided for in the RFP, which were based
on the requirements of Act 29, Act 120, the Regulation and the PREPA Fiscal Plan,
as certified on June 27, 2019, by the Financial Oversight and Management Board
of Puerto Rico (‘‘FOMB’’). As such, the Partnership Committee’s discretion through-
out the evaluation and selection process was restricted within the confines of
applicable law.
As of May 15, 2020, the date the Partnership Committee recommended to the
board of directors of the P3 Authority that the O&M Agreement be awarded to
LUMA, and pursuant to the requirements summarized above, the Partnership
Committee was comprised of the following individuals: (i) Omar Marrero, Esq.,
Executive Director & Chairman of AAFAF, CFO of the Government of Puerto Rico;
(ii) Jose Ortiz, PE, Executive Director of PREPA; (iii) Ralph Kreil, PE, President of
the board of directors of PREPA; (iv) Edison Avilés, PE, Esq., Chairman of the
Puerto Rico Energy Bureau (‘‘PREB’’); and (v) Ottmar Chavez, Executive Director
of the Central Office for Recovery and Reconstruction.
As a result of his appointment as executive director of AAFAF, Omar Marrero
became a member of the Partnership Committee on July 30, 2019. On July 18, 2018,
Governor Rosselló recommended Jose Ortiz be appointed as Executive Director of
PREPA, and the Governing Board of PREPA voted unanimously in favor of the ap-
pointment on July 19, 2018. As a member of the board of directors of PREPA, Ralph
Kreil was appointed to his position by Governor Rosselló. Edison Aviles and Ottmar
Chavez were appointed to the Partnership Committee for their knowledge and expe-
rience in the energy sector. As Chairman of PREB, Edison Avilés was appointed to
PREB by the Governor of Puerto Rico with the advice and consent of the Senate
of Puerto Rico. Edison Avilés is a professional engineer, and member of the
Engineers and Land Surveyors of the Commonwealth of Puerto Rico Bar Associa-
tion, the Institute of Electronic and Electrical Engineers, and previously served as
President of the Electrical Engineers Institute of the Professional College of
Engineers and Land Surveyors of Puerto Rico. Governor Rosselló recommended that
Ottmar Chavez serve as the Executive Director of Central Office for Recovery and
Reconstruction. Ottmar Chavez currently serves as the Governor’s Authorized
Representative before FEMA and serves as the Administrator of the General
Services Administration of Puerto Rico.
38
Question 3. Can LUMA terminate the contract with PREPA during an extended
force major event? If so, wouldn’t an extended force major event—such as a
hurricane—be a time when grid work would be needed?
Answer. LUMA is able to terminate the O&M Agreement for a Force Majeure
Event only if the Force Majeure Event continues for more than eighteen (18)
consecutive months and materially interferes with, delays or increases the costs
of the Front-End Transition Services or the O&M Services (see Section 14.5(c)
(Additional Termination Rights—Extended Force Majeure Event)). Under the O&M
Agreement, hurricanes are not enumerated as Force Majeure Events. Thus, the
disruption to the T&D System would need to continue beyond eighteen (18)
consecutive months—i.e., longer than the period of time that the electric system
was affected after Hurricanes Irma and Maria—before the Operator would be able
to terminate the O&M Agreement. For the reasons noted above, we do not think
this is a likely event and, if it did occur, the O&M Agreement provides protections
for consumers and rate payers.
Chair Grijalva is correct in stating that an extended force majeure event—such
as a hurricane—would be a time when grid work would be needed. In fact, that is
precisely one of the key reasons the P3A sought to bring in a private operator with
the expertise and know-how to ensure that what took place after Hurricane Maria
or Hurricane Irma does not happen again. The P3A took steps when negotiating the
O&M Agreement to ensure that if a hurricane as devastating as Hurricane Maria
or Hurricane Irma were to occur the consequences of such event would not continue
for such an extended period of time. The O&M Agreement, as executed, accounts
for this necessity by requiring the Operator to provide the Administrator and PREB
with a plan of action that takes effect from when the Operator takes over the T&D
System for responding to any emergency affecting the T&D System (the ‘‘Emergency
Response Plan’’).
The Emergency Response Plan will provide for storm monitoring and mobilization
of the Operator and Subcontractor workforce in connection with anticipated storms
and other electrical system emergencies, the repair and replacement of damaged
components of the T&D System, including due to Outage Events or Declared
Emergencies or Major Disasters, and the restoration of the T&D System to pre-
emergency conditions. Further, if at any time the Operator determines that imme-
diate action must be taken to mitigate the immediate consequences of an Emergency
Event, the Operator must take such action (see Section 5.14(b) (Emergency Action—
Emergencies). As such, upon the occurrence of a hurricane the Operator is obligated
to begin work to not only mitigate the consequences of a hurricane, but to work to
restore the T&D System to pre-emergency conditions.
LUMA has committed to leveraging consortium members’ expertise with respect
to Federal funding and emergency and disaster response to work to harden and
modernize the grid. Further, in their proposal, LUMA stated an intent to develop
an interim Emergency Response Plan to address storm/hurricane season during the
Front-End Transition so LUMA and its employees can be thoroughly prepared for
any emergency or disaster that may occur even before LUMA takes over the
operation and maintenance of the T&D System.

Questions Submitted by Rep. Velázquez
Question 1. Page 14 of the Executed Agreement between PREPA and LUMA LLC
defines force majeure as: to the extent not covered by (A) or (B) above, any event that
causes any Federal or Commonwealth Governmental Body to declare any portion of
the geographic area of the T&D System part of a ‘‘disaster zone,’’ ‘‘disaster area,’’
‘‘state of emergency’’ or any similar pronouncement;
1a. This definition does not specifically exclude when the island is declared as
disaster area after a hurricane makes landfall. Mr. Fontanés, are there any other
safeguards in the agreement that would prevent the agreement to be terminated by
LUMA when a hurricane as devastating as Maria strikes the island?
Answer. In order to prevent LUMA from terminating the O&M Agreement if a
hurricane as devastating as Hurricane Maria were to strike the island, the O&M
Agreement was drafted to prevent a hurricane, such as Hurricane Maria, from
qualifying as an extended Force Majeure Event. In the event that a hurricane as
devastating as Hurricane Maria were to strike the island, LUMA is not permitted
to terminate the Agreement unless the consequences of the hurricane last for more
than eighteen (18) months (see Section 14.5(c) (Additional Termination Rights—
Extended Force Majeure Event)). In addition, during the continuance of a Force
Majeure Event, such as a hurricane, the Operator is required, as promptly as rea-
sonably possible, to use commercially reasonable efforts to mitigate or eliminate the
39
cause of the Force Majeure Event, reduce the cost resulting therefrom, mitigate and
limit damage to Administrator and resume full performance under the Agreement
(see Section 17.1(b) (Force Majeure Events—Notice; Mitigation—Mitigation)). As
such, the Operator must work to repair the damages caused by the hurricane in
order to remedy the T&D System and eliminate the Force Majeure Event as
promptly as possible, and before an extended Force Majeure Event is able to occur.
1b. Why were hurricanes not excluded from the force majeure definition if they are
historically common on the island?
Answer. Although under the O&M Agreement, hurricanes are not enumerated as
Force Majeure Events, the P3 Authority took steps to ensure that the Operator
would work to upgrade and prepare the T&D System for future hurricanes and
other natural disasters. Puerto Rico’s dated and fragile electric system has faced sig-
nificant operational and reliability challenges and has struggled to provide residents
with reliable and affordable power. PREPA’s challenges were both highlighted and
significantly aggravated by Hurricanes Irma and Maria. Against the backdrop of
these two devastating back-to-back hurricanes that intensified an economic and
fiscal crisis, the Government sought to move forward in its economic and disaster
recovery by investing in infrastructure, people and the environment. In particular,
Hurricanes Irma and Maria forced the Government to rethink how PREPA’s power
supply and delivery infrastructure should be managed and upgraded to ensure that
it is better prepared for inevitable future weather events. The Project will harness
LUMA’s resources and expertise to revitalize and strengthen the T&D System in
order to be more resilient against future natural disasters.
In order to assure that the consequences of a hurricane do not exist for a consecu-
tive eighteen (18) month period the Operator must create an Emergency Response
Plan before the Operator takes over the operation of the T&D System. The
Emergency Response Plan is meant to serve as the vehicle for the improvement and
strengthening of the T&D System to withstand future hurricanes and other natural
disasters. The Operator is required to implement an Emergency Response Plan that
not only addresses disaster recovery and emergency response and restoration of the
T&D System, but that also coordinates plans for disaster recovery and response.
The Emergency Response Plan calls for storm monitoring and mobilization, system
condition monitoring, repair and replacement of damaged components of the T&D
System, as well as the restoration of the T&D System to pre-emergency conditions,
among other things. The Emergency Response further requires the Operator to con-
duct periodic drills including, at a minimum, a system wide test of the Emergency
Response Plan three (3) months prior to the commencement of the Atlantic
Hurricane Season, which shall replicate a Category 5 hurricane. Following such
drills, Operator will conduct post-event analysis and incorporate lessons learned
from drills and actual events to improve the readiness of the T&D System to
withstand the forces of nature.

Questions Submitted by Rep. Garcı́a
Question 1. LUMA has estimated that they can generate a cumulative net savings
of $323 million. Where and how can it produce these savings? Will this data become
public?
Answer. On December 20, 2019, LUMA provided a clarification letter to the P3
Authority specifically addressing several requests for clarification from the P3
Authority. LUMA provided estimates of savings from their Loss Reduction Program
and O&M Cost Improvement Program. Assuming a Service Commencement Date in
2021, as the Operator, LUMA estimates, per Appendix 2, a total cumulative Loss
Reduction savings of $648 million over the first 7 years and $536 million of O&M
cost savings over the same period for a total of $1,184 million.
Over the same period the total fees paid to LUMA are $861 million for a net
cumulative savings over the period of $323 million. These cumulative net savings
only cover the first 7 years of the term of the O&M Agreement. These savings will
continue to increase over the remaining 8 years of LUMA’s operation of the T&D
System. As actual savings are generated, the data will become public as LUMA’s
budgets and performance metrics are subject to the jurisdiction of the PREB.
In terms of technical and non-technical loss reductions, LUMA has a program to
reduce the resultant system energy losses. LUMA plans to reduce PREPA’s current
system total losses’ percent from approximately 12.2 percent to 5.5 percent over the
7-year period. LUMA’s energy loss reduction program is based on experience from
LUMA’s management team and similar sized utilities in Latin America where
successful programs have been implemented.
40
LUMA’s operation and maintenance cost reductions/savings come from their
extensive due diligence work, benchmarking to other utilities (i.e.: cost per kWh,
cost per customer, and cost per mile) and their operating utility experience. For
example, LUMA expects to achieve significant cost savings in vegetation manage-
ment. After an initial 3-year reclamation period of $50 million per year, LUMA
projects vegetation management costs will drop to $11 million and then reach a
steady state of $9 million per year. Note that the current 2020 Fiscal Plan for
PREPA shows vegetation management costs of over $70 million.
Additionally, although difficult to quantify now, the Partnership Committee
believes there could be substantial additional value at (and beyond) the end of the
term of the O&M Agreement, if, as is contemplated in the O&M Agreement, there
is no need (or limited need) to retain a new or replacement Operator because of the
knowledge transfer and development of local expertise that is intended to take
place, which was one of the objectives that the Operator committed to as part of
its proposal.
Question 2. Given that LUMA has the right to terminate its contract with the
government in case of either ‘‘prolonged force majeure events’’ or changes in
regulatory law, does the government have a plan in place if the Legislature or
Administration in Puerto Rico act to protect Puerto Rico’s residents from energy rate
hikes or penalties due to nonpayment?
Answer. Let me take each of these questions in turn.
First, the Operator may only terminate the O&M Agreement in the event that a
Force Majeure Event continues in excess of eighteen (18) consecutive months
and materially interferes with, delays or increases the costs of the Front-End
Transition Services or the O&M Services (see Section 14.5(c) (Additional
Termination Rights—Extended Force Majeure Event)). For the reasons noted above,
we do not think this is a likely event and, if it did occur, the O&M Agreement
provides protections for consumers and rate payers.
Second, with respect to changes in regulatory law, the O&M Agreement limits
when a cap on rates would be considered a Change in Regulatory Law. A Change
in Regulatory Law includes change, amendment or modification to any Common-
wealth Applicable Law or any adoption of, or change to, any administrative or judi-
cial interpretation (having the force of law) of any Commonwealth Applicable Law
that caps, or has the effect of capping, rates charged to T&D Customers. Notably
it expressly excludes any temporary cap on rates to address an Outage Event, among
other scenarios. The carve out of temporary rate caps for Outage Events reflects the
clear acknowledgment of both the P3 Authority and LUMA that the Legislature or
Administration in Puerto Rico might seek to protect ratepayers should a devastating
hurricane, such as Hurricane Maria or Hurricane Irma, strike the island and should
address the Committee Members’ concern with respect to energy rate hikes or pen-
alties due to nonpayment during the course of a hurricane and the aftermath of
such event.
Finally, it bears noting that the O&M Agreement does not establish energy rates
(which are set by an independent regulator-the PREB) and the compensation pay-
able to the Operator, or its duties to perform under the O&M Agreement, is not
linked to nonpayment by customers or amount of system revenues. Moreover, the
amount of revenues and level of the applicable rate paid by customers should not
interfere with the Operator’s duty to perform its obligations under the O&M Agree-
ment. The Operator’s compensation is not tied to the payment of rate charges by
T&D Customers. The Operator’s compensation includes a fixed fee payable to the
Operator for each contract year and an incentive fee tied to the Operator’s ability
to meet or exceed certain performance metrics. As such, the Operator is incentivized
throughout the term of the O&M Agreement to continue to operate and maintain
the T&D System even if the Legislature or Administration in Puerto Rico act to pro-
tect Puerto Rico’s residents from energy rate hikes or penalties due to nonpayment.

Questions Submitted by Rep. Bishop
Question 1. The Committee has heard from some witness today about all the nega-
tive aspects the newly signed LUMA contract will bring to the residents of the island.
Could you reiterate to us the expected benefits to the consumers of Puerto Rico that
were the basis for ultimately agreeing to the terms of the contract?
Answer. LUMA’s proposal, which was largely translated into the contract,
presents concrete and detailed plans and timelines for achieving substantial gains
in safety, customer service, reliability and resiliency, all of which result in
immeasurable benefit to the Puerto Rican economy, a demonstrable leap in economic
41
competitiveness, tangible and meaningful improvements in the everyday quality of
life of Puerto Ricans, and better work conditions for employees.
LUMA will bring to consumers an extensive understanding of the PREPA context,
which will be further developed during the Front-End Transition Period. LUMA’s
technical proposal, largely incorporated into the terms of the O&M Agreement, pre-
sents a tailored approach to the T&D system that demonstrates a clear under-
standing of the challenges and opportunities of the Project. With LUMA taking on
the role of the Operator, the people of Puerto Rico will benefit from improvements
in design resiliency standards, storm hardening practices, control centers, vegeta-
tion management, advanced metering infrastructure, public lighting and fleet solu-
tions to rebuild and upgrade the performance of the electric grid and customer
service. Further, LUMA projects that it will be able to generate significant cost
savings throughout the life of the contract such that the savings are intended pay
for the service fee under the Agreement and avoid increases to rate payers.
The people of Puerto Rico will benefit from LUMA’s extensive experience with
respect to Federal funding procurement, management and deployment. LUMA has
committed to engaging its consortium member, IEM, to deal with Federal funds
management. IEM is a comprehensive emergency management and disaster recov-
ery firm that has supported over 300 state and local jurisdictions with a wide range
of energy management services. IEM has experience with procuring and deploying
Federal funding, including over $51 billion in disaster recovery programs over the
past 35 years.
LUMA has made a commitment to investing in the local community and Puerto
Rico’s workforce through leveraging the existing PREPA workforce and developing
a self-sustaining standalone utility at the end of the contract term. Further, LUMA
has committed to building and managing, at its own expense, a state-of-the-art
lineworker and technical training campus in Puerto Rico to offer customized cur-
riculum and training to LUMA utility workers and the next generation of Puerto
Rico’s skilled workforce. The lineworkers college will significantly improve local
workforce development and retention by providing best-in-class training programs
and facilities. In addition, the lineworkers college is a critical component of LUMA’s
holistic approach to improving emergency response preparedness for the benefit of
the people of Puerto Rico. Part of the lineworkers curriculum includes emergency
preparedness training, which will be integrated into the mindsets of the local Puerto
Rican workforce from the outset of their training.
The central goal of the Project is to transform Puerto Rico’s energy system into
a modern, sustainable, reliable, efficient, cost-effective and resilient one. The Project
is intended to achieve the following objectives for the benefit of the people of Puerto
Rico: (i) delivery of low-cost electricity to the ratepayers of Puerto Rico; (ii) increase
in T&D System resiliency, achieving performance in line with codes, specification
and standards consistent with mainland U.S. electric utilities; (iii) increase T&D
System reliability; (iv) deployment of new technologies; and (v) implementation of
industry best practices and operational excellence through managerial continuity
and long-term planning.
Question 2. The Committee has heard that the RFP process that ultimately lead
to the contract signed with LUMA was opaque, lacking input from valuable public
member stakeholders, and conducted behind ‘‘closed doors.’’ Can you describe the
RFP process that the P3 Authority conducted? Would it be fair to claim that the
process lacked transparency?
Answer. The claims you refer to are irresponsible, are born out of a lack of knowl-
edge, or are simply designed to pursue a self-serving agenda. The entire procure-
ment process for the PPP related to the T&D System was conducted in accordance
with the highest standards and industry wide best practices. It also fully complied
with applicable legal requirements including as set forth in Act 29, Act 120, the
Regulation, and the evaluation criteria clearly detailed in the RFP.
Puerto Rico is a leader amongst U.S. jurisdictions with organized PPP programs.
The Government specifically enacted Act 29 and its regulations in order to finance
infrastructure projects that provide multiple public services. Pursuant to the frame-
work set forth in Act 29 the Government has had success in bringing to bear best
industry practices, expertise, experience and know-how to its infrastructure projects
by entering into PPPs with private sector participants. For example, the Govern-
ment has entered into PPPs to revitalize toll roads PR-22 and PR-5 and the Luis
Muñoz Marin International Airport, both of which were awarded Project Finance
International’s deal of the year in the Americas award for the successful financing
of significant infrastructure projects. By providing clarity, uniformity, and certainty
with respect to PPP selection and contracting, Act 29 and the regulation enacted
thereunder comprise one of the most robust legal frameworks for PPPs in the
42
Americas. In particular, Puerto Rico’s PPP program is guided by the following five
key components of a successful PPP program identified by the World Bank Group:
clear public policy, strong legal framework, clear processes and institutional respon-
sibility, responsible financial management, and good governance arrangements.
The detailed legal framework set forth in Act 29 includes specific rules governing
the confidentiality of the PPP process and the specific timing of any disclosures re-
garding the process, the identity of participants and resulting agreement, in this
case the O&M Agreement. During the evaluation, selection and negotiation process,
including all proceedings prior to the approval of the proposed partnership by the
board of directors of the P3 Authority and board of directors of PREPA and by the
Governor, all information relating to the PPP process, including the identity of the
participants remaining in the process, the proposals submitted, and the negotiations
between the parties must remain confidential. Pursuant to Act 29, the relevant in-
formation about the PPP process is only disclosed by the P3 Authority after an
agreement is approved by the Governor and executed by the parties.
Article 9(b) of Act 29 further requires that, in commencing a PPP process, the P3
Authority must devise processes directed at (i) guaranteeing the participation of the
greatest number of qualified proponents and (ii) protecting and ensuring a level
playing field and fair competition among such proponents. Protecting and preserving
the confidentiality of the proponents, their proposals and the evaluation thereof
until the execution of the O&M Agreement was essential for achieving the afore-
mentioned goals as explained in more detail below. Act 120 makes the confiden-
tiality and other provisions of Act 29 expressly applicable to the PPP process for
PREPA. Furthermore, the Regulation similarly provides for the confidentiality of all
information and documents submitted in connection with a PPP process prior to the
execution of a final agreement.
Finally, Art. 4.7(b)(iii)(3) of the Regulation provides that proposals received for
any PPP process under Act 120 and Act 29 shall not be read publicly nor shall the
P3 Authority generate copies thereof. Instead, the Regulation requires that during
the period for selection and evaluation for proposals, ‘‘only the members of the P3
Authority, the members of the Partnership Committee or persons designated by the
P3 Authority or its Executive Director may have access to the Proposals or the re-
sults of the evaluation of those proposals.’’ In turn, Article 5.1(ii)(vi), which
addresses the review of proposals and eventual recommendation by the Partnership
Committee requires that proposals, evaluation, discussion and negotiations be kept
confidential through the evaluation, selection and negotiation process.
Thus, the applicable statutes and regulations provide for the confidentiality of the
draft O&M Agreement and related Partnership Committee Report, as well as all
proposals and other information received or exchanged during the evaluation, selec-
tion and negotiation process of a Project until the O&M Agreement was executed.
These statutory and regulatory confidentiality requirements are geared at protecting
important interests that are key to the success of the PPP process, namely the eval-
uation, selection and negotiation with as many qualified proponents as possible
through a competitive process. It is only through a robust and competitive process
that the Government would be able to achieve the best terms for the relevant PPP
and thus protect the best interests of the people of Puerto Rico.
As noted above, the confidentiality of the procurement process serves two
purposes, both of which ultimately benefit the people of Puerto Rico. First, protec-
tion of proponents’ information and proposals through the execution of the O&M
Agreement (and beyond that for certain items such as proprietary information and
trade secrets) serves to encourage a greater number of participants to engage in the
PPP process because they are not concerned that their data will end up in the hands
of their competitors. Greater participation in a PPP process enhances competition
and provides the Government with a greater number of alternatives, inevitably
leading to less risk transferred to the Government and people of Puerto Rico.
Second, ensuring that proponents do not have access to each other’s proposals, the
Partnership Committee’s evaluation of such proposals, or information about the
negotiations between a proponent and the Partnership Committee is key to pre-
serving the Partnership Committee’s leverage and ability to negotiate the best
terms for the P3 and ensuring the fairness of the process. In order to maintain the
true competitive tension necessary for the Partnership Committee to negotiate the
best terms for the O&M Agreement, it was necessary to preserve confidentiality
while there were any possibilities of further negotiation with the other proponent.
It is also worth noting that a PPP process may be of interest to publicly-traded
companies. These public companies may be particularly sensitive to disclosure of
their participation in a PPP process before the execution of an agreement. Such dis-
closure could require an obligation to make certain securities law filings regarding
the potential transaction and could affect the company’s share price. Maintaining
43
confidentiality of the PPP process until an agreement is executed allows public com-
panies to participate in a PPP process without concern of material non-public infor-
mation being disclosed prior to the point at which the PPP transaction has been
formalized (i.e., upon execution of a final agreement). This increased the likelihood
of public company participation in a Project and thus the number of potential par-
ticipants, both of which were critical to the Project. Against this backdrop and pur-
suant to the requirements of applicable law, the procurement process for the Project
commenced with an open and transparent market sounding process and Request for
Qualification (‘‘RFQ’’) process. In the summer of 2018, the Government, including
the P3 Authority, AAFAF and PREPA, together with the FOMB, issued a letter so-
liciting private sector feedback on the energy transformation generally and the
Project specifically, with the stated goal of creating a modern, sustainable, reliable,
efficient, cost effective, and resilient energy system. Following the market sounding
process, the P3 Authority issued the RFQ for the Project, as well as a public notice
with respect to the RFQ. The RFQ solicited statements of qualification, to be re-
viewed by the Partnership Committee, from respondents qualified to participate in
the RFP process. The RFQ was made publicly available and requested statements
of qualification from companies and consortia that demonstrated, among other
things: (i) experience operating large-scale electric utilities, (ii) the ability to operate
electric utility T&D infrastructure on an island or other stranded location, (iii)
experience with formal regulatory proceedings and (iv) experience managing dis-
aster recovery operations. A copy of the RFQ is available at the P3 Authority’s
website at https://www.pr.gov/p3/.
The P3 Authority then conducted a RFP process that was fair and transparent
among participating proponents. The RFP for the Project was issued in February
2019 pursuant to Article 5 of Act 120 and Article 3 of Act 29. The RFP process
sought proposals from companies and consortium that had been pre-qualified in the
Request for Qualification process. The objective of the RFP process was to enable
the Partnership Committee to determine the proponent best qualified to enter into
the O&M Agreement based on their final proposal. For the following ten (10)
months, the Partnership Committee oversaw (i) a robust due diligence exercise,
which included access to significant information about PREPA by way of a data
room, specifically, 17,988 documents related to PREPA totaling 149,181 megabytes
of data, over 730 diligences questions submitted by proponents and answered by the
P3 Authority, which answers were made available to all proponents, unless a pro-
ponent requested confidentiality and the P3 Authority agreed to such treatment,
management presentations, site visits and information sessions, and (ii) extensive
discussions with the qualified proponents regarding the structure and transaction
documentation for the proposed Project, including multiple opportunities for com-
ments on the proposed transaction documentation and discussion of such comments.
The proponents were provided access to the same information and had similar ac-
cess to the P3 Authority and PREPA management. All proponents were given access
to the data room, and proponents were able to submit any request for clarification
with respect to the contents of the RFP, the information available in the data room
and other matters related to the Project.
The P3 Authority issued seven addenda to the RFP to (i) update the timeline of
the RFP process, (ii) update the processes and procedures to be used to implement
the RFP process, including the evaluation criteria and weighting to be applied to
the proposals and proposal submission instructions, and (iii) distribute certain
transaction documents provided to the proponents prior to November 25, 2019, the
date on which proposals were due, including the term sheets summarizing two con-
templated transaction structures and various drafts of the O&M Agreement. During
the period from February through November 2019, the proponents received three
draft terms sheets and four drafts of the O&M Agreement. Pursuant to the process
set forth in the RFP, the proponents (i) provided written comments to and markups
of two terms sheets and three drafts of the O&M Agreement, and (ii) met with the
P3 Authority, certain consultants to the P3 Authority, and representatives of the
FOMB on four occasions to walk through and discuss their comments to the term
sheets and draft O&M Agreements. In order to maintain fairness and transparency,
communications between the P3 Authority and the proponents throughout the term
of the RFP process were solely distributed via PowerAdvocateC, a digital platform
specifically designed for the energy industry to make competitive procurement easy
and efficient.
The proponents were required to submit their proposals by 12:00 PM AST on
November 25, 2019. On December 4, 2019, each of the proponents participated in
in-person meetings to discuss their proposals with the P3 Authority, various consult-
ants to the P3 Authority and representatives of the FOMB. On December, 6, 2019,
the proponents were given the opportunity to present their proposals to the
44
Partnership Committee and answer any questions the members had. Following a
detailed review and evaluation of the proposals, and in accordance with the proce-
dures set forth in Act 120 and its regulations, the Partnership Committee voted in
January 2020 to proceed with negotiations with LUMA. Thereafter, the Partnership
Committee and LUMA negotiated and finalized the terms and conditions of the
O&M Agreement. For more detailed information on the RFP process, please see
Section 4.4 (Request for Proposals) of the Partnership Committee Report attached
as Exhibit B hereto.
Upon execution of the O&M Agreement the Partnership Committee published the
Partnership Committee Report. The Partnership Committee Report is an extensive
330-page report that details (i) the Project background and objectives, (ii) procure-
ment process, (iii) selection process and key considerations relevant to recom-
mending that the board of directors of the P3 Authority elect LUMA to execute the
O&M Agreement, and (iv) a comparison between LUMA’s proposal and other pro-
posals presented, as well as all other information pertinent to the procedure fol-
lowed and the evaluation conducted. This report, as well as the O&M Agreement
itself, are publicly available at the P3 Authority’s website at https://www.pr.gov/p3.
In sum, the procurement process for the O&M Agreement was not only carried
out strictly in accordance with the legal requirements of Act 29, Act 120 and the
relevant regulations, but also was designed to allow proponents extensive access to
information about PREPA and the T&D assets, significant opportunity for review
and comment on the transaction documents and the ability to clarify and refine
their proposals to better serve the Government’s objectives and the ultimate day-
to-day experience of the people of Puerto Rico.

*****
The following documents were submitted as supplements to Mr. Fontanés’
responses. These documents are part of the hearing record and are being retained
in the Committee’s official files:
— EXHIBIT A—Amendment No. 7 to the Request for Proposals
— EXHIBIT B—Partnership Committee Report

The CHAIRMAN. Thank you very much, sir.
Next is the Chair of the Puerto Rico Energy Bureau, Mr. Edison
Avilés.
Sir.
STATEMENT OF EDISON AVILÉS-DELIZ, CHAIR, PUERTO RICO
ENERGY BUREAU (PREB)
Mr. AVILÉS-DELIZ. Good afternoon Chairman Grijalva, Ranking
Member designee González-Colón, and members of the Committee.
My name is Edison Avilés, and I am the Chair of the Energy
Bureau also known as the PREB.
On behalf of the PREB, I appreciate the opportunity afforded to
present our views regarding the transformation of the Puerto Rico
Power Authority, PREPA.
PREB is an independent regulatory body consisting of a shared
commissioner and four associate commissioners, all of whom have
equal voting rights. The PREB has a mandate to implement and
enforce the energy public policy of the government of Puerto Rico
as well as to adopt the regulations necessary for such
implementation.
The PREB was created in 2014 by the Puerto Rico Energy
Transformation and RELIEF Act, serving as a key component for
the full and transparent implementation of the Act’s energy reform
goals. The PREB has a mandate to ensure electric service is safe,
reliable, and affordable.
45

PREB’s commissioners are highly qualified professionals. PREB
also engages recognized experts in the regulatory field to assist its
informed and grounded regulatory development. It is an active
member of NARUC.
The U.S. Department of Energy Office of Electricity has provided
and continues to provide significant technical assistance in the
areas of electric distribution planning and energy efficiency pro-
gram development.
The New York Department of Public Service is currently
providing support to the PREB by sharing its expertise and experi-
ence with the oversight of the Long Island Power Authority, LIPA,
third party T&D operation services agreement.
The recently adjudicated T&D maintenance and alteration agree-
ment provides the PREB with tools for enforcement. The private
T&D operator has a financial incentive to improve system perform-
ance according to metrics approved by the PREB.
On the other hand, penalties will be paid by LUMA, not the rate-
payers. Significant positive changes intended to rebuild public con-
fidence have taken place since the last time the PREB testified in
Congress.
I am proud to report that the PREB is already conducting
numerous proceedings that account for significant steps in advanc-
ing the transformational goals of reliability, sustainability, and cost
effectiveness.
Some notable proceedings include: (1) Rate Case—for the first
time, electric service rates were set in Puerto Rico by an inde-
pendent regulator; (2) Regulation Energy Cooperatives in Puerto
Rico—this regulation contributes to the public policy established by
the government of Puerto Rico to promote the development of a de-
centralized energy model capable of providing renewable energy op-
tions to the residents of the island; (3) Energy Efficiency Program
Development—the process to adopt an energy efficiency regulatory
program started in 2019, and we expect to have the regulation in
place before year end. This proceeding seeks to ensure an energy
efficiency goal of 30 percent is reached by 2040; (4) Regulation on
Electric Energy Wheeling—as a first step, PREB adopted the regu-
lation establishing the legal framework on electric energy wheeling.
The second step, already ongoing, encompasses the abundance of
PREPA assets to then adopt the applicable wheeling charges.
PREB expects to complete this process within the next 8 months;
(5) the Integrated Resource Plan, the IRP, is the cornerstone and
roadmap of the energy conservation of the island. The PREB is cur-
rently evaluating the performance of the utility’s proposed IRP
with the goal set out from the Puerto Rico Energy Public Policy
Act, and we expect the final resolution to be issued in August 2020;
(6) Preliminary T&D Operation and Maintenance Agreement—it is
important to emphasize: (a) the Puerto Rico Energy framework; (b)
the certificate of compliance issued by the PREB; as well as (c) the
T&D agreement acknowledging PREB’s regulatory authority to en-
sure LUMA’s compliance with the energy public policy, the applica-
ble legal framework, and the agreement itself.
In our views, for all energy purposes, LUMA will be in PREPA’s
shoes. I look forward to your questions and remain committed to
46

strengthening the working relationship with the Committee for the
benefit of Puerto Rico.
[The prepared statement of Mr. Avilés-Deliz follows:]
PREPARED STATEMENT OF EDISON AVILÉS-DELIZ, P.E., ESQ., CHAIR,
PUERTO RICO ENERGY BUREAU
I. INTRODUCTION

Good afternoon Chair Grijalva, Ranking Member Bishop, Congresswoman
González-Colón, and members of the Committee.
My name is Edison Avilés-Deliz, and I am the Chair of the Energy Bureau of the
Puerto Rico Public Service Regulatory Board (‘‘PREB’’).1 I am a licensed electrical
engineer with a specialty in power and control systems and an attorney with a
Masters in Energy Law from the Vermont Law School. I joined PREB in June 2018.
PREB is an independent, regulatory body consisting of five (5) commissioners. The
Commissioners have equal voting powers. The PREB has a mandate to implement
and enforce the energy public policy, as well as to adopt the regulations necessary
for such implementation.
We acknowledged receipt of your letter dated July 15, 2020, inviting us to testify
before the Committee on Natural Resources of the House of Representatives at an
oversight hearing concerning The Transformation of the Puerto Rico Power Electric
Authority (PREPA). We appreciate the opportunity afforded to present our views
regarding this important matter.
As this Committee is aware, in 2017 Hurricanes Irma and Marı́a devastated
Puerto Rico’s already precarious electric system. Significant efforts have been and
continue to be underway to rebuild the electricity system for Puerto Rico. I am here
today to discuss the significant public policy changes that govern PREPA’s
transformation as well as PREB’s crucial role in this process to ensure a successful
transformation.
Having a strong and effective regulator is crucial to a stable and robust electric
delivery system. The PREB is an independent regulator but subject to judicial
review. This stability fosters an environment where long-term plans and strategies
can succeed.
Having a strong and effective regulator is a major pillar of the energy trans-
formation in Puerto Rico. Significant positive changes intended to rebuild public
confidence have taken place since the last time the energy regulator testified to
Congress.2
II. A STRONG, EFFECTIVE REGULATOR

The PREB was created in 2014 by the Puerto Rico Energy Transformation and
RELIEF Act 3 serving as a key component for the full and transparent implementa-
tion of the Act’s energy reform goals. Specifically, the PREB has the responsibility
to regulate, monitor and enforce the energy public policy of the Government of
Puerto Rico. PREB has a mandate to ensure electric service is safe, reliable, and
affordable. PREB is an active member of the National Association of Regulatory
Utility Commissioners (‘‘NARUC’’) with several commissioners serving key roles
within the Association. I serve in the Advisory Board of NARUC’s Regulatory
Training Initiative (‘‘RTI’’) and Associate Commissioner Lilliam Mateo-Santos is a
member of NARUC’s Emergency Preparedness, Recovery and Resiliency Task Force.
1. Expertise
a. Commissioners
By statute,4 PREB Commissioners have diverse professional backgrounds. The
current Bureau has exceptionally professionally qualified commissioners. Currently,
two commissioners hold dual degrees in engineering and law, and are licensed in
both professions, one commissioner is a seasoned energy, land use, and environ-
mental attorney that serves as the Second Vice President for the Southeast
Association of Regulatory Utility Commissioners (‘‘SEARUC’’) and one commissioner
is a licensed engineer specialized in the design of electrical power systems. There
is one vacancy.

1 Formerly known as the Puerto Rico Energy Commission.
2 ‘‘Puerto Rico’s Electric Grid’’, Senate Energy and Natural Resources Committee, May 8, 2018.
3 Act 57–2014, as amended.
4 Section 6.6 of Act 57–2014, as amended.
47
b. Nationally Recognized Technical Resources
PREB has recognized experts in the regulatory field to assist its informed and
grounded regulatory development. These resources include former commissioners
and staff from multiple U.S. Public Utility Commissions (‘‘PUCs’’) as well as experts
in the areas of energy regulatory affairs, economics, engineering, energy efficiency
and resource/system/operations planning, among others. These experts also provide
consulting services through the United States and other international jurisdictions.
c. Department of Energy (‘‘DOE’’) Technical Assistance
The DOE’s Office of Electricity (‘‘DOE-OE’’) has provided and continues to provide
significant technical assistance in the areas of electric distribution planning and
energy efficiency program development. The interface among stakeholders, the util-
ity and the subject matter experts facilitated by DOE-OE has provided the PREB
a clear view of the technical current state-of-affairs at the utility, including the
foundational investments that are needed to support the right sequencing of the
resilience buildup efforts that are a significant operational goal for the grid.
i. NARUC’s Exchange Initiative 5
With support from DOE, NARUC and PREB resources, a delegation of nine utility
commissions (PR, MI, PA, HI, FL, NY, MO, MS, and NJ) assembled for an initial
exchange in San Juan during February 2020. This initial exchange represents a pre-
liminary step in laying the foundation for a future Staff rotational program to send
mainland utility Commission Staff to Puerto Rico to support the PREB with
additional capacity and expertise that targets specific needs.
• New York Department of Public Service
Arising from the NARUC’s Exchange Initiative, PREB is currently receiving
invaluable support the from the New York Department of Public Service
(‘‘NYDPS’’). The NYDPS is sharing its expertise and experience with the over-
sight of the Amended and Restated Operation Services Agreement entered by
the Long Island Power Authority (‘‘LIPA’’) and PSEG Long Island, LLC, in
accordance with the LIPA Reform Act. Under this contractual arrangement,
comparable to the PREPA private third-party transmission and distribution
system maintenance and operating arrangement, LIPA outsourced the oper-
ation and maintenance of its public utility grid and delivery services to a pri-
vate third-party operator, PSEG Long Island. PREPA with the Puerto Rico
Public-Private Partnership Authority (‘‘P3 Authority’’) and LUMA Energy
have recently entered a similar contractual arrangement. Both arrangements
resulted from legislation enacted to address challenges exacerbated by weath-
er events—Hurricane Sandy in New York (2012) and Hurricanes Irma and
Marı́a in Puerto Rico (2017). Both New York and Puerto Rico’s third-party
arrangements seek to maximize Federal recovery funds for increasing system
resilience. The third-party contractual accountability of these arrangements
and their independent regulatory oversight are critical to ensure that per-
formance and rate incentives align with the public interest. The PREB is cur-
rently developing the Oversight Implementation Plan for the PREPA/(P3
Authority)-LUMA Transmission and Distribution Operation and Maintenance
Agreement (‘‘T&D OMA’’) using the NYDPS’s regulatory oversight 6 as a
model. I want to highlight our appreciation to our counterparts in New York
and look forward to continued engagement.
2. Notable Proceedings
Although a fairly new regulatory agency, responsible to guide and oversee the
statutory transformation of the electric industry in Puerto Rico, the PREB is already
conducting numerous proceedings that account for significant steps in advancing the
transformational goals of reliability, sustainability and cost effectiveness.

5 https://www.fortnightly.com/fortnightly/2020/05/forging-regulatory-bridge-puerto_rico?auth

key=6e034479ae939210ef3e50f8efae93f75a4580105a3819aa9dfe04b33060e604.
6 The NYDPS provides oversight to the implementation of the LIPA-PSEG Operations Services

Agreement, where PSEG Long Island, LLC took over management and operation of LIPA’s
electric system and on January 1, 2014 became responsible for LIPA’s day-to-day operations,
including: budgeting, maintenance, storm preparedness and response, infrastructure improve-
ments, and energy efficiency and renewable activities.
48
a. Rate Case 7
This is a landmark proceeding. For the first time, electric service rates have been
set in Puerto Rico by an independent regulator based on evidence and testimony
produced under oath, eliminating rates that had not been revised for 27 years. The
PREB implemented the new permanent rates on May 1, 2019 and approved several
riders designed to be reviewed no more than every quarter 8 to limit the frequency
of when the electric bill could vary. A modified tariff book was also adopted on May
22, 2019.
b. Integrated Resource Plan (‘‘IRP’’) 9
The IRP is the cornerstone and roadmap of the energy transformation of the
Island. The PREB is currently evaluating the utility’s proposed IRP against the
renewable resource goals set out in the Puerto Rico Energy Public Policy Act (Act
17–2019). The IRP proceeding had numerous intervenors, five (5) days of technical
hearings and five (5) days of local public hearings (Ponce, Mayagüez, Arecibo,
Humacao, San Juan) during February 2020. Final briefings were completed in April
2020. We expect the Final Resolution, which will consist of (i) a summary of PREB’s
analysis of thousands of pages of technical documentation; (ii) PREB’s findings and
conclusions; and (iii) specific actions for implementation, to be issued in August
2020. IRPs are reviewed on a three (3) years cycle.
c. Energy Efficiency (‘‘EE’’) Program Development 10
By statute, the PREB has authority over the EE program.11 This proceeding seeks
to ensure an energy efficiency goal of thirty percent (30%) is reached by 2040.
Energy efficiency is always the least cost resource. Lowering demand can be
achieved at far less cost than new generation with its associated transmission and
distribution. It also lessens dependence on oil-fired generation. Finally, with
enhanced ability to better measure demand reduction that allow energy efficiency
to participate as a firm resource, it can increase system stability.
A successful EE program is key to achieving the energy sustainability goals of the
Puerto Rico Energy Public Policy Act. However, the insolvency currently experi-
enced by the utility is a barrier to the successful implementation of energy efficiency
programs for the Puerto Rico electric consumer.
With support from the DOE, we are holding a virtual stakeholder engagement
event on July 31 to consider best approaches to deploy energy efficiency measures
in Puerto Rico. Presenters include nationally recognized EE experts, resources from
the Lawrence Berkeley National Laboratory, the USDA Rural Development Electric
Program, the American Council for an Energy Efficient Economy (‘‘ACEEE’’), the
National Association of State Energy Officials (‘‘NASEO’’), the Arkansas Public
Service Commission, and the Ouachita Electric Cooperative.
d. Regulation on Electric Energy Wheeling 12
This Regulation was adopted and enacted in September 2019 to implement the
energy wheeling mechanism in Puerto Rico, in accordance with applicable legislative
mandates. More specifically, to implement a system that allows an exempt business,
dedicated to the production of energy, as described in Section 2(d)(l)(H) of Article
1 of Act No. 73–2008, as amended, known as the Economic Incentives Act for the
Development of Puerto Rico, or similar provisions in other incentive laws, as well
as Electric Power Service Companies, Micro grids, Energy Cooperatives, Municipal
Ventures, Large Industrial and Commercial consumers, and Community Solar and
other demand aggregators, to participate in the energy wheeling mechanism in
Puerto Rico.
e. Regulation Energy Cooperatives in Puerto Rico 13
Through the adoption of this Regulation in October 2019, the PREB contributes
to the public policy established by the Government of Puerto Rico to promote the
development of a de-centralized energy model capable of providing renewable energy

7 CEPR–AP–2015–0001.
8 In Re: Puerto Rico Electric Power Authority Rate Review, Case No. CEPR–AP–2015–0001,
Final Resolution and Order, January 10, 2017. pp. 130–131, §§ 377–378.
9 CEPR–AP–2018–0001.
10 NEPR–MI–2019–0015.
11 See Section 6.29B(a) Act 57–2014.
12 https://energia.pr.gov/wp-content/uploads/2020/02/9138-Regulation-on-Electric-Energy-
Wheeling.pdf.
13 https://energia.pr.gov/wp-content/uploads/2019/10/9117-Regulation-on-Energy-
Cooperatives.pdf.
49
options to the residents of Puerto Rico, which strengthens the electric system
resilience to natural disasters.
f. Preliminary T&D OMA Certificate of Energy Compliance 14
PREPA is required to obtain an Energy Compliance Certificate from the PREB
for every transaction it enters. PREB must certify that a preliminary contract com-
plies with the energy public policy and regulatory framework established by Puerto
Rico’s Energy Public Policy Act.15 On June 17, 2020, the PREB issued a Certificate
of Energy Compliance for the preliminary T&D OMA between PREPA/(P3
Authority) and LUMA. It is important to note that the T&D OMA acknowledges the
PREB’s regulatory authority to ensure this compliance by LUMA, as the T&D
Operator.
3. Strong Regulatory Landscape
The previous notable proceedings demonstrate the strong comprehensive
regulatory landscape created by Act 57–2014 and Act 17–2019. More significantly,
this landscape includes an enforcement infrastructure for compelling compliance
with the statutory transformational measures to develop a reliable and sustainable
electric system.
a. PREB’s Enforcement Mechanisms—Real Incentives/Real Penalties
The recently adjudicated T&D OMA provides the PREB with real teeth for
enforcement. The private T&D Operator has a financial incentive 16 to improve sys-
tem performance according to metrics approved by the PREB.17 The PREB can also
fine the T&D Operator for noncompliance with its regulations.18 In the past, impos-
ing fines on PREPA effectively meant fining the Puerto Rico government, thus nega-
tively impacting the people of Puerto Rico twice. Third-party accountability means
that any potential penalties imposed on the private T&D Operator will erode its
fixed fee payments under the contract. Having this regulatory tool available to the
PREB is nothing short of transformational.
b. Independent Office of Consumer Protection (IOCP)
The electric regulatory landscape in Puerto Rico is well supported by a strong
legal framework that directs the Independent Office of Consumer Protection (IOCP)
to represent and defend, among others, the energy services customer in all matters
in front of the PREB, including the IRP, rate revisions, electric utility bill disputes
and disputes originating from customer dealings with electric service companies.
III. HURRICANES IRMA AND MARÍA (2017) AND EARTHQUAKE EVENTS (2020)

We are all familiar with the devastating impact that Hurricanes Irma and Marı́a
had on the electric grid in Puerto Rico in 2017 and its inability to quickly recover.
We all also recognize that this cannot happen again. Significant actions, including
those I have described earlier, have been taken that together is already advancing
this objective.
1. Puerto Rico Electric Power Transformation Act—Act 120–2018
Act 120–2018 addresses longstanding electric utility deficiencies that were clearly
exposed during the aftermath of hurricanes Irma and Marı́a and the earthquake
events of 2020. This Act authorizes the legal framework required for the transfer
of the operation and maintenance of PREPA’s Transmission and Distribution
systems. This Act enabled the PREPA/(P3 Authority)-LUMA T&D OMA that went
into effect on June 22, 2020.
2. Puerto Rico Energy Public Policy Act—Act 17–2019
Act 17–2019 was enacted for the purposes of establishing Puerto Rico’s public
policy on energy in order to set the parameters for a resilient, reliable, and robust
energy system with just and reasonable rates for all customer classes; make it fea-
sible for energy system users to produce and participate in energy generation; facili-
tate the interconnection of distributed generation systems and microgrids, and
unbundle and transform the electrical power system into an open system.

14 NEPR–AP–2020–0002.
15 Section 5(g), Act 120–2018.
16 See Annex IX and X of the Puerto Rico Transmission and Distribution System Operation
and Maintenance Agreement.
17 Id. Section 4.2(f).
18 Id. Section 7.6(a)(ii).
50
a. Increased System Resilience
The restoration work is now complete. The next phase of reconstruction needs to
follow an orderly plan based on sound economic and engineering principles. The re-
cently adjudicated T&D OMA assigns the T&D Operator with the responsibility of
implementing long-term strategies to plan the electric system for increased
resilience and in compliance with the energy public policy.
b. Fully Accessible Stakeholder Engagement
To increase the transparency of regulatory proceedings affecting the energy sector
in Puerto Rico, the PREB embarked in a series of stakeholder engagement activities
that continue to this date. All stakeholder engagement events are simulcast in
Spanish/English onsite and over the internet to facilitate participation from all
Puerto Ricans. To our knowledge, we are the only energy regulatory commission in
the United States that offers these accommodations. These stakeholder activities
support the following energy public policy elements:
Electric Distribution Planning
The DOE-OE has made available subject matter experts during this comprehen-
sive Initiative that have meaningfully engaged with PREPA’s technical resources on
what would be the most effective sequencing to build up system resilience. Given
the multitude of utilities helping to expedite restoration after the hurricanes of
2017, the electric distribution system needs to be baselined in the utility GIS to
ensure effective planning/reconstruction. Three (3) working groups were created to
support this Initiative, (1) Electric Infrastructure Resilience, (2) Hosting Capacity/
Data Availability, and (3) Planning Coordination. This Initiative has also benefited
from collaborations from the Hawaii PUC and the Hawaiian Electric Company
(‘‘HECO’’).
Interconnection Rules
Considers methods, technologies, and standards to streamline the interconnection
process to best support increased integration of renewable sources.
Renewable Energy Certificate (‘‘REC’’) Market
Considers the elements for the effective creation of the REC market in Puerto
Rico, the challenges arising from its implementation as reflected in Act 82–2010,
and mechanisms to efficiently support its operation.
Energy Efficiency
With technical assistance from the DOE, the PREB has held several stakeholder
engagements events to consider different approaches to best deploy an effective
energy efficiency program incorporating measures that address the specific charac-
teristics of the Island.
c. Renewable Portfolio Standard (‘‘RPS’’)
The new goals for compliance with the RPS are 20% by 2022, 40% by 2025, 60%
by 2040, and 100% by 2050.
IV. STRONG AND EFFICIENT OVERSIGHT OF THE ELECTRIC INFRASTRUCTURE
RECONSTRUCTION [FEDERAL RECOVERY FUNDING]

1. The Transmission and Distribution Operation and Maintenance
Agreement (‘‘T&D OMA’’) 19
Under the T&D OMA, an independent third-party private operator assumes
operational control and management of PREPA’s electric grid. This operator has re-
sponsibility for long-term plans and strategies to expand and upgrade the Island’s
grid, proposals for resilience buildup of the electric infrastructure, and management
of Federal recovery funding. The emphasis is on rebuilding to meet current national
codes and standards and to integrate electric industry best practices that will make
it easier to interface with other U.S. Mutual Aid utilities during emergency
responses. It is important to highlight that even though system plans may have ex-
isted or may still exist for the electric grid in Puerto Rico, all T&D system planning
and operations are now the responsibility of the T&D Operator, who is subject to
the full oversight of the PREB. It is expected that LUMA, as the T&D Operator,
will be able to commence implementation immediately of well-studied long-term
strategies to improve reliability that assures Federal recovery funding is effectively

19 http://www.p3.pr.gov/assets/executed-consolidated-om-agreement-td.pdf.
51
and efficiently invested to build up the resilience of the Island’s electric network
system.
2. The Private T&D Operator is Subject to PREB’s Oversight
The arrangement of the T&D OMA places a private operator to manage PREPA’s
electric grid. This operator is the single entity in charge with orchestrating the long-
term plans and strategies for the electric T&D system.
a. PREB has effective regulatory tools to ensure that the T&D Operator will comply
with Puerto Rico’s energy public policy and contractual performance metrics
that include:
• Making the electric system more resilient to sustain weather events;
• Aligning restoration and repair time on par with similar utilities in the
United States;
• Improving the reliability of the system to sustain economic and industrial
growth; 20
• Charging affordable rates; and
• Increasing adoption of clean energy.
b. PREB’s New Enforcement Tools
• Incentives 21 are permitted to enhance T&D Operator’s yearly payments, thus
incentivizing the Operator to improve compliance with performance
requirements; and
• Fines 22—incentivize the Operator to improve compliance with performance
requirements, because fines will be paid directly by the T&D Operator.
c. The PREB has already begun interfacing with LUMA’s regulatory team and have
identified almost 30 deliverables that the PREB will approve and/or monitor
throughout the span of the T&D OMA, the most notable of which include:
• Initial Budgets
• System Remediation Plans
• Performance Metrics
• Vegetation Management Plan
• System Operation Principles
• Emergency Response Plan

V. CONCLUSION

Two Core Elements of the Energy Transformation of the Island are well
underway:
1. Well-funded, professionally staffed, strong, effective, and independent electric
utility regulator enabled by statute to impose penalties that will not be paid by rate-
payers but will erode the fixed fee payments 23 of the contracted T&D Operator.
2. A selected T&D Operator responsible for daily operations and long-term
planning of the electric system and who is properly incentivized to improve
performance.
We all saw the devastation and the aftermath of Hurricane Marı́a on the frail
conditions of the electric transmission and distribution systems and the earthquake
events that exposed the vulnerability of legacy generation facilities, risking the
safety and security of our people, particularly our most vulnerable. I was there.
Millions of people were there.
Today, the people of Puerto Rico stand together with a common objective to never
repeat the misfortunes experienced in that dark period of our Island’s history. I am
here, representing the public interest of my fellow citizens through the legal
mandate that has been bestowed upon the PREB, to help lead the recovery and

20 Consistent with attracting manufacturing opportunities to the U.S.
21 See Section 7.1(c) and Annexes VII, IX and X of the Puerto Rico Transmission and
Distribution System Operation and Maintenance Agreement.
22 Id. Section 7.6(a)(ii).
23 See Section 7.6(a)(ii) of the Puerto Rico Transmission and Distribution System Operation
and Maintenance Agreement.
52
revitalization, through industry’s proven methods, and yield a dependable, resilient,
clean and efficient electrical infrastructure for our people.
The transformation of our public policy regime to secure long-term benefits to the
people of Puerto Rico has been significant. In 3 years, while the island was recov-
ering from its extreme devastation, the leaders of Puerto Rico undertook the anal-
ysis of the mind-numbing details of the hallmarks of effective regulation. Today, I
am proud to say that Puerto Rico has now a competent framework, more-than-
competent human resources, and a competent plan for the future. This has come
about with a remarkable effort of many to ensure a resilient and vibrant future
electric sector for the Island. I want to personally thank this Committee for its
support of this transformation.
I look forward to your questions and remain committed to strengthen the working
relationship with the Committee for the benefit of Puerto Rico.

QUESTIONS SUBMITTED FOR THE RECORD TO EDISON AVILÉS-DELIZ, CHAIR,
PUERTO RICO ENERGY BUREAU

Questions Submitted by Rep. Grijalva
Question 1. Various entities, including the Electrical Industry and Irrigation
Workers Union {UTIER), claim the LUMA contract will increase electricity prices for
consumers. However, government officials and LUMA deny this.
Answer. The PREB thinks that this statement is the basis of your next two
questions. We hope that the answers to these two questions provide the information
that you seek, please advise otherwise.
Question 2. Has the Puerto Rico Energy Bureau received any correspondence and
requests from LUMA to review the current rate?
Answer. No.
Question 3. What is the probability that the rate will increase and the potential
timeline?
Answer. In Puerto Rico rate revisions are regulated by Act 57–2014, Act 83–1941,
and the Puerto Rico Energy Bureau’s (PREB) regulations. A rate revision could re-
sult in a decrease or increase on the electricity bill. Any rate revision must follow
an extensive proceeding before the PREB with ample public and stakeholder’s
participation.
Act 57–2014 mandates PREB to formulate and implement the strategies to
achieve the goal of reducing and stabilizing energy prices. These goals and respon-
sibilities remain unchanged and must be adhered to by any entity assuming the op-
eration of the Puerto Rico’s Electric and Power Authority (PREPA) Transmissions
and Distribution System (‘‘T&D System’’), including LUMA Energy. We are unable
to predict the probability and timeline of a rate increase or decrease because no
evidence supporting one or the other has been presented to the PREB.
The recently signed Puerto Rico’s Electric and Power Authority Transmissions
and Distribution Operating and Maintenance Agreement (‘‘T&D Agreement’’)
provides a timeline for the beginning of a process—to be conducted before PREB—
to ensure that adequate amounts are available for inclusion in the T&D System
budgets. However, we should clarify that a rate revision does not merely imply add-
ing LUMA’s Service Fee to other T&D System expenses. We must consider several
factors toward our determination that the resulting rate is fair and reasonable.
PREB is the body vested with the responsibility to safeguard the public interest and
has the authority to provide strong oversight over the implementation of the LUMA/
(PREPA-P3 Authority) T&D Agreement and any action that has an impact on the
enacted energy public policy.
We reiterate that in any rate revision process the PREB will work diligently to
achieve the goal of reducing and stabilizing energy prices in Puerto Rico and ensure
that all achievable savings identified and materialized are immediately transfer to
the customers.
Question 4. The UTIER and consumer representative at the PREPA board claim
that you participated in both the evaluation and approval of the LUMA contract. The
claims state you served on the government committee that selected LUMA and,
afterward, participated in the PREB process that granted the certificate of compli-
ance to the LUMA consortium. Why didn’t you recuse yourself from participating in
these processes?
53
Answer. The Certificate of Energy Compliance issued by the PREB in connection
with the T&D Agreement is being challenged in the Puerto Rico Court of Appeals
(Case Civil No. KLRA2020000170 1 and Case Civil No. KLRA2020000186 2).
UTIER’s claim described in your question is specifically part of the pending judicial
proceeding. Due to fact that this issue is currently under judicial review we must
refrain from making public expressions. Therefore, we respectfully cannot answer
your specific question.
Question 5. Why isn’t there an approved post-hurricane Integrated Resources Plan
yet?
Answer. The first ever electric utility Integrated Resource Plan (IRP) was
submitted by PREPA on July 7, 2015.3 Before the creation of the energy regulator
in 2014 there was no mandate for an IRP to be the submitted and approved by the
energy regulator. The PREB 4 gave its final approval to PREPA’s Modified IRP on
February 10, 2017.5 The IRP then became legally binding and enforceable on March
13, 2017 6 and remains the currently approved IRP. Given the impact of hurricanes
Irma and Marı́a on the electric grid during September 2017, the PREB held that
it was prudent to accelerate the 3-year IRP cycle to accommodate the new reality
of the electric system.7 The March 14, 2018 Resolution and Order commenced an
IRP proceeding and directed PREPA to file a revised IRP in October 2018. On
October 15, 2018, PREPA requested an extension to file a final IRP report by
January 21, 2019, which was granted without administrative penalties. On January
23, 2019, PREPA filed some portions of the IRP Report and requested an extension
until February 12, 2019 to complete the IRP filing, which was again granted 8 with-
out imposing penalties. On February 11, 2019, PREPA requested a 3-day extension
to file the complete IRP. The PREB refused this extension, imposed an administra-
tive fine and ordered PREPA to file the complete IRP by February 15, 2019.9 On
February 13, 2019, PREPA filed its IRP. On March 14, 2019, the PREB found that
the IRP filing did not comply with Regulation 9021 10 and identified a set of actions
to address the deficiencies identified.
We note that it is not uncommon for a Public Utility Commission to reject and/
or seek modifications to submitted utility plans.11 The IRP regulatory process has
become even more burdensome across jurisdictions due to the numerous scenarios
that need to be analyzed to account for increased integration of renewable energy
resources in order to comply with renewable portfolio standards.
A Technical Conference took place on April 1, 2019 to address the IRP’s deficiency
issues. On April 5, 2019 PREPA was ordered to refile its IRP by May 10, 2019.12

1 Filed by Union de Trabajadores de la Industria Eléctrica y de Riego, (‘‘UTIER’’ by its Spanish

acronym).
2 Filed by certain Local Environmental Organizations.
3 See Final Resolution and Order on the First Integrated Resources Plan of the Puerto Rico

Electric Power Authority, Case No. CEPR-AP-2015-002, dated September 26, 2016 (https://
energia.pr.gov/wp-content/uploads/2016/09/23-sept-2016-Final-Resolution-and-Order-IRP-CEPR-
AP-2015-0002.pdf) and Resolution on the Verified Motion for Reconsideration of Puerto Rico
Electric Power Authority, Case No. CEPR-AP-2015-002, dated February 10, 2017 (https://
energia.pr.gov/wp-content/uploads/2017/02/10-feb-2017-Resolution-Ruling-on-PREPAs-Verified-
Motion-for-Reconsideration.pdf) (the aforementioned resolutions and orders collectively referred
to as ‘‘PREPA’s IRP’’. PREPA’s IRP was not subject to judicial review and became enforceable
on March 13, 2017.
4 The PREB was known as the PREC in 2015.
5 See the Resolution on the Verified Motion for Reconsideration of the Puerto Rico Electric
Power Authority, issued on February 10, 2017, Case No. CEPR-AP-2015-0002, https://
energia.pr.gov/wp-content/uploads/2017/02/10-feb-2017-Resolution-Ruling-on-PREPAs-Verified-
Motion-for-Reconsideration.pdf.
6 See the Resolution and Order on the Review of The Puerto Rico Electric Power Authority
Integrated Resource Plan issued on March 14, 2018, Case No. CEPR-AP-2018-0001, https://
energia.pr.gov/wp-content/uploads/2018/03/Resolution-and-Order-IRP-CEPR-AP-2018-0001.pdf.
7 Id.
8 https://energia.pr.gov/wp-content/uploads/2019/01/Resolution-CEPR-AP-2018-0001-4.pdf.
9 https://energia.pr.gov/wp-content/uploads/2019/02/Resolution-and-Order-CEPR-AP-2018-0001-
3.pdf.
10 Regulation on Integrated Resource for the Puerto Rico Electric Power Authority.
11 The Hawaii PUC (‘‘HIPUC’’) initiated the HECO companies IRP process on March 1, 2012
and rejected HECO’s IRP on April 28, 2014, see HIPUC Order 32052, (https://
dms.puc.hawaii.gov/dms/DocumentViewer?pid=A1001001A14D29A91612182852).
12 https://energia.pr.gov/wp-content/uploads/2019/04/Resolution-and-Order-CEPR-AP-2018-
0001-3.pdf.
54
On May 3, 2019, PREPA requested a 3-week filing extension.13 In response, the
PREB ordered PREPA to finalize its IRP submission by June 7, 2019 to avoid
further administrative penalties. On June 7, 2019, PREPA filed its IRP.
The IRP is the cornerstone and roadmap of the Island’s energy transformation.
The PREB is currently evaluating the utility’s proposed IRP (June 2019) against the
renewable resource goals set out in the Puerto Rico Energy Public Policy Act (Act
17–2019). The IRP proceeding has had numerous intervenors and has held numer-
ous technical conferences, five (5) days of technical hearings, and five (5) days of
local public hearings (Ponce, Mayagüez, Arecibo, Humacao, San Juan) during
February 2020. Final briefings were completed in April 2020. We expect to issue the
Final Resolution later this month.
Question 6. Why is PREPA binding public funds in long-term natural gas projects,
when the Integrated Resources Plan has not been approved by the Puerto Rico Energy
Bureau, and Act 17–2019 requires the integration of 100 percent renewables by 2050?
Answer. Between 2018 and 2019, two natural gas purchase agreements have come
under the consideration of the PREB:
• 5-year agreement 14 between NFENERGÍA, LLC and PREPA that allowed the
conversion of San Juan generation Units 5 and 6 to natural gas 15;
• 12-year agreement 16 between EcoEléctrica, LP-Naturgy Aprovisionamientos,
S.A. and PREPA that required no new sitting in Peñuelas and is set to expire
in September 2032.
The above contracts, as required by Act 57–2014, have been evaluated in accord-
ance with the current IRP. Where circumstances have allowed, the contracts have
also been evaluated taking into consideration information and analysis submitted as
part of the IRP under evaluation.
PREB conducted extensive analysis of the above natural gas projects, which anal-
ysis ensured consistency with the approved IRP.17 PREB applied strict standards
in the evaluation of the criteria to determine the project’s viability within the needs
of Puerto Rico.18 A series of recent natural disasters (hurricanes, earthquakes) have
had immediate effects in the available energy generation capacity supplying the
Island’s bulk electric system. Evidence presented by PREPA and evaluated by the
PREB demonstrates significant energy generation cost savings and power capacity
capabilities that outweighed all other available near-term options.19
PREB remains committed to providing the necessary oversight to assure
achievement of Puerto Rico’s goal of 100 percent renewable generation by 2050.
Question 7. The LUMA agreement establishes that the private operator will
prepare a proposed Integrated Resource Plan for the long-term development of the
electric system, which also includes power generation operations, subject to the
Puerto Rico Energy Bureau’s review and approval.
Answer. The PREB thinks that this statement is the basis of your next two
questions. We hope that the answers to these two questions provide the information
that you seek, please advise otherwise.
Question 8. Would Luma prepare the Integrated Resource Plan for the future long-
term development of the Puerto Rico electric system?

13 https://energia.pr.gov/wp-content/uploads/2019/05/1-Memo-New-Results-ESM-and-Scenario-
4-Strategy-2-Base-Plans-Request-CEPR-AP-2018-0001-copy.pdf.
14 Three (3) 5-year extensions can be considered at PREPA’s discretion, https://
contratos.ocpr.gov.pr/contract/downloaddocument?documentid=981840.
15 See the Resolution and Order on the Request for Proposals for Conversion of San Juan
Units 5 and 6 to Natural Gas issued on January 25, 2019, Case No. CEPR-AI-2018-0001, https://
energia.pr.gov/wp-content/uploads/2019/01/Resolution-and-Order-CEPR-AI-2018-0001.pdf.
16 See Exhibit B—PREPA’s Urgent Motion for Entry of an Order Authorizing PREPA to
Assume Certain Contracts with EcoEléctrica, L.P. and Gas Natural Aprovisionamientos SDG,
S.A., Case No. 17-BK-4780-LTS, United States District Court District of Puerto Rico, https://
document.epiq11.com/document/getdocumentsbydocket/?docketId=765553&projectCode-PR1&
docketNumber=1951&source=DM; the original EcoEléctrica Power Purchase and Operating
Agreement dated March 10, 1995, and amended in 1997 and 2006, committed PREPA to a 27-
year contract term set to expire in March 2022.
17 See the Resolution and Order on the Review of The Puerto Rico Electric Power Authority
Integrated Resource Plan issued on March 14, 2018, Case No. CEPR-AP-2018-0001, https://
energia.pr.gov/wp-content/uploads/2018/03/Resolution-and-Order-IRP-CEPR-AP-2018-0001.pdf.
18 See NFENERGÍA Docket CEPR-AI-2018-0001 (https://energia.pr.gov/wp-content/uploads/
2019/01/Resolution-and-Order-CEPR-AI-2018-0001.pdf and EcoEléctrica-Naturgy Docket NEPR-
AP-2019-0001, https://energia.pr.gov/wp-content/uploads/2020/03/Resolution-and-Order-NEPR-
AP-2019-0001-1.pdf.
19 Id.
55
Answer. Yes. The preparation of the IRP is part of the services rendered under
the T&D Agreement.20 From time to time, a proposed IRP will be submitted by
LUMA to the PREB for evaluation and approval (or disapproval), in accordance with
the applicable laws and regulations.21
Question 9. Can you provide more information about the rationale to delegate this
responsibility to the private operator of the transmission and distribution system?
Answer. Responsibility for IRPs was expressly delegated to the Operator of the
Electrical System by law under Act 17–2019 (the Puerto Rico Energy Public Policy
Act) amending Article 6.23 of Act 57–2014 that had previously imposed such respon-
sibility on PREPA. The current language of Article 6.32 Act 57–2014 is the
following:
The electric power company responsible for operating the Electrical System
shall submit to PREB an Integrated Resource Plan (IRP) consistent with
Section 1.9 of the Puerto Rico Energy Public Policy Act. The electric power
company shall devise the IRP with the input of the companies that operate
the power plants.
Question 10. The Federal coordinator for the reconstruction of Puerto Rico, Peter
Brown, recently expressed that nuclear energy is an option to diversify Puerto Rico’s
energy sources. PREPA’s Integrated Resources Plan does not integrate nuclear energy
as an option. Will PREPA maintain this position in compliance Act 17–2019, which
requires reaching a minimum of 40 percent renewable energy integration by 2025;
60 percent by 2040; and 100 percent by 2050?
Answer. PREPA proposed the specific mix of generation resources in the currently
effective IRP, and thus, is the appropriate entity to answer this question. The PREB
does not propose which resources should make up the IRP mix but approves or
disapproves what is proposed.
The PREB’s core responsibility is to assure a regulatory path realizes the energy
public policy goals established under the laws of Puerto Rico. Accordingly, PREB
must continue to evaluate all plans and proposals that help accelerate the adoption
of renewable energy to meet and exceed the goals of the adopted Renewable
Portfolio Standard (‘‘RPS’’), which could limit consideration of nuclear resources that
are not deemed renewable nor alternate renewable generation under the law.22
Question 11. In April, I joined my colleagues in a letter to the Federal Energy
Regulatory Commission (FERC) urging them to examine New Fortress Energy’s
natural gas project in San Juan, since the company failed to ask FERC for approval.
What was the role of the Puerto Rico Energy Bureau reviewing, awarding, and/or
authorizing the contract between PREPA and New Fortress Energy? Did PREB raise
any concerns with New Fortress Energy executing the contract without FERC
authorization? If not, why?
Answer.
A. Administrative Proceeding at PREB
1. PREB’s Regulatory Scope for Review of the New Fortress Contract
a. As a first step, in accordance with Act 57–2014 and PREB’s
Regulation 8815,23 PREB shall evaluate and approve (or disapprove)
Request for Proposals (RFP) that are to be issued by PREPA regard-
ing certain projects. PREB must determine if the proposed project is
consistent with the Integrated Resources Plan (‘‘IRP’’). It also shall
evaluate other factors depending on the nature of the proposed
project, e.g., capital costs, operating costs, fuel costs and so forth.
b. As a second step, PREB shall evaluate and approve (or disapprove)
the Proposed Contract. For such purposes PREB receive a report from
PREPA after the completion of a competitive process. PREB shall
determine if the Proposed Contract is consistent with the IRP,
compliance with PREB’s previously approved RFP, as well as other
parameters specifically prescribed in Regulation 8815.

20 Section 5.6(f) of the Puerto Rico Transmission and Distribution System Operation and
Maintenance Agreement, http://www.p3.pr.gov/assets/executed-consolidated-om-agreement-td.pdf.
21 Section 6.23, Act 57–2014.
22 Act 82–2010.
23 Joint Regulation for the Procurement, Evaluation, Selection, Negotiation and Award of
Contracts for the Purchase of Energy and for the Procurement, Evaluation, Selection,
Negotiation and Award Process for the Modernization of the Generation Fleet, https://
energia.pr.gov/wp-content/uploads/2016/10/AJ-07795-REGLAMENTO-1.pdf.
56
2. PREB Approval of RFP and New Fortress’ Proposed Contract
a. In October 2018 PREB approved the RFP. [Resolution and Order
dated October 4, 2018, Case No. CEPR-AI-2018-0001] 24
b. Then, on January 2019, PREB approved the proposed contract.
[Resolution and Order dated January 25, 2019, Case No. CEPR-AI-
2018-0001] 25
B. Permits and Authorizations necessary for the Execution of the
Proposed Contract
The PREB did not raise concerns during its evaluation of the proposed contract
because many of the regulatory processes related to the development of a
facility are typically pursued and conducted simultaneously. Consequently, it is
not uncommon for permits and authorizations required from other agencies and
governmental authorities to be pending or not yet filed during a contract review
proceeding under the Regulation 8815. This is why, in the present case, that
the New Fortress’ Contract includes provisions that require New Fortress to
secure all the permits and authorizations necessary for the execution of its obli-
gations under the Contract and that a failure to do so would constitute a breach
of contract.
PREB is aware that the Federal Energy Regulatory Commission (FERC), within
the scope of its enforcement authority, commenced a proceeding to determine
whether it has jurisdiction over New Fortress’ Facility in San Juan. That mat-
ter is currently under FERC’s evaluation and has not yet been adjudicated.
Still, PREB is closely monitoring the proceedings at FERC and will exercise its
authority, when necessary, with regards to the New Fortress’ Contract.

Questions Submitted by Rep. Bishop
Question 1. We’ve heard from some witnesses on the panel today that there is the
potential for rate hikes on Puerto Rico consumers under the new LUMA contract and
potentially future contracts cut by PREPA. Could you talk about the role the
Independent Office of Consumer Protection plays under the PREB? How likely of a
scenario is it that consumers in Puerto Rico will experience dramatic rate hikes given
the current regulatory landscape where PREB has a strong role to play as a third-
party independent regulator?
Answer.

A. The role of the Independent Office of Consumer Protection (‘‘IOCP’’)
The Independent Office of Consumer Protection (‘‘IOCP’’) was created by virtue
of Act 57–2014, as amended. Its role is to defend the interests of consumers of
energy before the utility and PREB, thereby providing another layer of consumer
protectionism for the Island’s energy customers. The IOCP is in part responsible for
coordinating public participation in the matters affecting their energy rates and
services. Through the IOCP, customers are empowered through capable and inde-
pendent representation resources offered at no cost to the public. The IOCP may
also initiate a rate revision in representation of the interests of energy consumers.
B. Likelihood of electricity rates hike under the T&D Agreement
In Puerto Rico rate revisions are regulated by Act 57–2014, Act 83–1941, and the
Puerto Rico Energy Bureau’s (PREB) regulations. A rate revision could result in a
decrease or increase on the electricity bill. Any rate revision must follow an exten-
sive proceeding before the PREB with ample public and stakeholder’s participation.
Act 57–2014 mandates PREB to formulate and implement the strategies to
achieve the goal of reducing and stabilizing energy prices. These goals and respon-
sibilities remain unchanged and must be adhered to by any entity assuming the op-
eration of the Puerto Rico’s Electric and Power Authority (PREPA) Transmissions
and Distribution System (‘‘T&D System’’), including LUMA Energy. We are unable
to predict the probability and timeline of a rate increase or decrease because no
evidence supporting one or the other has been presented to the PREB.
The recently signed Puerto Rico’s Electric and Power Authority Transmissions
and Distribution Operating and Maintenance Agreement (‘‘T&D Agreement’’)

24 https://energia.pr.gov/wp-content/uploads/2018/10/Resolution-and-Order-CEPR-AI-2018-
0001.pdf.
25 https://energia.pr.gov/wp-content/uploads/2019/01/Resolution-and-Order-CEPR-AI-2018-
0001.pdf.
57
provides a timeline for the beginning of a process—to be conducted before PREB—
to ensure that adequate amounts are available for inclusion in the T&D System
budgets. However, we should clarify that a rate revision does not merely imply add-
ing LUMA’s Service Fee to other T&D System expenses. We must consider several
factors toward our determination that the resulting rate is fair and reasonable.
PREB is the body vested with the responsibility to safeguard the public interest and
has the authority to provide strong oversight over the implementation of the LUMA/
(PREPA-P3 Authority) T&D Agreement and any action that has an impact on the
enacted energy public policy.
We reiterate that in any rate revision process the PREB will work diligently to
achieve the goal of reducing and stabilizing energy prices in Puerto Rico and ensure
that all achievable savings identified and materialized are immediately transfer to
the customers.

The CHAIRMAN. Thank you very much, sir.
Let me now invite Ms. Ruth Santiago, Member of Queremos Sol
Coalition, for her comments.
Ms. Santiago, the time is yours.
STATEMENT OF RUTH SANTIAGO, MEMBER, QUEREMOS SOL
COALITION
Ms. SANTIAGO. Good afternoon Chairman Grijalva and members
of the House Committee on Natural Resources, and to the public
in general. On behalf of the Queremos Sol Coalition, we appreciate
the opportunity to testify on the transformation of PREPA.
The Coalition is composed of civil society groups, including com-
munity, environmental, labor, professional organizations, and
academia that have come together to promote the transformation
of the Puerto Rico electric system. The Coalition promotes the
transformation of the Puerto Rico electric system as a public serv-
ice, both relating to PREPA governance and the technology that
empowers citizen participation.
Recently, PREPA entered into a contract with LUMA Energy via
a lengthy operation and management agreement not only for the
transmission and distribution system and customer service, but
also for power generation dispatch and control, planning, acquisi-
tions, and many other functions.
The contract’s initial transition period requires numerous condi-
tions prior to full takeover by LUMA that signifies anything but a
foregone conclusion that the transaction will be consummated.
We urge this Committee and the Federal and Puerto Rican
governments, to encourage PREPA to annul the LUMA contract
and develop a plan focused on on-site solar and battery systems
and energy efficiency programs based on the recommendations of
numerous experts.
The LUMA contract in the midst of multiple crises, including the
pandemic, seismic activity, socio-economic dysfunction, and the
threat of an active hurricane season will not provide the 21st
century electric system and service that the residents of Puerto
Rico require.
PREPA needs to transform its governance structure to integrate
residents, employees, and businesses. The high poverty rates in
Puerto Rico and the economic crisis require energy conservation,
efficiency, demand response programs, and renewable energy tech-
nologies, primarily rooftop or on-site solar and battery energy
58

systems to substitute the fossil generation and the centralized
transmission and distribution system.
Queremos Sol opposes the use of billions of dollars in Federal
funds to rebuild and to ‘‘harden’’ the T&D system and add more
fossil generation, especially methane gas, or natural gas, infra-
structure that the LUMA contract would facilitate.
Queremos Sol proposes the Federal Government work with
PREPA to take measures to initiate a transparent process for pro-
curement of solar equipment and battery systems to be installed
and maintained by the dozens of PREPA employees who have been
trained in renewable energy technology already.
The LUMA contract is a 20th century approach that will not pre-
pare Puerto Rico for the climate crisis. It dismantles PREPA while
simultaneously providing LUMA with multiple opportunities to
abandon its responsibilities under the agreement.
LUMA will prepare the PREPA IRP, may become part owner of
the electric system, and may request increases in electric rates.
The contract requires alignment of the proposed T&D work with
the grid modernization plan which requested $21 billion from
FEMA of which $12.2 billion is for reconstruction of existing T&D
systems rather than transformation of the system and an addi-
tional $4 billion of that is for new fossil plants.
The London Economics International report estimates that even
with Federal funding, the electricity rates would increase to 27.8–
30 cents per kilowatt hour if the proposed T&D work and the RSA
for the PREPA debt restructuring are implemented.
LUMA is granted undue control to manage Federal funds. It can
participate in selection of the grant administrator and can request
changes to Federal funding. LUMA can abandon the tasks required
under the contract after PREPA has been dismantled and when re-
inforcements of the electric system are most needed.
The LUMA contract infringes upon the rights of PREPA
employees as they will not be required to hire even the majority
of PREPA employees. The contract provides for priority payments
to LUMA to the detriment of other PREPA obligations.
LUMA may suspend or terminate electric service to government
entities that in turn provide public services. The LUMA contract
would perpetuate central station fossil fuel generation and the
T&D system.
An example of this kind of old generation is the New Fortress
Energy LNG terminal in San Juan. FERC recently issued an order
to show cause against New Fortress because it built and operates
the terminal without FERC’s authorization.
If New Fortress had requested FERC authorization, it would
have been required to study the health and safety risks of the LNG
terminal to nearby communities, workers, and properties prior to
building and operating it. The potential illegalities of the New
Fortress project are exposed in an in-depth report published by
Cambio and IEEFA.
The cost of electricity for San Juan private citizens, as we have
already seen, burning gas is 10.79 cents per million BTU, the most
expensive baseload units in PREPA’s system.
The Federal Oversight and Management Board approved the
New Fortress project and the new EcoEléctrica agreements, which
59

cost approximately $500 million more than competitively bid
contracts.
The disastrous experience with the privatization of energy and
other sectors in Puerto Rico include the AES coal burning power
plant, which has contaminated the South Coast Aquifer.
The CHAIRMAN. Ms. Santiago, you need to wrap up.
Ms. SANTIAGO. Thank you.
The CHAIRMAN. You are welcome.
[The prepared statement of Ms. Santiago follows:]
PREPARED STATEMENT OF RUTH SANTIAGO, MEMBER, QUEREMOS SOL COALITION
Chairman Grijalva and members of the House Committee on Natural Resources,
on behalf of the Queremos Sol Coalition, (‘‘We Want Sun’’, queremossolpr.com), we
appreciate the opportunity provided by the House Committee on Natural Resources
to testify and submit comments on the Transformation of the Puerto Rico Electric
Power Authority (‘‘PREPA’’). The Queremos Sol Coalition is composed of numerous
civil society groups, including community, environmental, labor, professional organi-
zations and academia that have come together to promote a sustainable, more
affordable platform for the transformation of the Puerto Rico electric system, con-
sistent with the Puerto Rican government’s commitment to 50 percent renewable
energy by 2030 and 100 percent renewable energy for Puerto Rico by 2050.
As further explained below, our Coalition members have substantial concerns
with both the process and the outcome of PREPA’s recent ‘‘T&D System Operation
and Maintenance Agreement’’ with Luma Energy, LLC (the Luma contract’’). These
concerns are shared by Puerto Ricans in the diaspora, as evidenced by the recent
protests on the mainland.
As such, we urge this Committee, the Federal Government and the Puerto Rican
government to encourage PREPA to annul the Luma contract and develop a plan
focused on on-site solar and battery systems and energy efficiency programs, based
on the recommendations of numerous experts, as further detailed below.
I. INTRODUCTION

Puerto Rico is at a crossroads with respect to its electric system. One of the main
issues confronting the territory is whether to double down on rebuilding Puerto
Rico’s inadequate 20th century infrastructure or to embark on the creation and con-
struction of a 21st century electric system, based on the Puerto Rican government’s
commitment to renewable energy that enables Puerto Rico residents to participate
in this essential public service. The Queremos Sol Coalition vigorously promotes the
transformation of the Puerto Rico electric system as a public service including
PREPA governance and the technology that empowers citizen participation as
‘‘prosumers’’—producers and consumers of energy in order to achieve energy
democracy.
The Luma contract structures an almost complete privatization of Puerto Rico’s
electric system via a lengthy operation and management (O&M) contract, not only
for the transmission and distribution (T&D) system and customer service depart-
ment, but also for power generation dispatch, acquisition and planning, among other
issues discussed below. However, the contract calls for an initial transition period
requiring numerous conditions prior to a full takeover by Luma that signifies
anything but a forgone conclusion that the transaction will be consummated.
The privatization of the Puerto Rico electric system as embodied in the Luma
Energy contract in the midst of multiple crises, including the COVID-19 pandemic,
recent and ongoing seismic activity, unaddressed socio-economic dysfunction un-
veiled by Hurricanes Irma and Maria, and the threat of another active hurricane
season will not provide the 21st century electric system and the empowerment and
service that the residents of Puerto Rico require. More than ever, PREPA must un-
dertake a swift transformation of its electric system to integrate residents, commu-
nities and businesses. The high poverty rates in Puerto Rico and the economic chaos
engendered by the COVID crisis require the transformation of PREPA to incor-
porate energy conservation, efficiency, demand response programs, and renewable
energy technologies, primarily roof-top or on-site solar and battery energy storage
systems (‘‘BESS’’), as well as other alternatives to central station imported fossil
fuel generation and centralized transmission and distribution. These alternatives
stand in stark contrast to the use of billions of dollars in Federal taxpayer funds
to rebuild and ‘‘harden’’ the T&D system and add more central station fossil
60
generation, especially so-called ‘‘natural’’ methane gas infrastructure that the Luma
contract would facilitate. The Federal Government should work with PREPA to take
measures to initiate a transparent process for acquisition or procurement of solar
equipment and BESS to be installed, operated, and maintained by the dozens of
PREPA employees who have been trained in renewable energy technology in
conjunction with local communities and other alternatives discussed below.
II. FIRST STEPS FOR TRANSFORMING THE PUERTO RICO ELECTRIC SYSTEM

During the technical hearings in the PREPA Integrated Resource Plan (‘‘IRP’’)
process before the Puerto Rico Energy Bureau (‘‘PREB’’) multiple experts provided
numerous recommendations for the Action Plan that would immediately implement
on-site renewables, storage, and energy efficiency programs, and begin the trans-
formation of Puerto Rico’s electric grid to better serve the people of Puerto Rico.
Federal funding afforded to PREPA should be earmarked for these types of
programs. PREPA’s Preferred Plans, on the other hand, would ensure decades of
continued reliance on large, centralized power plants and long, vulnerable South-
to-North transmission lines that would not promote the resilience of the electricity
grid to climate-related and other disasters. Hurricane Maria and the seismic events
of this year showed the importance of decentralizing the power network. A distrib-
uted generation system centered on on-site/rooftop solar will be more resilient and,
after an emergency, will allow for prompt restoration of energy services, fulfilling
the responsibility of saving lives.
A. Energy Conservation, Efficiency, Customer Engagement and Demand
Response Programs
The Queremos Sol proposal highlights the importance of starting the necessary
technical transformation with energy conservation, efficiency, customer engagement,
and demand response programs. During the IRP technical hearings, expert
witnesses identified several cost-effective Quick-Start Energy Efficiency programs:
• Solar water heaters. At the hearing, PREPA’s consultant, Siemens Industry
agreed that the Siemens experts were wrong to reject solar water heaters as
part of an energy efficiency program.1 PREPA could facilitate communications
between providers and customers, provide technical assistance with installa-
tion, incentivize adoption through PREPA budget allocations, and educate
customers through engagement.
• Refrigerator incentive programs. Local Environmental Organizations’ expert
witness pointed out that these programs have already had success in the past
in Puerto Rico.2 In addition to the steps detailed above, PREPA could provide
historical data from these programs.
• PREPA could provide energy audits, including energy efficiency measures, as
well as solar and storage options.3
• Various expert witnesses listed other programs that would be cost-effective
and popular: 4
— appliance replacement programs
— tuning up air conditioners
— replacing very old air conditioners
— expanding the Office of Public Policy’s low-income weatherization
program, which has served 15,000 homes already
The IRP assumes that PREPA will comply with the 2 percent annual reduction
in load due to energy efficiency as required by the Puerto Rico Energy Public Policy
Act (‘‘Law 17–2019’’), culminating in a 30 percent reduction in PREPA’s total load
by 2040. Yet, the Action Plan does not explain how PREPA would accomplish this
change.5 Siemens/PREPA acknowledge that in order to increase energy efficiency

1 Negociado de Energı́a en vivo, Evidentiary Hearing/CEPR-AP-2018-0001, YouTube (Feb 5,
2020), https://youtube/vIXWJt52Hfk?t=8350.
2 Negociado de Energı́a en vivo, Evidentiary Hearing/CEPR-AP-2018-0001, YouTube (Feb 4,
2020), https://youtube/RXb0bf5ScY?t=8970. Mr Sandoval has more than a decade of management
experience with energy utilities. Mr Sandoval’s experience includes work in transmission and
distribution system planning, demand side management, grid efficiency, grid transparency, and
clean energy.
3 Negociado de Energı́a en vivo, Evidentiary Hearing/CEPR-AP-2018-0001, YouTube (Feb 4,
2020), https://youtube/RXb0bf5ScY?t=13532.
4 Id.
5 Act 17–2019, Section 1 6 (11).
61
uptake, PREPA must offer a greater variety of energy efficiency programs,6 and in-
deed Law 17–2019, Section 1.9(3)(B) requires the IRP to include an evaluation of
the conservation resources, including electricity demand management and the
necessary programs to improve energy conservation. The Energy Bureau’s consult-
ant, Dr. Asa Hopkins, highlighted the most important conclusion of these scenarios:
the initial $300M investment in energy efficiency would save PREPA $1B in avoided
generation costs over the planning period, and the next $700M in energy efficiency
spending would save an additional $1.8B in avoided generation costs over the
planning period.7
PREPA must coordinate with the Bureau, the Energy Efficiency program
administrator, and stakeholders in designing a customer engagement plan ‘‘to
educate citizens and electric power service customers on energy efficiency, consump-
tion reduction, distributed generation strategies, and other available tools to em-
power consumers to have more control over their energy consumption,’’ as required
by Law 17–2019 Section 1.5(4)(b). We note that PREPA titled Part 3 of its Action
Plan ‘‘Engaging the Customer’’ but did not actually include a customer engagement
plan.8 A customer engagement plan would also help PREPA develop a ‘‘reasonable
set of assumptions for econometric and/or end use variables,’’ as required by the
Regulation on Integrated Resource Plan for the Puerto Rico Electric Power
Authority (Regulation 9021) Section 2.03(C)(2)(c).
B. Renewable Energy, Bess, Power Electronics, and Other Alternatives
Law 17–2019 directs PREPA to ‘‘maximize the use of renewable energy’’ and, at
the same time, ‘‘aggressively reduce the use of fossil fuels’’ and ‘‘minimiz[e] green-
house gas emissions . . .’’ 9 Dr. Agustin Irizarry conducted the analysis that
PREPA/Siemens should have done: he obtained real quotes for photovoltaic (PV) and
storage equipment costs at retail price in Puerto Rico, along with financing ex-
penses, widely available to Puerto Ricans for these projects. Dr. Irizarry’s real-
world, Puerto Rico-specific analysis of solar PV costs resulted in a forecast of
Levelized Cost of Energy for rooftop PV of 7.8 cents per kWh in 2019, declining to
1.8 cents per kWh in 2038.10 After Dr. Irizarry obtained his results, he found they
were quite similar to the National Renewable Energy Laboratory’s (‘‘NREL’’)
forecast for the costs of rooftop solar.
The draft IRP prepared by Siemens Industry, Inc. for PREPA indicates that the
costs of customer alternatives are lower than the final all-in Energy System
Modernization (ESM) and S4S2 plans generation portfolio rates. (Pages 8–40 and
8–59 of the IRP, third draft dated 06/07/2019.) The cost of customer generation is
significantly lower than the total rate even before the non-bypassable component is
added. Despite on-site, rooftop solar being cheaper in the IRP, customer-sited solar
is severely limited to only about 20 percent of the generation mix at the end of the
IRP planning period in 2038 (Exhibit 8–46 ESM Future Installed Capacity Mix,
third draft dated 06/07/2019).
In the IRP, energy consumption by group indicates that commercial and residen-
tial clients constitute the lion’s share of energy demand in Puerto Rico while indus-
trial clients barely consume about 13 percent of energy generation. The commercial
sector consists of sprawling malls and other installations with expansive parking
lots and rooftops that can be used to site solar arrays to power operations. Much
residential construction in Puerto Rico consists of single-family housing develop-
ments known as urbanizations. They are especially expansive and prevalent in the
San Juan metropolitan area and can provide the on-site ‘‘rooftop resource’’
referenced in the Department of Energy (‘‘DOE’’) commissioned studies by faculty
at the University of Puerto Rico at Mayaguez (‘‘UPRM’’), recommending widespread
use of existing structures to site PV installations, which also coincides with the
major energy demand center in Puerto Rico.11

6 Negociado de Energı́a en vivo, Evidentiary Hearing/CEPR-AP-2018-0001, YouTube (Feb 4,
2020), https://youtube/RXb0bf5ScY?t=12664.
7 Negociado de Energı́a en vivo, Evidentiary Hearing/CEPR-AP-2018-0001, YouTube (Feb 6,
2020), https://youtube/HO40ImpqKe8?t=3669. The above $300M investment in energy efficiency
is the cost of moving from the ‘‘no energy efficiency’’ scenario to the ‘‘low energy efficiency’’
scenario, while the $700M cost represents moving from the ‘‘low energy efficiency scenario’’ to
the base case scenario. Each increase in the level of energy efficiency investments generates
savings at well over a factor of two Id.
8 IRP, Section 10 3.
9 Law 17–2019 Section 1 5(6)(b), Section 1 11(d).
10 Irizarry-Rivera Direct Test at 27–29.
11 http://www.uprm.edu/aret/docs/Ch_1_Summary.pdf. Multiple studies have proven the
resiliency of on-site photovoltaic (PV) and battery energy storage (BESS) systems. https://
Continued
62
The proposal for the initiation of transparent procurement or acquisition of PV
and BESS, installed on rooftops or on-site by PREPA employees, aligns with the
Queremos Sol proposal which sets forth a vision, objectives, and mechanisms to
achieve incremental advances in energy efficiency, demand response programs, and
escalating amounts of renewable generation based on community rooftop solar that
would achieve 100 percent renewable generation by 2050.
The advantages of on-site, rooftop solar or solar installations close to the point of
use are many. They include the use of existing sprawling housing development and
commercial rooftops to avoid further impacts to open spaces, agricultural land, and
ecologically sensitive areas. Rooftop solar eliminates the need for large investments
in transmission infrastructure. It avoids transmission losses. Grid maintenance
costs are reduced and impacts to tropical forests and vegetation as a result of tree
cutting and pruning are minimized. The on-site solar alternative doesn’t require es-
tablishing extensive easements or servitudes on private property, while helping to
lower temperatures within the structures and providing protection to the buildings.
Rooftop solar installations add value to the structures and promote local wealth.
Distributed renewable generation on rooftops creates greater reinvestment in the
local economy than utility-scale projects. It enables ratepayers to become producers
or ‘prosumers’ of energy, not mere consumers and allows for control by residents
and local communities and businesses, which is particularly important during out-
ages of the main grid as was experienced after Hurricane Maria and the earth-
quakes. On-site solar enjoys broad support from civil society contrary to land-based
installations that have been the subject of considerable opposition.
1. Renewables and BESS can Serve Critical Loads and Provide Resilience
Siemens acknowledged that renewable resources could be available immediately
after a major event (e.g., hurricane, power outage). Therefore, the company’s origi-
nal assumption in the IRP that base fossil generation was indispensable was
wrong.12 Siemens’s rebuttal testimony acknowledged that the June 2019 IRP did not
recognize the full value of renewables, stating that solar panels could be certified
to withstand major events, and therefore should have been considered to supply crit-
ical loads.13 In December 2019, the Energy Bureau’s Energy Storage Study
confirmed that ‘‘thermal resources are not required to prevent loss of critical
loads.’’ 14 At the hearing, Siemens’ project head further explained that if the IRP
had correctly recognized the full resiliency value of renewables, then the fixed deci-
sion to build 414 MW of gas-fired peaking units in 2021 may not have been
necessary.15
The Energy Storage Study commissioned by PREB also confirmed that Siemens’
incorrect decision to force gas-fired resources into the modeling had improperly
lowered the amount of renewables and storage selected:
The analysis finds that the gas-fired plants (thermal resources) required by
PREPA’s minigrids approach to meet critical and priority load impact the
buildout of solar and storage. Because the model is forced to include
thermal resources, it cannot add as much solar and storage as it would if
it were allowed to seek out the most cost-effective options for meeting
demand.16
PREPA should coordinate with the Puerto Rico Energy Office to provide education
about storage, as recommended in the Energy Bureau’s Energy Storage Study.17
PREPA acknowledges that transformation of the system using distributed genera-
tion is both viable and must take a predominant role in the Puerto Rico grid.18

www.nrel.gov/docs/fy15osti/62631.pdf, https://www.nrel.gov/state-local-tribal/blog/posts/how-
solar-pv-can-support-disaster-resiliency.html.
12 In addition, Siemens did not take distributed storage into consideration. See PREPA
response to Local Environmental Organizations’ ROI 3 56.
13 PREPA’s Mot to Submit Corrected Rebuttal Test, Direct Test of Nelson Bacalao, PHD at
7, (Jan 20, 2020), http://energia.pr.gov/wp-content/uploads/2020/01/Corrected-Rebuttal-
Testimony-of-Nelson-Bacalao-PH_D_in-Support-of-PREPAs-Draft-Integrated-Resource-Plan-
CEPR-AP-2018-0001.pdf. [hereinafter Bacalao Rebuttal Test].
14 Puerto Rico Energy Bureau, Energy Storage Study For a renewable and resilient island grid
for Puerto Rico at Section 6 1 (Dec 19, 2019), filed in Dkt NEPR-MI-2020-0002, http://
energia.pr.gov/wp-content/uploads/2020/01/NEPR-MI-2020-0002-Estudio-Sistemas-de-
Almacenamiento-de-Energi%CC%81a.pdf. [hereinafter PREB Energy Storage Study].
15 Negociado de Energı́a en vivo, Evidentiary Hearing/CEPR-AP-2018-0001, YouTube (Feb 5,
2020), https://youtube/vIXWJt52Hfk?t=2190.
16 PREB Energy Storage Study, Section 6 1.
17 PREB Energy Storage Study, Section 6 2.
18 ‘‘Customer-Centric: which includes customer participation via energy efficiency, customer
side energy resources and demand response with a predominant role in the supply and
63
Law 17–2019 and the PREPA Governing Board mandate require that the electric
system be customer centric.
2. Financing the Necessary Transformation
Financing strategies and instruments can be sourced from various sectors: the
Federal Government, credit unions, cooperatives, and other organizations to achieve
renewable generation goals with a distributed generation strategy. PREPA could
also use its budget to incentivize customers to build distributed solar and storage
systems and share implementation costs with customers. Puerto Rico Senate Bill
1879 detailed such a program. PREPA could implement a system to incentivize
customers to build distributed solar and storage systems and share implementation
costs with customers. Bill 1879 would require PREPA to fund 80 percent of the total
cost and installation of renewable energy systems in the residences of the partici-
pating owners that have the average consumption of a family of four members, or
800 kilowatts of energy per month, whichever is greater. In turn, the excess energy
produced by the systems installed and acquired through the incentive must be used
to reduce the energy cost in Puerto Rico. The funds for on-site/rooftop initiatives can
come from short-term and long-term sources including Federal funds that would not
result in rate increases. Through these programs, Puerto Rico could achieve the
goals of the Queremos Sol proposal: 75 percent of homes must have a rooftop solar
system of around 1.5 kW of generation capacity accompanied by a 10-kWh storage
system by 2035 to increase the efficiency of residential electric service.
III. THE LUMA CONTRACT IS A 20TH CENTURY APPROACH THAT WILL NOT PREPARE
PUERTO RICO FOR THE CLIMATE CRISIS OR SERVE THE PUBLIC INTEREST

The Luma contract goes against the necessary transformation of PREPA that
would allow Puerto Rico residents and communities to participate in the electric sys-
tem through energy conservation and efficiency, PV systems sited on rooftops or
close to the point of use, BESS and other alternatives to centralized generation at
fossil fuel fired power plants and T&D. As discussed above, the alternatives to a
centralized electric system set out in the Queremos Sol proposal are recommended
by multiple experts and studies. By perpetuating South-North transmission, the
contract with Luma facilitates the operation of the AES coal burning power plant
in Guayama potentially beyond the end of the AES contract term if the regulatory
provisions against coal combustion are amended, as well as the rest of the central
station fossil fuel plants located in Southern Puerto Rico.
The Luma contract is a long, expensive and exclusive scheme that creates
a private monopoly. The Luma contract spans 15 years and may be terminated
before or extended by mutual agreement with the approval of the PREB. Under the
contract, PREPA must pay Luma a service fee that ranges from $83 million to $125
million per year and, in addition to virtually all Luma’s costs through the so-called
Operator T&D Pass-Through Expenditures,19 some capital expenses and expenses
during outage events. Luma has no obligation to invest its own funds.
From the service start date and for the rest of the term of the contract, the
Operator, the contractors and their subcontractors will have the exclusive right,
subject to Section 3.5 (right of access), to enter, occupy, and use the T&D system
and its related areas.
Although the Agreement recognizes that electric service is an essential public
service, no duty is established to provide that service to the public, though the en-
tire T&D system would be under the Operator’s control and Luma would also
exercise control over the dispatch of the generation plants. (Luma contract page 35,
pdf 42).

consumption matrix of Puerto Rico, and empowering customers to participate and take
ownership on their energy security and affordability’’ IRP, at 1-1.
19 Details of T&D Pass-Through Expenditures to Be Paid by PREPA to Luma
T&D transfer expenses will include, among others, the following four types of expenses as an
example of the list of 22 expenditure types that PREPA must reimburse to the Operator:
1. wages, salaries, bonuses, employer contributions to medical pension and employee plans;
2. costs incurred by ServCo in the provision of O&M services, including the costs of all
subcontracted employees, all goods and services, subcontractor costs, employee allowances,
administrative costs such as fees, subscriptions, meals, and entertainment.
3. costs related to system capital improvements, including project management costs incurred
by ServCo employees and the cost of debt for assets and all other costs associated with financing
these improvements, except for Operator-owned capital improvements as provided in Section 5.5
(d) (Capital Improvements—Option to Propose Operator-Owned Capital Improvements) of the
Agreement;
4. costs incurred with respect to professional services, including legal, engineering, accounting,
finance, auditing, information technology, etc.
64
The Luma contract divides and dismantles PREPA into two different
companies, while simultaneously providing Luma with multiple
opportunities to abandon its responsibilities:
‘‘GenCo’’ will be the entity that owns the generation assets—the existing
generating plants—after the PREPA dismantling. (Luma contract page 17, pdf 24).
‘‘GridCo’’ is defined as the entity that acquires or obtains ownership of the T&D
system. This arrangement essentially dismantles PREPA and creates heightened
risk for Puerto Ricans should Luma terminate the agreement or fail to provide the
requisite services under the extremely broad force majeure contract clause.
Luma is granted monopoly control over Puerto Rico’s electric system that goes
beyond the T&D system and customer service. In relation to generation services,
Luma will control the dispatch of the power plants and management of energy
supply. Luma is granted the authority to manage the acquisition of generation
projects and generation supply contracts. Luma would acquire easements, fee
interests and concession rights and, identify and constitute new easement areas.
Similarly, the Operator can acquire concession rights that allow for the use of real
estate assets in the public domain, including submerged lands, wetlands and
areas designated as part of the terrestrial maritime zone by the Puerto
Rico Department of Natural and Environmental Resources for the operation,
maintenance, repair, restoration, replacements, improvements, additions, and
alterations to the T&D system.
Luma would provide ‘‘other’’ services, including ‘‘implicit’’ services. In addition, if
requested by the Administrator, the Operator may perform additional services
reasonably related to the T&D system not included in O&M services. (Luma
contract pages 73–6, pdf 80–6).
The Luma contract mandates that the Operator must have complete flexibility as
to the budget, and although it must consult the Administrator and PREB, their ap-
proval is not required, to (i) reassign, accelerate, or postpone expenses within the
approved Operating Budget, (ii) reallocate, accelerate, or postpone expenses within
the approved Capital Budget financed by the Federal Government, subject to
Federal financing requirements, and (iii) reallocate, accelerate, or postpone expenses
within the approved Capital Budget not financed by the Federal Government, in
each case, in such a way that the reallocations do not exceed 5 percent of the
Budget. (Luma contract page 89, pdf 96). The grant of discretion to Luma over
public funds, including Federal funds is problematic as previous energy contracts in
Puerto Rico have shown.
Luma will prepare the PREPA IRP. The Operator, as an agent of PREPA, will
prepare a proposed IRP for the future long-term development of the Puerto Rico
electric system, subject to PREB’s review and approval. (Luma contract page 67, pdf
74). As the experience with the Siemens IRPs has shown, the ability to draft the
IRP bakes in biases, such as a preference for fossil fuel generation into modeling
inputs.
Luma may become part owner of the Puerto Rico electric system. Luma
could carry out capital improvement projects that could become its property if it
invests its own funds to build them. (Luma contract page 66, pdf 73).
Luma may request increases in the electricity rate. Although it is alleged
that the Agreement is intended to lower the cost of electric energy, the Operator
may submit a request to PREB to increase or change the customer rates or charges.
(Luma contract page 67, pdf 74). In fact, according to PREPA’s Fiscal Plan, PREPA
now has a deficit roughly equivalent to the amount of the payment to Luma for the
current fiscal year.
The Luma contract cites the Grid Modernization Plan (‘‘Grid Mod Plan’’) 20 and
other documents and requires alignment of the proposed T&D work. (Luma contract
II–36, pdf page 2014). The Grid Mod Plan was drawn up to request $20.3
billion or $21 billion in Federal funds from the Federal Emergency Manage-
ment Agency (‘‘FEMA’’), of which $12.2 billion is slated for reconstruction
of existing transmission and distribution systems and some substations
rather than the transformation of the system. The major expense requirements
of the Grid Mod Plan focus on the direct rebuilding of transmission and distribution
systems and substations. Total expenses in those categories are $12.2 billion, or 60
percent of the total. Table 4-5 of the Grid Mod Plan details a list of South-North
transmission infrastructure. Table 4-12 proposes spending $1.7 billion to strengthen
that transmission. Fossil infrastructure spending would be $3.8 billion, according to
the Grid Mod Plan.

20 https://recovery.pr/documents/Grid%20Modernization%20Plan_20191213%20(2).pdf.
65
The London Economics International (‘‘LEI’’) report 21 estimates that the Puerto
Rico’s electricity rates would increase to between 27.8 to 30 cents per kWh (nominal)
over the next 5 years if the proposed T&D system projects and the Restructuring
Support Agreement (RSA) for the restructuring of the PREPA debt are implemented
even with the investment of Federal funds. Rates will increase further, to 103
cents per kWh in 2047 (65 cents per kWh in 2019 real dollars) in the base case,
and 60 cents per kWh (38 cents per kWh in 2019 real dollars) in the alternative
case. These astronomical increases are mainly due to the proposed investments in
T&D.
Under the Agreement, Luma is granted undue control over Federal
funds. The Operator will work with IEM (as its subcontractor) to manage Federal
funds. The Operator’s first step after the initial transition begins is to establish a
governance framework to manage long-term recovery using Federal funds on behalf
of PREPA. (VII. Federal Funds Procurement Manual). Under the Luma contract,
the ‘‘Grant Administrator’’ is defined as ‘‘the relevant government agency and any
third party, authorized by PREPA, and reasonably acceptable to ManagementCo, ie,
Luma to act as manager to administer Federal funds. ManagementCo may request,
to the extent permitted by applicable law, changes or modifications to Federal fund-
ing (including modifications or reassignments between project worksheets related to
the T&D system prepared by FEMA pursuant to Section 428 of Stafford Act) or the
Integrated Resource Plan.’’ (Luma contract page II–39, pdf 207).
Luma can abandon the tasks required under the contract after PREPA
has been dismantled and when reinforcements for the electric system are
most needed and almost at any time. In an extended force majeure event, Luma,
as Operator has the right to terminate the contract, in the event that the force
majeure event continues for a period longer than eighteen (18) consecutive months
and materially interferes, delays or increases the cost of initial transition services
(front-end) or operation and maintenance services (O&M). (Luma contract page 125,
pdf 132). In addition, according to the contract, ‘‘force majeure event’’ is defined so
broadly that it excuses Luma from performing the services required for almost any
reason, including an interruption or blackout event (page 22, 29), computer sabotage
or virus, quarantine, epidemic, or civil disobedience; any event that causes any
Puerto Rico or Federal Government agency to declare any part of the geographical
area of the T&D system as part of a ‘‘disaster zone’’, ‘‘state of emergency’’ or any
other similar declaration; and a change in the law. (Luma contract pages 14–5, pdf
22. The definition of force majeure is very broad and allows the Operator to evade
responsibility after receiving the benefits of the contract.
The Luma Agreement infringes upon the rights of PREPA employees.
Neither ManagementCo nor ServCo will be required to hire or compensate
PREPA employees. ServCo will not be required to hire even the majority
of PREPA employees and the determination of which employees it will hire
will be made by ServCo in its sole discretion. Job offers will remain open
for a period of 10 business days. Any offer accepted within the 10-day period will
be irrevocable only until the service start date. Job offers will provide employment
with ServCo on the terms and conditions established in ServCo’s sole discretion.
(Luma contract page 69, pdf 76). The Operator will not be required to assume
PREPA pension payments. Employees hired by the Operator will not receive any
credit for their previous service unless required by Law 120–2018. ServCo’s benefit
plan will not be obliged to cover pre-existing health conditions or other benefits for
employees and their dependents. (Luma contract page 47–8, 54–55).
The contract provides for priority of payments to the Operator as
administrative expenses in the PREPA bankruptcy Title III process to the
detriment of other PREPA obligations. (Luma contract page IV–1, pdf 218).
Luma may suspend or terminate electricity service to government
entities, such as municipalities. Luma will assume the implementation of
Regulation 8818 of September 27, 2016 (Regulation on Contribution in Lieu of Taxes
(CILT/CELI).Contrary to a public utility, Luma is not guided by the services that
government agencies provide and how they may be impacted by suspension of
electric service.
The contract requires PREPA to grant a liability waiver for damages to
customers in favor of Luma. With the presentation of the initial budgets to the
PREB, the parties agree to request the inclusion in the rate order of an exemption
from liability from PREPA in favor of ManagementCo and ServCo as to customers
or anyone who receives energy and electricity for any loss that arises in any way
or in connection with the operation of the T&D system and the supply of energy
and electricity, including any outage event, irregular or defective electrical service

21 https://creditorspr.com/wp-content/uploads/2020/02/Redacted-LEI-Report-filed-version.pdf.
66
due to force majeure events, other causes beyond the control of PREPA,
ManagementCo or ServCo or common negligence, gross negligence or willful mis-
conduct of PREPA, ManagementCo or ServCo, or their respective employees, agents
or contractors; and exemption in all cases of liability for any loss of earnings or
income, among others. (Luma contract, page 44, pdf 51).
Luma may evade the requirement to maintain insurance policies. If any
required insurance policy is not available at commercially reasonable prices, the
Operator will have the right to request the Administrator’s consent to obviate the
requirement, the consent will not be denied, delayed or unreasonably conditioned.
PREPA is required to pay the claims that would be covered under an insurance
policy if Luma does not purchase the policy. (Luma contract page 103, pdf 110).
The Luma contract would perpetuate central station fossil fuel genera-
tion and the associated T&D system. The Grid Mod Plan to which the Luma
contract must be aligned lists multiple methane gas facilities, including San Juan,
Mayagüez, Palo Seco, Yabucoa, and other peaking units but admits that having four
gas import points increases costs and is not ‘‘optimal’’. However, the government’s
consultants go on to discuss multiple mechanisms to deploy new methane gas infra-
structure, which have been the subject of stiff civil society opposition. On page 55
of the Grid Mod Plan, Figure 4-10 shows that natural gas constitutes 43.72 percent
(adding EcoElectrica and Costa Sur) of ‘‘Total Production per Fuel Type
Accumulated,’’ while diesel amounts to 13.53 percent and bunker C is 19.36 percent,
totaling 32.89 percent for oil combustion generation. Therefore, methane gas genera-
tion already exceeds oil-fired generation. This undermines the argument of increas-
ing gas generation as a ‘‘transition’’ to renewable energy or for ‘‘fuel diversification’’
purposes. Instead, any increase in gas generation would necessarily further exacer-
bate reliance on a single, imported fuel source.
The Luma contract, by virtue of the requisite ‘‘alignment’’ with the Grid Mod Plan
perpetuates centralized generation with imported fossil fuels, especially new
‘‘natural,’’ highly explosive, methane gas infrastructure that involves investments of
billions of dollars and continued dependence on the transmission of electricity from
southern Puerto Rico to the San Juan metropolitan area. It should be noted that
methane gas plants and pipelines usually are taken out of operation during earth-
quakes to minimize explosions of this highly volatile fuel. This practice implies that
the gas infrastructure would be inoperative during earthquake aftershocks that can
go on for months as is currently the case in Puerto Rico.
The Action Plan in the draft IRP calls for the construction of three ship-based
LNG terminals to be sited in San Juan, Mayaguez, and Yabucoa and one land-based
LNG terminal in San Juan, four new Combined Cycle Generation Turbines (CCGT)
of 302 MW each in Palo Seco, Costa Sur, Yabucoa, and Mayaguez, and the possi-
bility of the conversion of the AES coal burning power plant in Guayama to burn
gas; three (3) CCGTs of 38 MW each in the San Juan metropolitan area; 18 mobile
23 MW units, between 900 to 1800 MW of land-based solar projects and between
600 to 900 MW of BESS. The Plan also proposes the conversion of several existing
plants to burn imported methane gas. The construction of these projects would
create long-term dependence on methane gas imports and impede the adoption of
on-site and rooftop solar and related options.
PREPA senior executives have indicated that the funds for methane gas infra-
structure and the reconstruction of the current T&D system will come from Federal
sources. Implicit in this approach is the presumption that the people of Puerto Rico
will be getting a ‘‘free lunch’’ and that they can request large sums for infrastruc-
ture of doubtful utility and security because it is paid by the Federal Government
and ultimately, U.S. taxpayers. This reflects a mentality of dependence driven by
the methane gas/LNG industry and corporations that sell fossil generation units.
The ‘‘free’’ methane gas infrastructure would tie Puerto Rico to methane gas-burning
plants and endanger public health and safety.
A recent example of how the methane gas infrastructure can go against the public
interest is the New Fortress Energy/NFEnergia (NF) Liquefied Natural Gas (‘‘LNG’’)
terminal in San Juan Harbor. Recently, the Federal Energy Regulatory Commission
(‘‘FERC’’) issued an Order to Show Cause against NF because NF built and operates
the LNG terminal in San Juan without previously having obtained the requisite
authorization under Section 3 of the Natural Gas Act. If NF had submitted an appli-
cation for FERC authorization it would have been required to study the health and
safety risks of the LNG terminal to nearby communities, workers, and properties.22

22 Faith groups that represent thousands of concerned citizens living in or around the area
of the proposed NFEnergia LNG facilities, including Christian churches from various denomina-
tions in the Municipalities of San Juan, Guaynabo and Cataño sent a letter to FERC requesting
the agency’s intervention in the project. (See the attached letter). The churches include the
67
The NF project is plagued with irregularities and potential legal violations,
recently revealed in an in-depth report published by Cambio Puerto Rico and the
Institute for Energy Economics and Financial Analysis (‘‘IEEFA’’).23
The NF terminal is supplying methane gas to the PREPA San Juan 5 & 6 units,
which are burning light distillate or gas.24 The cost of electricity from San Juan
5 & 6, burning gas is $10.79/MBTU, which makes those units the most
expensive baseload units on PREPA’s system.
All the gas infrastructure build-out proposed is based on dubious legal exceptions
and a proposed waiver of the Jones Act (Merchant Marine Act) exclusively to allow
for shipping of methane gas extracted via hydraulic fracturing (fracking) from the
continental United States in foreign vessels, which is not likely to be approved
according to news sources. The executive branch’s gas infrastructure buildout will
leave no space or resources for customer-sited renewables.
IV. THE LUMA CONTRACT WILL EXACERBATE PREPA’S CURRENT SYSTEM
VULNERABILITIES AND HARM PUBLIC HEALTH AND SAFETY

Hurricanes Irma and Maria demonstrated that the 230 kV and 115 kV lines that
carry power from the large, centralized power plants in the South to the North were
a key vulnerability of the system. The Luma contract requires continued reliance
on centralized fossil fuel combustion plants and these transmission lines, and even
contemplates more large, centralized plants, also connected to the grid through the
same vulnerable transmission lines. The South-to-North transmission lines are vul-
nerable to extreme weather events, vegetation growth, wildlife impacts, lack of
investment in maintenance, and difficult access to servitudes and easements, among
others.
The seismic events further demonstrated the vulnerability of large, centralized
plants and the affiliated transmission system: Costa Sur and EcoElectrica are both
damaged. The U.S. Geological Survey has determined that the areas where the San
Juan and Palo Seco plants are located present high risk of liquefaction in the event
of earthquakes.25 The Great Southern Puerto Rico Fault Zone runs through the
Jobos Bay area where the Aguirre Power Complex and the AES coal burning power
plants are located.26
The Palo Seco plant, depot and accompanying infrastructure are in a tsunami
flood area.27 The IRP fails to consider how much of the existing or proposed energy
infrastructure is in flood prone areas or to provide documents related to sea level
rise, storm surge, or other flooding risks for the plants and T&D infrastructure.28

following: (1) Iglesia Cristiana (Discı́pulos de Cristo) in Amelia, Guaynabo (serving Barrio
Pueblo Viejo de Guaynabo, Sabana, Amelia, Vietnam, La Puntilla and others sectors between
Guaynabo & Cataño); (2) Iglesia Cristiana (Discı́pulos de Cristo) in San Patricio (serving
Northeast/Northwest Puerto Nuevo and Barriada Borinquen); (3) Iglesia Luterana El Redentor
(serving Puerto Nuevo); and (4) Iglesia Cristiana (Discı́pulos de Cristo) of Puerto Nuevo (serving
Puerto Nuevo and the Hermanas Dominicas de la Santa Cruz community in Cataño). The group
is also backed by the Puerto Rican Council of Churches with more than 500 congregations
among its ranks. Combined, the group represents more than a dozen pastors seeking answers
as to why FERC has not assumed jurisdiction on such a dangerous project involving large
amounts of flammable methane gas in proximity to communities and places of worship.
23 https://ieefa.org/wp-content/uploads/2020/06/Is-Puerto-Ricos-Energy-Future-Rigged_June-
2020.pdf.
24 In May 2020, it appears that PREPA burned about 240,000 barrels of light distillate at San
Juan 5 & 6, and 85,000 barrels of methane gas, according to the Reconciliation File May 2020,
May-2020 Fuel Cost & Consumption tab, rows 45–52, PREPA’s June 17th filing in PREB’s rate
case docket, NEPR-MI-2020-0001.
25 Bachhuber, Hengesh, & Sunderman, Liquefaction Susceptibility of the Bayamon and San
Juan Quadrangles, Puerto Rico, at Figure 6, PDF p 30 (2008), https://earthquake_usgs_gov/
cfusion/external_grants/reports/03HQGR0107.pdf (noting very high susceptibility zones in areas
along the Bayamon coastal plain, Bahia de San Juan, and Laguna San Jose); Hengesh, &
Bachhuber, Liquefaction susceptibility zonation map of San Juan, Puerto Rico, in Mann, P (ed),
Active tectonics and seismic hazards of Puerto Rico, the Virgin Islands, and offshore areas:
Geological Society of America Special Paper 385, at 249–262 (2005).
26 Id. at 250.
27 GridMod Plan, at 107, Figure 6-6 (‘‘Map of Palo Seco Plant and Depot in Flood Area,’’ listing
PREPA as the source of this information).
28 The terms ‘‘Storm surge’’ and ‘‘Flooding’’ each appear only once in PREPA’s IRP, while ‘‘Sea
Level Rise’’ is left out completely Cf Puerto Rico Climate Change Council (PRCCC), Puerto Rico’s
State of the Climate 2010–2013: Assessing Puerto Rico’s Social-Ecological Vulnerabilities in a
Changing Climate at 7 (2013), http://pr-ccc_org/download/PR%20State%20of%20the%20Climate-
FINAL_ENE2015.pdf (noting the demands of the scientific and academic community in Puerto
Rico for ‘‘an immediate halt to the endorsement and approval of projects in coastal areas
vulnerable to the effects of sea level rise’’).
68
The operation of all fossil fuel plants in Puerto Rico emit multiple contaminants
that adversely impact public health and the environment. The Applied Energy
System (AES) Corporation coal-fired power plant and the Aguirre Power Complex,
located in southeastern Puerto Rico are the two primary sources of toxic emissions
in Puerto Rico and disproportionately impact some of the poorest communities.29
These two plants also extract large amounts of freshwater from the South Coast
Aquifer and have contributed to the water scarcity that led to water rationing in
summer 2019 and in previous years.30
The AES coal burning power plant in Guayama transmits electricity to northern
Puerto Rico, including the San Juan metro area and accumulates hundreds of
thousands of tons of coal ash waste at its plant site. The facility and its polluting
practices already contaminated part of the South Coast Aquifer, the sole source of
potable water for tens of thousands of people in Puerto Rico.31
The Costa Sur and EcoElectrica plants in southwestern Puerto Rico both burn
imported methane gas and also transmit energy long distance. Gas combustion is
the substitution of one group of contaminants for others. The myth that methane
gas is a cleaner energy source is a fallacy. The methane LNG used in Puerto Rico
must be stored under cryogenic conditions and revaporized/regasified before it can
used at the plants. These additional processes add to the total emissions of LNG
use in a way that exceeds the CO2 emissions of other fossil fuels. Methane gas
combustion also emits increased Volatile Organic Compounds (VOCs) such as
formaldehyde, benzene, toluene, hexane, and styrene.32
Multiple scientific studies, including a recent Harvard University report found
that, ‘‘A small increase in long-term exposure to PM2.5 leads to a large increase in
COVID-19 death rate, with the magnitude of increase 20 times that observed for
PM2.5 and all-cause mortality. Exposure to air pollution and COVID-19 mortality
in the United States.33 The study results underscore the importance of continuing
to enforce existing air pollution regulations to protect human health both during
and after the COVID-19 crisis.’’ The specific findings demonstrate that, an increase
of only 1 ug/m3 in PM2.5 is associated with a 15 percent increase in the COVID-
19 death rate, at a 95 percent confidence interval. https://projects.iq.harvard.edu/
covid-pm. Particulate matter is emitted by electric power plants, motor vehicles and
other sources of air contamination. Continued reliance on these plants for energy
transmission to San Juan and northern Puerto Rico is another disaster in the
making.
V. THE DISASTROUS EXPERIENCE WITH PRIVATIZING ENERGY AND OTHER SECTORS IN
PUERTO RICO

Within the electric power sector, Puerto Rico already has several examples of
generation by private corporations. The AES coal-fired plant generates approxi-
mately 17 percent of Puerto Rico’s electric power and has incurred in multiple viola-
tions and instances of noncompliance with the plant siting permit, orders, and
resolutions of the Puerto Rico Environmental Quality Board (EQB), violations of the
Federal Clean Water Act and other violations that constitute sufficient basis for the
rescission of the power purchase agreement between PREPA and AES prior to the
expiration of the contract term. Evidence of environmental contamination by AES
is documented in various Groundwater Monitoring reports commissioned by AES to
its contractor, DNA Environmental, LLC as a requirement of the Federal Coal
Combustion Residuals Rule. AES is now in the process of determining the corrective
measures to implement to clean the groundwater contamination and prevent further
water pollution at its plant site.34 However, there are at least 40 sites where AES’
Agremax was used as fill material over the South Coast Aquifer and various other

29 https://enviro.epa.gov/triexplorer//tri_factsheet.factsheet_forstate?pZip=&pParent=NAT&p
City=&pCounty=&pState=PR&pYear=2018&pDataSet=TRIQ1&pPrint=0.
30 (https://waterdata.usgs.gov/pr/nwis/wu; https://www.periodicolaperla.com/acuifero-del-sur-
retrocede-la-unica-fuente-de-agua-potable-de-30-mil-surenos1/).
31 Report On Corrective Measures Assessment Aes Puerto Rico—AgremaxTM Staging Area,
Guayama, Puerto Rico https://aespuertorico.com/wp-content/uploads/2019/11/Corrective-
Measures-Assessment-English.pdf, AES Puerto Rico Coal Combustion Residuals website; https://
aespuertorico.com/ccr/.
32 Pediatric Environmental Health Specialty Unit (PEHSU), Mount Sinai Medical School. pgs.
1–2. https://elibrary_ferc.gov/IDMWS/search/advResults.asp, Case No. CP13-193-000.
33 Xiao Wu, et al. medRxiv 2020.04.05.20054502; doi: https://doi.org/10.1101/2020.04.05.
20054502.
34 DNA-Environment, LLC, 2017 Annual Groundwater Monitoring Report AES Puerto Rico
LP, Guayama, Puerto Rico (Jan. 31, 2018). Available at: http://aespuertorico.com/wp-content/
uploads/2018/02/2017_01_31_AES_Groundwater-Monitoring-and-Corrective-Action_Annual-
Report.pdf.
69
sites in municipalities throughout Puerto Rico that have not been tested and are
likely leaching heavy metals into water supplies.
Other examples of private energy generation in Puerto Rico are the renewable
energy power purchase agreements. Table 5-6 of the 2015 Supplementary IRP pre-
pared by Siemens Industry lists 43 power purchase agreements totaling 1056 MW.
The prices of some of these contracts are as high as $197.00 per MWh, in addition
to annual escalation costs and requiring payment for renewable energy certificates
(‘‘RECs’’). In addition, almost all of these projects are built or proposed to be built
on agricultural land or ecologically sensitive areas.
The Federal Oversight Management Board (‘‘FOMB’’) approved the NF LNG
project in San Juan Harbor as well as the new EcoElectrica/Naturgy agreements.
Based on the LNG market analysis of Poten & Partners, the EcoElectrica/Naturgy
agreements could cost approximately $500M in excess of competitively bid contracts
over the 12-year term of the agreements. The NF contract also includes above-
market rates for LNG. Ultimately, PREPA ratepayers would be required to shoulder
this burden. It’s imperative that the FOMB explain the basis for its approval of the
various dubious transactions mentioned above.
A study on the privatization of the Puerto Rico Aqueduct and Sewer Authority
(‘‘PRASA’’) concluded as follows:
[P]rivatization did not improve the quality of water services either, and
certainly led to many more fines and expenses for Puerto Rico, as evidenced
by the work done by the Office of the Comptroller of Puerto Rico. Contrary
to what was believed and argued by those that supported privatization of
the water supply services, two different privatization projects, with dif-
ferent companies and varying contractual terms, failed. Cortina de
Cardenas, Susana Maria. ‘‘Does private management lead to improvement
of water services? Lessons learned from the experiences of Bolivia and
Puerto Rico.’’ PhD (Doctor of Philosophy) 35
The study concludes that, ‘‘There is no evidence that supports the notion that
privatizing any service per se, including water, through any kind of contract, a
concession or otherwise, will lead to the delivery of better services.’’ Id pg. 192.
VI. THE PUBLIC MODEL IS NECESSARY TO TRANSFORM THE PUERTO RICO
ELECTRIC SYSTEM

The Queremos Sol platform envisions the vindication of the public utility in
Puerto Rico through citizen participation and ‘‘prosumer’’ generation. According to
the American Public Power Association, known as APPA, public energy companies
in the United States generally provide electric service at lower prices than private
companies:
Public power utilities provide reliable electric service at comparably low cost, and
they do so because they are staffed by dedicated and highly qualified individuals
who have years of experience. Employees of public power utilities understand their
local communities and take pride in keeping the lights on for their neighbors—
(http: / / c.ymcdn.com/sites/members.iamu.org /resource/resmgr/informer_2016 / APPA_
Pay_Report.pdf, pg.1). The study cited indicates that the residential rates of public
energy companies were 14 percent lower than the rates of private energy companies
known as Investor Owned Utilities (‘‘IOUs’’). (Id. pg. 2). Meanwhile, in the commer-
cial sector, the rates of public companies are a little lower and in the industrial
sector they are comparable with the rates of private companies. The total rates of
public companies are on average 7 cents lower than the tariffs of the IOUs. Id. pg.
2. In terms of service reliability, public electric power companies in the United
States, on average outperform private companies in the industry parameters.
Subscribers of public companies on average experience fewer blackouts than
customers of other kinds of electric companies (Id. pg. 3).
In Puerto Rico, private companies that generate electricity have received very
generous tax exemption benefits. While PREPA has historically made contributions
in lieu of taxes (‘‘CILT’’) to municipalities and other branches of government and
provides substantial subsidies by virtue of multiple provisions of law. According to
a survey conducted in 2014, private electric power companies in the United States
only pay 4.2 percent of their total operating income to state and local governments
while public utilities contribute an average of 5.6 percent of total operating income,
this is 33 percent more than the payments of private companies (Id. pg. 4).
Public utilities provide other tangible and intangible benefits to their local
communities. Public ownership of the assets provides local control over investments,

35 Thesis, University of Iowa, 2011, pg.109, http://ir.uiowa.edu/etd/941.
70
energy supply options and programs. Representatives of subscribers of public com-
panies have the right to participate in meetings where decisions are made. Planning
is often done with a view to incorporating community input. The contributions,
together with the local participation also promote local economic development.
Public utilities are also innovative in terms of technology and many public energy
companies have taken a leadership role in preparing their communities for the fu-
ture by searching for new technologies as an integral part of community growth.
They serve as sources of information in a variety of technological fields, such as
environmental stewardship, high-speed internet capacity, security and the develop-
ment of community technology. Some public electricity companies have begun to
offer telecommunications services, which foster economic development because pri-
vate companies cannot offer these services to smaller communities at competitive
prices. Other advantages of public companies include greater efficiency of local
government through the exchange of personnel, equipment, and supplies. The
management and operations of public companies provide additional community
leadership for innovation and development. This local leadership tends to have a
greater commitment to conservation, security and the environment. Local control
affects special programs such as energy conservation, rate relief for certain classes
of customers, the aesthetics of the electrical distribution system and design. Local
control allows local resources to be linked to local needs without an economic and
political bias toward high-cost and capital-intensive techniques or technologies.
Place-based management facilitates the implementation of innovative techniques
and technology to meet the energy needs of communities. The main mission of
public companies is to provide a reliable and more affordable service. (Id.)
VI. THE NECESSARY TRANSFORMATION OF PREPA GOVERNANCE

The following specific proposals included in Queremos Sol are necessary for the
transformation of PREPA governance to best serve the public interest:
1—PREPA’s board of directors should be appointed or elected to fixed terms
and possess relevant professional qualifications and energy industry expertise.
Terms should be staggered. Three board members should be appointed by the
governor from lists submitted by: (1) environmental organizations; (2) labor unions;
and (3) small business organizations. Two board members should be appointed
directly by (1) the Puerto Rico Cooperative League and (2) the Association of
Economists. A sixth member should be selected from the engineering faculty of
Puerto Rico universities. Two members should be elected by PREPA’s residential
and commercial customers as consumer representatives, and one should be elected
by industrial consumers as an industry representative. Board members should be
dismissed only for cause and only if the resolution authorizing dismissal receives
more than six votes. The board must have finance and audit committees, and the
members of these committees should not overlap.
2—The PREPA executive director should be appointed by the board through an
open recruitment process. The board should have just cause before dismissing an
executive director.
3—Reform of contract and enforcement policies to systematically address all
contract irregularities discovered in audits by the Office of the Comptroller and by
the 2016 Senate investigation into the purchase of fuel.
4—Internal restructuring should be informed by various audits and investiga-
tions of PREPA fuel purchase practices that have highlighted the centralization of
power and responsibility within its Fuel Office. The board should undertake a
structural analysis of PREPA’s operations to ensure that potentially conflicting
operations are not centralized in a single office, particularly the Fuel Office.
5—The Legislature should authorize the creation of a non-profit, membership-
based PREPA Consumer Advisory Board with access to all information available
to PREPA board members, including all internal audit reports, and with the right
to responses from the executive director to all written questions and statements sub-
mitted by advisory board members and with the ability to compel enforcement by
the PREB in the event that PREPA does not cooperate.
6—Attraction and retention of an appropriate labor force through policies
aimed at reducing administrative costs associated with the large number of political
appointments within the agency. Opportunities for workforce training, especially in
renewable energy, should be prioritized. An effective investigation into the costs of
salary and benefits that PREPA has incurred due to political appointments should
be conducted.
71
7—Acknowledgement of climate change as central to decision-making.
Climate change must be understood as one of the central forces in the trans-
formation of the energy sector, which is why it is imperative that PREPA integrate
adaptation measures in infrastructure planning and that climate considerations be
inserted as a pillar in the design of all public policy, legislation and decision-making
processes.
8—Effective opportunities for citizen participation and education.
Providing and supporting spaces for citizen participation in PREPA in the spirit of
publicly owned power companies, vital to achieving baseline levels of agreement in-
formed by inclusiveness and transparency. An energy literacy program including
energy audits should be developed and aimed especially at small- and medium-sized
businesses and industry to implement conservation and reduction in electric bills.
9—Promotion of labor sector participation. Electrical industry workers are
key to the sort of system change that will lead to a clean energy future. The term
‘‘just transition’’ is defined as societal evolution toward cleaner energy resources and
lower-emission economies while guaranteeing sustainable lifestyles and suitable
workforce transition. In a just and equitable transition, affected workers, unions and
communities are equal partners in a well-planned and carefully managed shift from
fossil fuels to clean energy. A just transition provides employment opportunities and
guarantees job security and livelihoods for energy-industry workers and impacted
community members. Pensions and health plan benefits are preserved, and workers
and members of affected communities have the right to first employment for the
jobs created through the dismantling of fossil fuel energy structures. Workers also
receive education and training and ideally are unionized with similar salaries and
benefits. A just and equitable transition will commit each level of government and
business in a unified effort; provides workforce training; replaces lost tax revenues;
and creates lasting and good jobs that strengthen the economy and support working
families, especially jobs related to clean energy, energy efficiency and climate resil-
ient infrastructure. A just transition requires that those responsible for pollution are
held accountable for clean-up to achieve usable land and clean water.
10—Appointment of an Independent Private Sector Inspector General
(IPSIG). An IPSIG is an independent firm with expertise in auditing and manage-
ment that would have the power to investigate and audit the day-to-day PREPA
operations and report relevant findings and progress.
11—A comprehensive audit of the debt (and holding accountable those who
participated in illegal debt issuances) and a debt restructuring that protects local
bondholders (individuals, small businesses, cooperatives) while ensuring a substan-
tial reduction or elimination of debt repayment by PREPA ratepayers to achieve an
affordable and financially sustainable electrical system.
Sustainable, technically viable and cost-effective alternatives that include the
combination of energy conservation, efficiency and demand response programs,
community-sited renewables, especially on-site roof-top solar, and BESS are cur-
rently viable as documented above. Puerto Rican electric customers pay the second
highest electric rates of any U.S. jurisdiction and ratepayers will ultimately pay for
the transformed electric system. The Luma contract would perpetuate a centralized,
imported fossil-fuel based electric system and compromise energy resiliency in
Puerto Rico. The proposed acquisition and procurement for on-site, rooftop solar
systems and BESS, installed by qualified PREPA personnel and the other measures
discussed above will help to achieve the necessary transformation of the Puerto Rico
electric system toward a locally controlled, decentralized, renewable energy system.

The CHAIRMAN. Mr. Ángel Figueroa-Jaramillo, President,
Electrical Industry and Irrigation Workers Union. Your statement
will be read by the translator. And the translator will be available
for the Q&A and Mr. Jaramillo will be participating in those with
the translator.
With that, Mr. Jaramillo, the floor is yours.
72
STATEMENT OF ÁNGEL FIGUEROA-JARAMILLO, PRESIDENT,
ELECTRICAL INDUSTRY AND IRRIGATION WORKERS UNION
(UTIER)
Mr. FIGUEROA-JARAMILLO. [Speaking through interpreter]. Good
afternoon. My name is Ángel Figueroa-Jaramillo. I appear as presi-
dent of the union and UTIER. I am with Attorney Jessica Coldberg.
I thank the Committee for the invitation. My statement will be
read by the translator.
UTIER represents 3,000 of the 6,000 workers that PREPA will
lay off due to the LUMA Energy contract. However, UTIER speaks
not only for the benefit of its members, but also for the 12,000
PREPA retirees and the people of Puerto Rico as a whole. It is
essential that this Committee know that we agree PREPA needs to
be transformed.
However, handing over all current PREPA functions to a private
operator is not a transformation. LUMA Energy will do everything
PREPA is already doing and is charging an additional $125 million
in public funds for it. A true transformation requires an investment
and expert input.
UTIER and other organizations have made proposals for a true
transformation and they have fallen on deaf ears. UTIER sponsors
Queremos Sol, which has a comprehensive proposal to transform
PREPA. We have also proposed changes, such as: (1) altering the
composition of the Governing Board and the Energy Bureau to in-
crease transparency and consumer representation and limit the
discretion that leads to contracting; (2) the implementation of an
independent private sector inspector general, IPSIG, as a control to
ensure compliance with existing laws and regulations without the
need to appoint a trustee; and (3) most importantly, the reinvest-
ment of funds in PREPA’s workforce which has been severely de-
pleted in recent years and led to so many difficulties after
Hurricane Maria.
But apparently what the government wants is to wash its hands
of the deficiencies of those who have been appointed to manage
PREPA and not transform it. An example, the current CEO, José
Ortiz, has done nothing for the real transformation.
The contract with LUMA does not provide any benefit for the
people of Puerto Rico. The payment of the contract has already
placed PREPA at a $125-million budgetary deficit as certified by
the Financial Oversight and Management Board in the latest
budget.
There is no doubt that PREPA does not have the resources to
pay that money, which is why the Oversight Board is requesting
an administrative expense priority in the Title III for LUMA
Energy, which in turn will affect the retirement system and other
creditors.
The only way to pay this deficit will be by increasing the rates,
which will affect the people of Puerto Rico and disproportionately
harm the population living below the poverty level, especially those
with annual incomes between $0 and $14,399. This population will
have to dedicate between 36 and 42 percent of their income to pay
their electrical bill.
Under the contract, LUMA Energy has even been given the def-
erence that the plan of adjustment under Title III of PREPA must
73

be ‘‘reasonably acceptable to LUMA Energy.’’ Otherwise, LUMA
can terminate the contract.
The concession on LUMA to have veto power over the approval
of the plan of adjustment will pressure the Oversight Board and
the Title III Court to approve a plan that is not necessarily in the
best interest of the people of Puerto Rico.
The question to ask is why should LUMA Energy have that kind
of power. LUMA will not be accountable to the people of Puerto
Rico. It can terminate the contract practically at any time with
only 120 days’ notice and leave Puerto Rico without an electric
service operator.
In addition, despite being a private entity, it will make public
policy decisions and manage at its own discretion the $18 billion
in Federal funds assigned to Puerto Rico. In fact, LUMA has al-
ready started bragging about those Federal funds to its investors
and affiliates. The Federal Government should stop this.
Speaking about accountability, the locally registered corporation
was created in January of this year for the sole purpose of signing
this contract and was created as a limited liability company to
avoid responsibility. Furthermore, the contract has an exemption
from express liability for any damage that LUMA may cause to its
ratepayers.
In summary, LUMA Energy will take over PREPA’s operations
without investing a dime in PREPA or in Puerto Rico. It will
charge a fee of $125 million and manage $18 billion in Federal
funds and will be able to award contracts to Quanta Services and
ATCO while PREPA pays for its transition and operation. It is not
accountable to the people of Puerto Rico, and it is not required to
transform the electrical system. In fact——
The CHAIRMAN. You need to wrap it up, sir.
Mr. FIGUEROA-JARAMILLO. Thank you.
The CHAIRMAN. Yes. You are welcome.
[The prepared statement of Mr. Figueroa-Jaramillo follows:]
PREPARED STATEMENT OF ÁNGEL FIGUEROA-JARAMILLO, PRESIDENT, UNION DE
TRABAJADORES DE LA INDUSTRIA ELÉCTRICA Y RIEGO (UTIER)
I. INTRODUCTION

When the Puerto Rico legislature passed the Puerto Rico Electric Power System
Transformation Act (Act No. 120–2018) it said, and I quote:
PREPA’s employees have made a Herculean effort to serve Puerto Rico.
They have played a key role in the reestablishment of the electric power
system after hurricane Maria. Their knowledge is critical in ensuring the
electric power systems’ success. They are not the problem. (Statement of
Motives) (emphasis added).
To make good on those expressions, the Legislature dedicated the entire Section
15 of the law to protect the rights of PREPA’s workers, ensuring that none of them
would lose any rights in the process of transforming PREPA. Yet, when PREPA and
the Public-Private Authority entered into this Contract with Luma Energy, they
completely ignored that mandate, in more than one way.
While it is true that the Contract with Luma Energy completely ignores the rights
of PREPA’s workers, which we have been sure to denounce loudly and with convic-
tion, it is also true that the Contract misses the mark in other ways. The
Legislature was clear, PREPA’s workers ‘‘are not the problem.’’ So, what is the
problem?
In a recent study, the Economist José I. Alameda-Lozada, Ph.D. noted that
PREPA’s financial woes are not the same as those of the Commonwealth nor do they
74
share identical causes.1 This conclusion stems from two premises that are
undisputed: First, PREPA is a public corporation, independent from the Common-
wealth Government. As an independent public corporation, PREPA has its own
budget, revenue and debt issuance. Second, PREPA was created to provide an essen-
tial service that has been valued as a derived human right. Thus, Alameda-Lozada
studied the independent causes of PREPA’s financial situation.
He concluded that there were particular circumstances that contributed: (1) that
the Governing Board of PREPA was highly politicized along party lines, leading to
poor decisions, and (2) that the issuance of debt did not lead to investment in infra-
structure and maintenance. Of course, there is also the issue of the Commonwealth
Government’s outstanding debt with PREPA, which amounted to $208 million by
2016, and the $412 million owed by the municipalities. However, there is another
trend that contributed to PREPA’s deterioration: the reduction of its workforce.2
In the period between 2000 and 2013, PREPA had an average diminution of 81
workers. While in 2000 PREPA had 9,540 workers, by 2013 it was down to 7,822.
Then, with the enactment of laws that directly infringed upon the rights of workers
in 2014, PREPA lost 516 workers per year. Then after an additional law of this kind
was passed in 2017, the reduction was of 292 workers per year. By 2018, the work-
force was reduced to 5,687. This heavy decline impacted PREPA’s retirement
system, due to an increase in retired workers, and reduced the active stock of
human resources.3 This, as we know, took its toll when Hurricane Marı́a made its
way through the island, as PREPA did not have the manpower to reenergize the
island quickly; hence, the ‘‘Herculean effort’’ of those employees recognized by the
Legislature of Puerto Rico. There seems to be an affinity for removing PREPA’s
workers from the table, where they are invaluable for the search for solutions. This
could not have been more evident than when PREPA attempted to outsource to
Whitefish, the work that its workforce, had it not been reduced so drastically, could
have completed efficiently and expediently. This was another failed attempt to find
solutions outside of PREPA’s workforce and evidence of the issues UTIER insists are
what needs to be attended.
In view of that background, UTIER posits that the problem with PREPA is (1)
the party-politics dynamic that dominates the Governing Board; (2) the lack of in-
vestment in infrastructure in maintenance; and (3) the systematic reduction in its
workforce by acts of PREPA and the Legislature, in mislead attempts to achieve
savings by impairing workers’ rights rather than assuming any of the available
alternatives. These alternative methods of achieving income and savings were dis-
cussed by Alameda-Lozada in the study referenced above and it is part of the sub-
missions made for the record of this hearing. None of these problems are addressed
by the Luma Contract. That ‘‘transformation’’ initiative creates more problems than
it solves.
UTIER recognizes that PREPA is in great need of reform, but its proposed alter-
natives are much less burdensome for the people of Puerto Rico and PREPA itself
than the adoption of this, frankly, bad contract. Privatizing for the sake of
privatizing is not a solution. If we have learned anything in Puerto Rico it’s that
private actors are not exempt from the party-political dynamics that PREPA suffers
from. Scandals surrounding high profile public contracts with private contractors
are usually traced back to political party connections. A recent example is the con-
tracts for the COVID-19 tests, which have been revealed to be part of a scheme with
government party members.4 Party politics corruption in Puerto Rico extends to pri-
vate contractors, who are favored because of their affiliations. Furthermore, the
Luma Contract does not require it any investment to PREPA’s infrastructure or
maintenance. PREPA will be paying for those ‘‘services’’ just as it always has.
Lastly, the Luma Contract will continue to impair the rights of PREPA’s workers,
which, as we have seen, leads to reduction of the workforce, increase in retirees who
will burden the pension system and the inacceptable risk that we face another

1 José I. Alameda-Lozada, Ph.D., The Impairment of UTIER’s Collective Bargaining
Agreement and the Calculation of Damages (June 15, 2020).
2 Id. at 19–27.
3 Id. at 78–80.
4 The Center for Investigative Journalism has covered the scandal and the connections to the
statehood party in these contracts: Luis J. Valentı́n Ortiz & Joel Cintrón Arbasetti, El esquema
de la venta de pruebas en Puerto Rico, CPI (May 28, 2020) https://periodismoinvestigativo.com/
2020/05/el-esquema-de-la-venta-de-pruebas-en-puerto-rico/; Luis J. Valentı́n Ortiz & Cristina del
Mar Quiles, Tierra de nadie la compra de pruebas y suplidos para la emergencia del COVID-
19, CPI (April 8, 2020) https://periodismoinvestigativo.com/2020/04/tierra-de-nadie-la-compra-de-
pruebas-y-suplidos-para-la-emergencia-del-covid-19/.
75
hurricane or natural phenomenon without the necessary number of experienced
workers to address the aftermath.
In this opportunity to present our position before this Committee, we will first,
establish the basis of our opposition to the Contract with Luma Energy. We will
then submit our proposals as better alternatives than the Luma Energy Contract
for the actual problems that PREPA is facing. Finally, we will respectfully highlight
the areas in which Congress can intervene to address the actual situation of
PREPA.
II. OPPOSITION TO THE CONTRACT WITH LUMA ENERGY

We will start pointing out the reasons this Contract should be voided. As we
have argued in our legal opinions and memorandums, as well as in the ongoing liti-
gation regarding the Contract, this Contract with Luma Energy is, in itself,
unconstitutional, illegal and in every way, a great detriment for PREPA. The gist
of our opposition is that this Contract is bad business, thus, contrary to basic public
policies enacted by Puerto Rico’s legislature. Moreover, legally specific arguments
aside, PREPA does not derive a single benefit from it, unless you consider disman-
tling PREPA to be in its own benefit, like the Oversight Board does.5
A. The Contract is Unilateral, PREPA Reaps No Benefits
In summary, the Contract with Luma Energy shifts PREPA’s operations into
Luma Energy’s hands, intact. That means that our once public monopoly on energy
distribution becomes a private monopoly. PREPA retains only the property rights,
while Luma Energy takes on: operations, customer service, billing, legal, capital im-
provements, Federal fund procurement and management, some generation services,
the Integrated Resource Plan procedures, PREPA’s representation in Government
bodies, renewable energy public policy goals, electricity rates, and so on. Meanwhile,
PREPA will be paying for Luma Energy’s transition in, out and all the expenditures
it incurs during the Contract, the contract will increase its financial burden, con-
trary to the requirements of restructuring, debt adjustment and financial sound-
ness. The Contract will cause an increase in the service’s cost to ratepayers. This
in turn, will affect demand, because the staggering amount of population that lives
under the poverty line will have to drastically reduce its energy consumption in
order to balance the percentage of its income they dedicate to that payment, thus,
securing other bills such as rent and food. This is confirmed in a recent study by
Sociologist Héctor Cordero-Guzmán, Ph.D.6
In Puerto Rico, 44.5 percent of the population lives below the Federal poverty
guidelines.7 As such, increases in electricity rates will disproportionately impact
people below the poverty line. Specifically, for the bottom 40 percent, with incomes
between $0 and $14,399, electricity will take up between 36 percent and 42 percent
of their income.8 These circumstances only serve to pressure migration and exacer-
bate the financial crisis. This in turn, results in a decrease in demand that further
suppresses progress.9 Therefore, the increase in rates that the Contract requires
affects the availability of sustainable cash-flow to cover all of PREPA’s obligations,
including the retirement system and bond payments.
B. The Contract is Illegal and Unconstitutional under Puerto Rico Law
Under the Contract, Luma Energy will not respect the rights of PREPA’s workers,
as they have acquired them in their collective bargaining agreement with PREPA
and deprives them of the union representation that they have. This is expressly
stated in Section 5.2 of the Contract, where Luma Energy says it will assume
‘‘system contracts’’ which are defined in Section 1.1 as not including collective bar-
gaining agreements. In Puerto Rico, this is not legal, and it is diametrically opposed
to the Constitution, the law and public policy. Thus, it taints the already question-
able Contract with additional constitutional concerns.
The Puerto Rico Constitution contains explicit protections for worker’s rights in
the Bill of Rights, which is Article II of the Constitution. Section 17 of Article II
of the Constitution states that workers have the constitutional right to unionize and

5 PREPA’s Motion for Entry of an Order Allowing Administrative Expense Claim for
Compensation for Front-End Transition Services under Puerto Rico Transmission and Distribu-
tion System Operation and Maintenance Agreement with Luma Energy, Case No. 17 BK 4780-
LTS, Docket No. 2053–1 at 16.
6 Héctor R. Cordero-Guzmán, Ph.D., The Socio-Economic Impacts of the Puerto Rico Electric
Power Authority (PREPA) Restructuring Support Agreement (RSA) on the Population of Puerto
Rico (rev. September 10, 2019).
7 Id. at 11.
8 Id. at 20.
9 Id. at 34.
76
negotiate collective bargaining agreements. This protection is also present in Act
No. 130–1945, P.R. Laws ann. tit. 29 §§ 62 et seq., a labor law that explicitly
declared the Puerto Rico public policy regarding collective bargaining agreements.
That public policy states that maintaining industrial peace, adequate and stable
wages and production through collective bargaining agreements is essential for
Puerto Rico’s economic development. P.R. Laws ann. tit. 29 § 62(2). That depends,
the law says, on maintaining fair, friendly and mutually satisfactory labor relations.
Id. For that reason, the law says that collective bargaining agreements are instru-
ments of public policy and are, thus, vested with public interest. Id. § 62(5). The
Puerto Rico Supreme Court has repeatedly interpreted this law liberally in favor of
the constitutional protections of Article II Section 17. See COPR v. SPU, 181 P.R.
Dec. 299, 314–21 (2011). Any act that intervenes or restrict worker’s rights under
that law, meaning that it frustrates the collective bargaining effort, is deemed
illegal. P.R. Laws ann. tit. 29 § 69(1)(a).
In addition, Act No. 120–2018, P.R. Laws ann. tit. 22 §§ 1111 et seq., which is the
law that allows PREPA to enter into the Contract with Luma Energy in the first
place, specifically states that it cannot be used as grounds to deprive a worker of
rights acquired through a collective bargaining agreement. Furthermore, Article II,
Section 7 of the Puerto Rico Constitution prohibits laws that substantially impair
contractual obligations, just like the U.S. Constitution. However, in Puerto Rico, if
the impaired contractual obligation has a government party, the scrutiny that the
law must survive is more rigorous than the traditional rational scrutiny. See
Domı́nguez Castro v. ELA, 178 P.R. Dec. 1, 80–84 (2010). If Act No. 120–2018 were
interpreted in any way that it allows the impairment of the collective bargaining
agreements then it would be susceptible to additional constitutional challenges and
so would the Contract with Luma Energy.
C. The Contract Dismantles PREPA and Risks Severe Service Interruption
in Case of Termination
In addition, the Contract is, as the Oversight Board puts it, the crucial first step
to dismantling PREPA.10 The Contract contemplates breaking PREPA down into
four private corporations.11 These are not four private corporations that will give
consumers and ratepayers more options. These are four private corporations that
will divide amongst themselves PREPA’s most vital functions. Luma Energy will
take over operations, including customer service and public policy formulation
through ServCo; GenCo will take over the power plants and generation operations;
GridCo will take over PREPA’s property rights over the T&D System, and an addi-
tional corporation will administrate debt issuance. While we appreciate that the
Government has some reservations about PREPA’s monopoly, we should all be able
to agree that a private monopoly is the worst solution.
Private monopolies are illegal for a reason. They hold consumers hostage in the
name of profit, rather than welfare. Both Puerto Rico and Federal law rightfully
prohibit any scheme that monopolizes a product or service. For all their postulating
about PREPA’s monopoly holding Puerto Ricans hostage, the Government missed
the mark with this Contract. At least if PREPA made decisions that affected rate-
payers, Puerto Ricans had the power of the political process and public influence
to address them. On the contrary, in a private monopoly, there is nothing that con-
sumers can do. Thus, it is unconscionable to subject the people of Puerto Rico, who
are still suffering interruptions in their electricity because of hurricanes and earth-
quakes to the whims of a private corporation. By definition, private corporations
seek profit. No amount of empty promises or honor code contractual provisions will
change that. Dismantling PREPA in this way does not foster competition. It creates
a private monopoly of intertwined but independent corporations. This creates a huge
problem for consumers. If and when Luma Energy leaves Puerto Rico, for the
numerous reasons the Contract allows it to, rebuilding the utility we lost will be
onerous and burdensome for Puerto Rico, leaving it without the essential public
service that it needs.
As we showed in our summary of the termination clauses of the Contract, to
terminate the Contract, Luma Energy only needs to give the Public-Private
Partnership Authority (‘‘P3’’) a 120 day notice. Although the Contract states that be-
fore it leaves Luma Energy must make efforts to find a successor, as part of the
Back-End Transition, this Transition only lasts until the earlier of these two: when
120 days are up or when the service accounts run dry. With that time and funding
restriction, there is little chance that Luma Energy will find a successor to their

10 Id.
11 Section 4.5(g) of the Contact references the PREPA Reorganization, which is defined in
Section 1.1.
77
position, as Section 16.1 of the Contract requires only that they coordinate efforts.
The reality is that once Luma Energy places their 120 day notice, PREPA will be
left scrambling to rebuild the public utility so that consumers do not suffer the con-
sequences. This will undoubtedly be close to impossible once PREPA has been gut-
ted and divided into four companies. Furthermore, PREPA will have to find a way
to rebuild its workforce, most of which will have been forced into early retirement,
pushed to migrate for job opportunities or even coerced to accept employment with
Luma Energy.
With all of these obstacles, it will be near impossible to reassemble the public
utility, which puts all of Puerto Rico at risk: businesses, hospitals, retirement
homes, residents, etc. Without the transmission of electricity everything comes to a
halt and people suffer a myriad of consequences from loss of income to damaged
property to death for lack of life saving machinery. These are not inconveniences,
these are severe risks that could come up at any moment if Luma Energy is
unsatisfied with business in Puerto Rico.
D. The Contract Directly Contradicts PROMESA’s Goals
Furthermore, the Contract conflicts with the supposed goals of PROMESA. Luma
Energy’s transition has already put PREPA in a deficit. The Oversight Board cer-
tified a 2020 Fiscal Plan that puts PREPA at a budgetary deficit of $132 million
for Fiscal Year 2021.12 Also, the FY 2020–21 budget is $125 million underwater.13
This is attributed by the Oversight Board to the burden of the Luma Contract.
Meanwhile, the Oversight Board is requesting an administrative expense priority
for the payment of $136 million for Luma Energy’s transition. This puts PREPA’s
rehabilitation in peril and prioritizes paying Luma Energy’s expenses above paying
PREPA’s creditors, including its bondholders and pension obligations.
When Congress imposed the Oversight Board on Puerto Rico, it told us that its
goal was to help Puerto Rico and its instrumentalities rehabilitate, pay their debts,
and have access to the bond markets again. However, we should marvel at the fact
that the Luma Contract is being approved under the reign of PROMESA and the
Board. It is unjustifiable to put a Title III Debtor in a situation where it will not
receive anything in return for handing over its operations and, on top of that grant
priority to million-dollar payments for that Contract over PREPA’s other creditors,
putting their claims at risk. Luma Energy won’t invest a dime in Puerto Rico or
PREPA, it will charge for its services and it will be prioritized in Title III.
Furthermore, if Luma Energy doesn’t get prioritized in Title III, it will terminate
the Contract and leave, because it can under Section 4.1 of the Contract. Then,
when it leaves, PREPA will be left with the bill for its failed efforts.
On July 7, 2020, the Oversight Board filed the motion to seek administrative
expense priority for what it projects will be $136 million, while the Board itself has
admitted that the Contract with Luma Energy has resulted in a $125 million
deficit in PREPA’s 2021 certified budget. Thus, in addition to putting PREPA
in a deficit, the Contract will have a $136 million priority which means that PREPA
will be forced to pay that amount to Luma Energy before it can pay its bondholders
and other creditors, such as pension obligations. The pension obligations at this
point consist, in part, of a claim for over $350 million that PREPA owes to the pen-
sion system for its employees. If PREPA cannot pay these dues and Luma Energy
will be prioritized in Title III, then the system will undoubtedly become insolvent
and leave thousands of PREPA’s retirees without a proper retirement.
The Contract does not provide any revenue for PREPA, because Luma Energy will
make no investments throughout the contractual relationship and will, instead, use
up PREPA’s revenues to pay for its operations. There is no indication in the contract
that Luma Energy will increase PREPA’s revenues by increasing demand or by fos-
tering economic development. On the contrary, the Oversight Board projections of
demand for the next 30 years only show a steady decrease in demand and a steep
increase in rates to compensate for loss of revenue.14 The demand is projected to
drop 2,817 GWh in the next 5 years alone and continues to drop. Meanwhile, rates
seem to take a dip in 2021, which seems to depend entirely on successful pension
reform but consistently increase for the remainder of time. These numbers reflect
that even the Oversight Board’s projections based on the complete success of their
own proposed measures will not result in any benefit for PREPA or its ratepayers.

12 2020 Fiscal Plan for the Puerto Rico Electric Power Authority, as certified by the Financial
Oversight and Management Board for Puerto Rico on June 29, 2020, at 10 https://
drive.google.com/file/d/1paRgy0dJBkUH4-5eev7z2SuR0diil8g9/view?fbclid=IwAR1ztJuq1z1gs9qP
7JhZi1AxKync2ZO3kzXYLmIPOsGrzR-kH0L0tvbqIKw.
13 Puerto Rico Electric Power Authority, Fiscal Year 2021 Certified Budget, at 3, https://
drive.google.com/file/d/1yIV664F009bi3UeE9WBHi3J6U6r42tFQ/view.
14 2020 Fiscal Plan for PREPA, supra note 11, at 42–43.
78
Furthermore, it should be noted that the Oversight Board is not contemplating any
of PREPA’s debts in its calculations, which undoubtedly will result in further in-
crease of rates and affect demand. Therefore, we are seeing a lot of money going
out to Luma Energy and no money coming in for PREPA to pay its debts. This will
make it impossible for PREPA to adequately complete its Title III bankruptcy,
which is contrary to the goals of PROMESA and the intent of Congress when it im-
posed the Oversight Board on Puerto Rico. The fact that the debtor here is a public
utility and, in fact, the only public utility of its kind, and, on top of that, the sole
distributor of electricity in all of Puerto Rico, puts in extreme peril the potential for
successful financial restructuring that would contribute to the much needed eco-
nomic development. Even the Oversight Board’s most generous projections do not
promise well for this Contract.
E. The Contract Gives Luma Energy Control Over Public Policy
On the other hand, the Contract allows Luma Energy to control and implement
important aspects of public policy, while it does not respond to the public in any
way. Luma Energy will be in charge of implementing public policy on renewable
energy, according to Section 5.18 of the Contract. It will also replace PREPA in the
Integrated Resource Plan procedures before the Puerto Rico Energy Bureau, accord-
ing to Section 5.6(f). This means that Luma Energy will decide what resources will
be used for generation and control the long-term development of Puerto Rico’s entire
electric system. Additionally, Luma Energy will have complete control over the
Federal funds, emergency or otherwise, that come in for the people of Puerto Rico,
according to Section 5.9 of the Contract. Lastly, Section 6.1 of the Supplemental
Agreement of the Contract seems to grant Luma Energy influence over or control
the plan of adjustment in Title III court, because it conditions the Contract on ‘‘the
Title III Plan and an order of the Title III Court confirming same shall be reason-
ably acceptable to Operator [Luma Energy].’’
F. The Contract Gives Luma Energy Control Over Federal Funding
Another issue with the Contract with Luma Energy is that it requires channeling
Federal aid through his private contractor. We are all aware of the many problems
we have faced in the aftermath of Hurricane Marı́a regarding Federal funding.
Thus, we should all be cautious of Contracts that funnel those funds through private
companies, whose ends are profit and not welfare. Luma Energy has already begun
flaunting the Federal funded capital improvements to PREPA’s infrastructure for its
own investors and affiliates:
Significant Opportunity for Electric T&D System Modernization and
Transformation—Quanta believes there is opportunity for it to compete for
work associated with Puerto Rico’s electric T&D system modernization
efforts that are separate from its ownership interest in LUMA. Puerto
Rico’s electric T&D system is at a critical juncture after the destruction
caused by Hurricanes Maria and Irma. As a result, the government of
Puerto Rico, through the P3 and in collaboration with PREPA, have
embarked on a plan to rebuild, modernize, harden and ‘‘green’’ its power
grid, a majority of which is expected to be funded by U.S. Federal disaster
relief agencies and managed by LUMA. The P3 estimates that more than
$18 billion of electric T&D capital investment could be required through
2028 for this initiative.15
Thus, we see a tendency toward Luma Energy’s ‘‘people’’ which has two principal
problems. First, evidently, these contractors will not be investing in Puerto Rico and
all the funds that are transferred to those companies will leave Puerto Rico. Federal
funds that are assigned to Puerto Rico should be put to work for Puerto Rico and
the citizens that reside there, not for companies that will not contribute to the eco-
nomic development of the archipelago. This allows a handful of corporations and
their officers to profit from Federal aid, while the people of Puerto Rico do not see
a dime. This is why UTIER proposes that Federal funding be channeled directly to
PREPA’s workforce, ensuring that the money stays in Puerto Rico.
Secondly, it is evident that, as a private actor, Luma Energy will be operating in
a way that benefits it first and foremost, regardless of the effect on PREPA and its
ratepayers. Public corporations in Puerto Rico are subject to competitive bidding re-
quirements that are protected and implemented by law. They are also open to public

15 Quanta Services and ATCO-Led Consortium Selected by the Puerto Rico Public-Private
Partnership Authority for the Operation and Maintenance of Puerto Rico’s Electric Power
Transmission and Distribution System, https://investors.quantaservices.com/news-events/press-
releases/detail/277/quanta-services-and-atco-led-consortium-selected-by-the.
79
scrutiny and can be challenged through political or judicial processes. On the other
hand, Luma Energy will have complete freedom and discretion to spend the Federal
funds assigned to Puerto Rico for its own benefit. With such discretion come great
risks for corruption, especially in a private corporation over which the people of
Puerto Rico have no accountability mechanisms or transparency requirements.
UTIER’s proposal to reinvest in PREPA and its workforce limits that discretion and
provides inherent accountability and transparency.
III. ALTERNATIVES TO THE CONTRACT WITH LUMA ENERGY AND UTIER’S PROPOSALS

Because UTIER has the firsthand experience with PREPA’s operations and flaws,
it is in a unique position to make proposals, however, they have been repeatedly
ignored by the authorities.16 As outlined previously, the main issues to address are
in the areas of top management, not at the workers and operations level. As such,
UTIER presents the following alternatives:
A. Independent and Professional Governing Board
As we have said, there is a troubling issue of party-politic dynamics regarding the
PREPA Governing Board. Those party lines have a tendency to stunt growth and
deviate efforts from making lasting improvements to other more politically attrac-
tive patchwork solutions. Thus, the first and most important solution is to alter the
method for selecting the incumbents of these managerial positions and amending
the composition of the Governing Board to retrieve the participation for consumers
that was lost in the recent years.
The Governing Board is made up of 7 members: 6 are Governor Appointed
members, only 3 of which require the consent of the Senate, and, of the remaining
3, only one of which must be independent; 1 Consumer Elected Member. There used
to be two consumer representatives, but the notorious Ex-Governor Ricardo
Rosselló’s administration pushed for an amendment to the law and achieved it.
These members have 5-year terms, except for the two non-independent members ap-
pointed at the sole discretion of the Governor, who are subject to the Governor’s
caprice. Those two non-independent members appointed at the sole discretion of the
Governor do not need to have any qualifications to occupy their position. Only four
votes out of those seven members are required for any decisions regarding PREPA.
(PREPA’s Organic Act, Act No. 83–1941, as amended). The problem should be self-
evident. We are talking about a board where three members must have blind loyalty
to the Governor; three other members are appointed by the regular political process
and only one is directly scrutinized by the public before assuming the position.
UTIER proposes that the Governing Board members be selected on merits rather
than affiliation. That is, rather than politically appointing members to the
Governing Board, where there is absolutely no check or balance against the political
inclinations of the Administration in Term. The proposal is for the experts on the
island to be tasked with the selection. The professional colleges of engineers, cer-
tified public accountants and legal professionals can provide a well-rounded evalua-
tion of potential candidates and select those members that would truly represent the
best interests of PREPA and address those areas that require attention from their
own expertise, rather than postulate on their political platforms. This would lead
to an independent and professionally capable Governing Board, more capable of
making those decisions that will truly rehabilitate PREPA.
Additionally, UTIER proposes a return to more participation for consumers.
Reducing the consumer representation on the Governing Board makes its contribu-
tion negligible. The consumer representative is constantly passed over and unable
to tip the scales of voting. This would mean that the Governing Board would be
composed of at least two representatives of PREPA’s consumers, the most vulner-
able party affected by PREPA’s actions, and the remaining members would be
selected from the professionals of Puerto Rico, increasing the chances of making
decisions based on consensus rather than number superiority.
B. Appointment of an Independent Private Sector Inspector General
While an independent and professional Governing Board is essential, an
additional alternative to the issues of PREPA’s poor management is the appoint-
ment of an Independent Private Sector Inspector General (‘‘IPSIG’’) to oversee, audit
and report deviations in the laws and procedures that control PREPA’s operations.
It is UTIER’s position that there is absolutely no need to over-legislate. PREPA has
many laws and regulations in place to control the processes that it undergoes and
to curb the possibilities of corruption and mismanagement. What is sorely missing

16 See, for example, Tom Sanzillo, Examination of the alternatives available to PREPA in order
to not impair the Labor Contracts of UTIER and its members (June 15, 2020).
80
is an independent agent to inspect, report and enforce compliance with those laws
and regulations. We have noticed that there is a penchant in the Puerto Rico
Government to legislate rather than to implement accountability measures.
An IPSIG is ‘‘an independent, private sector firm (as opposed to a governmental
agency) that possesses legal, auditing, investigative, and loss prevention skills, that
is employed by an organization (i) to ensure that organization’s compliance with rel-
evant laws and regulations, and (ii) to deter, prevent, uncover, and report unethical
and illegal conduct committed by the organization itself, occurring within the orga-
nization, or committed against the organization.’’ 17 In other words, an IPSIG can
be individuals or entities and they are charged with legal, auditing, investigative,
and other powers, so they help monitor the activity of public contractors.18
The primary roles of an IPSIG are to monitor, audit and investigate the activities
of the organization in order to detect unethical conduct, violations to the laws,
regulations or collective bargaining agreements and to report them to law enforce-
ment authorities or other entities with jurisdiction. It may also design and imple-
ment programs for the prevention of illegal, unethical and wasteful behavior.
The purpose of installing an IPSIG at PREPA would be to move the agency away
from its current state of organizational dysfunction and to an organizational culture
that embraces the practice of professional and ethical standards as first principles,
at all levels. The simple idea is that ‘‘good ethics is good business.’’ The overriding
objective of this proposal is to put PREPA on an internal track toward sound man-
agement that can support efforts to modernize the electrical system and secure the
confidence of the market and public.
The basis of an IPSIG would compile findings and recommendations from existing
oversight reports and stakeholder input, including business partners, labor organi-
zations, individual employees and interested outside organizations. At the end of its
tenure the IPSIG would produce a report including a long list of specific rec-
ommendations for administrative, financial and operational changes at PREPA. The
scope of the IPSIG’s mandate would cover the review of personnel decisions, fuel
and non-fuel procurements, budgets and regulatory compliance, financial practices,
etc. But it must be clear that the IPSIG would not have authority to usurp the man-
agement responsibilities of the Governing Board. It would need to identify the
illegal or unethical activity that it is tasked with identifying and taking its case to
the corresponding authorities. It is not a receiver, it will not displace PREPA’s
Governing Board, just audit it.
We are confident that the Puerto Rico Government has legislated enough and
there is more than enough regulation in place to keep PREPA on the straight and
narrow. The problem is accountability and auditing, two things the Government
seems to have an aversion to. The IPSIG is a viable solution to that problem.
C. Investment of Funds in the Workforce
Throughout PREPA’s crisis, a simple solution which can avoid the squander of
public funds, reduce corruption, put money back into the Puerto Rican economy and
contribute to strengthen PREPA in one fell swoop, has been overlooked: investing
in PREPA’s workforce. By allocating funds directly to rebuilding PREPA’s workforce,
on the ground not management level, PREPA will be securing the necessary profes-
sionals for its day-to-day operations and for the essential response in case of emer-
gencies. This allocation does not give management the discretion to move money
imperceptibly. Workers have wages and benefits with fixed and easily verifiable
quantities. Thus, corruption is reduced by the limits of discretion. Rather than
waste money on outsourcing to contractors who inevitably have to subcontract and
charge outrageous fees, PREPA could make use of its own workforce and provide
the incentives to keep workers. These workers in turn will use their money in the
Puerto Rican economies, unlike contractors and subcontractors who are usually shell
companies that have no interest in Puerto Rico.
We have witnessed the detrimental effects of the reduction of PREPA’s workforce
and the fascination of contracting private actors to attend situations that PREPA’s
workers would have been more than capable of dealing with if they had not been
forced out. By reinvesting in PREPA’s workforce, we reinvest in a better future for
PREPA.

17 Expert Declaration of Mr. Tom Sanzillo, Director of Finance for the Institute for Energy
Economics and Financial Analysis (IEEFA) in Support of Utier’s Objection to Insurers’ Motion
for Relief from Automatic Stay (Dkt#975) and to Pray for the Appointment of an Independent
Private Sector Inspector General (’’IPSIG’’) (Dkt#1158), Case No. 17 BK 4780–LTS, Docket No.
1211.
81
D. Independent, Transparent and Participatory Energy Bureau
Recent legislation implemented the Integrated Resource Plan (‘‘IRP’’) Process.
This was meant to be a robust procedure with public participation and transparency
as its pillars, where PREPA would ultimately achieve an IRP, that is a roadmap
for generational acquisitions and sound environmental goals. This was meant to
limit the discretion that PREPA may have in fuel procurement and assist a more
aggressive transition toward renewables. This has not been the case.
UTIER has repeatedly argued that an energy bureau is an unnecessary body
where there is only a public utility and no private utilities. However, the Govern-
ment decided to create one and now uses the Puerto Rico Energy Bureau as a
rubberstamp for its political decisions. The recent approval of the Contract with
Luma Energy is evidence of this. This is unacceptable.
If the Energy Bureau is going to continue, it must serve the purpose it was meant
to, that of an independent regulator. This means that, as UTIER’s proposal for a
governing body with the integration of professional non-partisan members, the
Energy Bureau should be composed of independent professionals which should
include members representing and directly responsible to consumers and the public
welfare. Also, any legal provision that hinders public participation must be
abolished to make its proceedings open for the population to scrutinize.
Just this year, the Energy Bureau deprived the population of access to the process
to approve the Contract with Luma Energy. Once the Contract became public, we
were able to point out the numerous flaws and illegalities with the process. But we
were also able to appreciate that the Energy Bureau committed a grave error by
allowing the Energy Bureau Chairman Edison Avilés to participate in the decision
when he was also a member of the Committee that selected Luma Energy and pro-
posed the approval in the first place. Public participation is a check on the discre-
tion of our officials, one that tends to reveal the nefarious conflicts that Government
contracts can cause.
E. Adoption of Proposed Energy Reform ‘‘Queremos Sol’’ (‘‘We Want Sun’’)
‘‘We Want Sun’’ is a collaborative effort of multiple professionals from different
organizations dedicated to environmental and energy issues. UTIER is proud to be
one of the organizations that endorse this project. This is a proposal for trans-
formation of the electric system in Puerto Rico based on clean, renewable energy
and a concentration on energy efficiency and conservation. ‘‘We Want Sun’’ posits
that sale and privatization of PREPA perpetuates fossil fuel-based generation and
impedes the transition to renewables.19 The full proposal has been submitted to the
record of this hearing.
The proposal includes a model for technical transformation. The goal is to achieve
the Renewable Portfolio Standard, which the Puerto Rico Legislature adopted in the
Puerto Rico Energy Public Policy Act, Act No. 17–2019. This effort includes
decentralizing energy and allowing communities and individuals to have an active
role in the ownership of electrical system assets. However, the proposal does not
seek to eliminate the PREPA governance structure, just to dramatically transform
its business model so that it promotes efficiency and conservation and facilitates and
manages distributed generators and microgrids. This requires greater public partici-
pation, as we have pointed out before, and attracting and maintaining human
resources. The proposal also covers issues surrounding PREPA’s debt, financing op-
tions, the focus on boosting the local economy and the presence of a strong
independent regulator. The proposal is ‘‘a living document’’ and is continuously
developed based on new information and input.
Just as ‘‘We Want Sun’’ expressed ‘‘the privatization process established by Act
120–2018 will produce more of the same: bad political deals disguised as energy
policy.’’ 20 It is not fixing the problem; it is moving the problem to the right, so it
does not block our view. That is what we see in the Contract with Luma Energy.
A proposal like ‘‘We Want Sun’’ is a response that truly reforms the energy system
in the way that Puerto Rico’s legislation and public policy has said it should. This
would fix the problem.
IV. CONCLUSION

Considering the problems and proposals that we have set forth, it is evident that
the Contract with Luma Energy is not a solution at all. This Contract does not ad-
dress the fundamental problems that have plagued PREPA, it just hands the system

19 We Want Sun: Sustainable. Local. Clean. (Version 4.0 February 2020) https://
www.queremossolpr.com/.
20 Id. at 5.
82
over to a private enterprise that does not have any accountability toward the People
of Puerto Rico while leaving the shell of the public utility to take the remaining
punches from its creditors.
At the end of the day, there are many alternatives that need to be taken seriously
and explored fully by the Puerto Rican Government and PREPA. However, there are
issues that Congress can influence. With that in mind, UTIER requests the
following:
(1) That this Congress prevent PREPA from funneling Federal funds
through Luma Energy and assign them directly to PREPA for investment
in its workforce and infrastructure.
As a private entity, Luma Energy will not be employing Federal funds for the
general welfare of Puerto Rico’s residents, but to facilitate its own business inter-
ests. We have already seen the signs of Luma Energy’s public proclivity to favor its
own subsidiaries and affiliates as contractors in federally funded projects, rather
than enter fair competitive bidding and provide opportunities for local enterprises.
Rather than put Federal funds to work for Puerto Rico, Luma Energy will favor
its investors, subsidiaries and affiliates. This is unacceptable, especially when the
Luma Contract is already displacing most of PREPA’s workforce and is not invest-
ing a dime in Puerto Rico. These Federal funds are the jack-pot, the prize that
Luma Energy wants to claim for the already lucrative Contract with PREPA. We
respectfully ask that Congress see through that and intervene. Luma Energy cannot
be allowed to hoard these funds. These funds must be invested in more efficient
ways that foster economic growth in Puerto Rico.
As we have argued, the Federal funding for PREPA’s transformation should be
invested directly into the workforce. It is PREPA’s workforce that is uniquely quali-
fied to transform PREPA from an aging, centralized, fuel-based system with poor
infrastructure into what it would be, a clean, modern and sustainable electric sys-
tem. This is not to say that private contracting should be prohibited, but it should
be limited to those exceptional cases where PREPA’s workers do not have the nec-
essary skills or experience and for the acquisition of materials that are not locally
available. Evidently, because PREPA has competitive bidding requirements by law,
with adequate oversight and scrutiny by an IPSIG, these contracts are more likely
to be granted on the basis of merit than due to the corporate relations with Luma
Energy, with its evident predisposition to outsource to its own.
(2) That Congress reactivate the Task Force for the purpose of
articulating specific recommendations that stimulate economic
development and renewable energy.
The Congressional Task Force found that high cost and low reliability of electric
power was one of the most serious obstacles to economic growth in Puerto Rico, this
in part because of the reliance of Puerto Rico on petroleum. The Task Force rec-
ommended that the government of Puerto Rico continued efforts for reform and seek
technical assistance from the U.S. Department of Energy.21 We would ask that the
Task Force to examine the problems that we are putting forth and accept the input
from PREPA’s stakeholders, not just from the Puerto Rico Government. We are con-
fident that our proposed solutions are superior to selling off and gutting PREPA and
more beneficial for PREPA and the people of Puerto Rico. We hope that a rec-
ommendation from the Task Force would tip the scale and make the Puerto Rican
Government listen.

*****
The following documents were submitted as supplements to Mr. Figueroa-
Jaramillo’s testimony. These documents are part of the hearing record and are being
retained in the Committee’s official files:
TABLE OF APPENDIXES

1. Puerto Rico Transmission and Distribution System Operation and
Maintenance Agreement dated as of June 22, 2020 by and among The Puerto
Rico Electric Power Authority as Owner, the Puerto Rico Public-Private
Partnerships Authority as Administrator, Luma Energy, LLC as
ManagementCo, and Luma Energy ServCo, LLC as ServCo.

21 Congressional Task Force on Economic Growth in Puerto Rico, Report to House and Senate
(December 20, 2016), at 37–40, https://www.finance.senate.gov/imo/media/doc/Bipartisan%20
Congressional%20Task%20Force%20on%20Economic%20Growth%20in%20Puerto%20Rico%20
Releases%20Final%20Report.pdf.
83
2. Certified Translation of Bufete Emmanuelli CSP Legal Opinion on the Luma
Energy Contract.
3. Bufete Emmanuelli CSP Memorandum on Termination Clauses and
Penalties of the Luma Energy Contract with English Summary.
4. Written Statement to the Puerto Rico Senate and English Summary of
Additional Legal Arguments Presented.
5. José I. Alameda-Lozada, Ph.D., The Impairment of UTIER’s Collective
Bargaining Agreement and the Calculation of Damages (June 15, 2020).
6. Hector R. Cordero-Guzman, Ph.D., The Socio-Economic Impacts of the Puerto
Rico Electric Power Authority (PREPA) Restructuring Support Agreement
(RSA) on the Population of Puerto Rico (rev. September 10, 2019).
7. Tom Sanzillo, Examination of the alternatives available to PREPA In order
to not impair the Labor Contracts of UTIER and its members (June 15,
2020).
8. Expert Declaration of Mr. Tom Sanzillo, Director of Finance for the Institute
for Energy Economics and Financial Analysis (IEEFA) in Support of UTIER’s
Objection to Insurers’ Motion for Relief from Automatic Stay (Dkt#975) and
to pray for the Appointment of an Independent Private Sector Inspector
General (‘‘IPSIG’’) (Dkt#1158), Case No. 17 BK 4780–LTS, Docket No. 1211.
9. PREPA’s Motion for Entry of an Order Allowing Administrative Expense
Claim for Compensation for Front-End Transition Services under Puerto Rico
Transmission and Distribution System Operation and Maintenance
Agreement with Luma Energy, Case No. 17 BK 4780–LTS, Docket No. 2053.
10. 2020 Fiscal Plan for the Puerto Rico Electric Power Authority, as certified
by the Financial Oversight and Management Board for Puerto Rico on June
29, 2020.
11. Puerto Rico Electric Power Authority, Fiscal Year 2021 Certified Budget.
12. We Want Sun: Sustainable. Local. Clean.
13. Congressional Task Force on Economic Growth in Puerto Rico, Report to
House and Senate (December 20, 2016).

The CHAIRMAN. The next person is Mr. Josen Rossi, President,
Puerto Rico Institute for Competitive and Sustainable Economy.
Mr. Rossi, the floor is yours.
STATEMENT OF JOSEN ROSSI, PRESIDENT, PUERTO RICO
INSTITUTE FOR COMPETITIVE AND SUSTAINABLE ECONOMY
(ICSE)
Mr. ROSSI. Chairman Grijalva, House Ranking Member designee
González, and members of the Committee, thank you for this op-
portunity to examine the much-needed transformation of the
Puerto Rico Electric Power Authority.
We continue in the crisis after hurricanes of historic proportion,
recent damaging earthquakes, and now the pandemic. Amongst
these challenges and still impeding Puerto Rico’s rebound stands
the broken electrical system.
I am before you today as Chairman of the Institute for
Competitive and Sustainable Economy, the ICSE. I am president of
the Puerto Rico Manufacturers Association and partner in a build-
ing services group of companies in the eastern United States.
Puerto Rico has an ongoing need for electrical system reorganiza-
tion, investment planning, and contracting oversight that protects
consumers and U.S. taxpayers’ monies.
It is a great concern that in the latest PREPA Fiscal Plan by the
Fiscal Oversight and Management Board, the Fiscal Board ignores
the fact that the restructuring support agreement, PREPA’s RSA
or debt reorganization structuring, is unsustainable.
84

There have been no attempts to update it in 2 years. And it has
never been presented to the legislature nor the Puerto Rico Energy
Bureau (PREB). The Fiscal Plan does not include PREPA’s most
recent interim financial statement with capital deficit, nor has it
met budget review and approval by the PREPA Board, nor the
regulator, the PREB.
Furthermore, PREPA’s consumer representative, the only
publicly elected member of the Board and ICSE executive director,
has challenged the government’s ongoing suggestions of adequate
PREPA Board independence and professionalism.
The PREPA Board hastily approved the stalled and inaccurate
RSA in 2019, despite a shallow fiduciary process that the consumer
representative opposed with supporting evidence.
More recently, PREPA’s handling of Costa Sur’s generation
repairs following the January earthquakes has been suspect at
best, and raises questions about project execution and capacity to
govern through operational crisis.
There has been no accountability to the fact that Costa Sur’s
Unit 5 remains off-line during peak season demand today. We
know damages to this unit were minor and temporary fixes were
available while longer term solutions could be implemented, yet
PREPA put forward a questionable emergency summer generation
plan to save the day, and even this has not been executed today.
PREPA needs an independent professional board governance
with world-class supervision from the utility regulatory framework
of the Puerto Rico Energy Policy Act, known as Act 17. Yet, major
decisions are still dominated by the same political appointees of ex-
Governor Ricardo Rosselló.
The Fiscal Board is ill-equipped to address this lack of govern-
ment commitment to the best performance metrics that should
drive transformation in our government agencies. The Fiscal Board
can and must work closely with our utility regulator with adher-
ence to Act 17 and PROMESA with the consumer participation
rights and obligations that Act 17 mandates.
The Fiscal Board and the PREB have recently approved two
utility scale investments with no tariffing proceedings, no Act 17
compliant adjudicatory processes, nor an approved infrastructure
plan. One is a 10-year natural gas generation contract; the other
a 15-year transmission and distribution management and
operations agreement.
Eighteen months after enactment of Act 17, the unapproved
PREPA infrastructure plan still pushes fossil fuel infrastructure at
the expense of large and small private renewable energy markets.
Fragmented and non-transparent contract approval processes
with no lawfully approved energy transformation roadmap will give
way to lengthy regulatory or legal proceedings like the 2-year-old
RSA. No amount of supposed government transparency portals and
public relations spin can overcome this operational and legal
dysfunction.
I hope with your continued oversight and robust engagement of
all to improve local utility regulatory capacity issues hindering real
progress at PREPA and the sustainable electrical system
reorganization.
85

ICSE can be of service to the Committee and the PREB so that
PREPA, PROMESA, and the Fiscal Board effectively support the
Act 17 transformational framework to finally achieve energy justice
for the more than 3.2 million American citizens living in Puerto
Rico. Thank you.
[The prepared statement of Mr. Rossi follows:]
PREPARED STATEMENT OF JOSEN ROSSI, PRESIDENT, PUERTO RICO INSTITUTE FOR A
COMPETITIVE AND SUSTAINABLE ECONOMY (ICSE)
Chairman Grijalva, Ranking Member Bishop and members of the Committee—
thank you for this opportunity to examine the much-needed transformation of the
Puerto Rico Electric Power Authority. Puerto Rico continues in economic crisis, after
hurricanes of historic proportion, recent damaging earthquakes, and now the pan-
demic. Amongst these challenges and still impeding Puerto Rico’s rebound stands
the broken electrical system.
I am before you today as the Institute for a Competitive and Sustainable Economy
of Puerto Rico’s Chairman. I am past President of the Puerto Rico Manufacturers
Association (PRMA), and Partner in a building services group of companies in south-
east United States.
Members on both sides of the aisle want for PROMESA to succeed and to ensure
recovery funding is put to good use. Puerto Rico has an ongoing need for electrical
system reorganization, planning and contracting oversight. We must protect Puerto
Rico’s future and taxpayer investments.
It’s of great concern that the latest PREPA fiscal plan by the Fiscal and Oversight
Management Board (FOMB) ignores the fact that the Restructuring Support
Agreement (RSA) debt is unsustainable. There have been no attempts to update this
2-year old RSA, which has never been presented to the legislature nor the Puerto
Rico Energy Bureau (PREB). The Fiscal Plan does not include PREPA’s most recent
interim financial statement capital deficit, nor has it met budget approval by the
PREPA Board, nor the regulator.
Furthermore, PREPA’s Consumer Representative, the only elected Member of the
Board, and ICSE Executive Director, has challenged the government’s ongoing sug-
gestions of adequate PREPA Board independence and professionalism. The PREPA
Board hastily approved the stalled and inaccurate RSA in 2019, despite a shallow
fiduciary process the consumer representative opposed with supporting evidence.
More recently, PREPA’s handling of Costa Sur’s generation repairs following the
January earthquakes has been suspect at best and raises questions about project
delivery, and capacity to govern through operational crisis. There has been no ac-
countability to the fact that Costa Sur’s Units 5 remain offline during peak seasonal
demands. We know damages to these units were minor and temporary fixes were
available while long-term solutions could be implemented through competitive pro-
curement. Yet PREPA put forward a questionable emergency summer generation
plan to save the day, and even this has not been executed.
PRPEA needs independent professional board governance and world-class super-
vision from the utility regulatory framework of the Puerto Rico Energy Policy Act,
known as Act 17. Yet major decisions in Puerto Rico are still dominated by the same
political appointees of ex-Governor Ricardo Rosello. The FOMB is ill equipped to ad-
dress the lack of commitment to best-in class supervision and performance metrics
that should drive transformation in our government agencies. The FOMB must
work closely with our utility regulator, overseeing its adherence to Puerto Rico law
as mandated by PROMESA, and to supervise PREPA, LUMA and all utility
planning and contracting decisions with the consumer participation rights and
obligations that Act 17 mandates.
The FOMB and the PREB have recently approved two utility scale investments,
with no tariff impact proceedings, no Act 17 compliant adjudicatory processes, nor
an approved infrastructure plan. They are a 10-year natural gas generation contract
and a 15-year Transmission and Distribution management and operations agree-
ment. The infrastructure transformation roadmap was promised by the regulator
after the hurricanes. Eighteen months after enactment of Act 17 the unapproved
PREPA plan still pushes fossil fuel infrastructure at the expense of private distrib-
uted or utility scale renewable energy markets. Fragmented and non-transparent
contract approval processes and no lawfully approved energy transformation road-
map have given way again to traditional backroom evaluations and unsustainable
approvals of new contracts that are destined for lengthy regulatory or legal
86
proceedings like the RSA. No amount of supposed government transparency portals
and public relations spin can overcome this operational and legal dysfunction.
I hope with your oversight and the engagement of our regulator to attend to the
most troublesome governance and utility regulatory capacity issues hindering real
progress at PREPA and sustainable electrical system reorganization. ICSE can also
be of service to the Committee in improving upon PROMESA and FOMB support
of Act 17 transformation framework. Puerto Rico consumers and investors can and
must continue advocating for robust public participation per Act 17 and PROMESA
as they stand, to finally achieve energy justice for the more than 3.2 million
American citizens living in Puerto Rico.

The CHAIRMAN. Thank you very much. To begin the questioning,
let me turn to the Chairs of Subcommittees to begin with.
Mr. Lowenthal, if you have any comments or questions? Let me
recognize you.
Dr. LOWENTHAL. I will come back and ask.
The CHAIRMAN. OK. Mr. Gallego.
Mr. GALLEGO. Yes. Thank you, Mr. Chairman. I would like to ask
just a couple questions. The first question is for Edison. I want to
make sure I see him up there.
For many years, we have been talking about trying to make the
grid both energy independent and being able to use more renew-
able energies, but also at the same time being able to be resilient.
What are the steps that we even have to take before we start
moving in that direction in your opinion in order for us to have
both a resilient grid as well as one that is largely solely run on
renewables?
Mr. AVILÉS-DELIZ. Thanks for the question. And we are right
now in the evaluation of the PREPA IRP. The PREPA IRP sub-
mitted to the Bureau presents a new grid, a resilient one, that
takes into consideration the impact of Hurricanes Maria and Irma.
But what they proposed—and I can refer to Mr. Ortiz to better
explain what they submitted—is that the island will be divided in
many different mini-grids. And the grids will be interconnected and
will be provided by generation within the grid and also with the
centralized generation.
We are right now awaiting what PREPA submitted. And we will
have a final say in August. Again, I think that in order to better
explain what they already submitted to the Bureau, I defer to José
Ortiz to answer your question.
Mr. GALLEGO. Thank you. And, unfortunately, I was not here, I
think, when Ruth Santiago spoke, Queremos Sol Coalition, but I
was hoping to get your opinion, Ruth, on the plan to basically
solarize the Puerto Rican energy grid as well as obviously to make
it durable and resilient.
Ms. SANTIAGO. Thank you for the question. The government of
Puerto Rico last year passed the Energy Public Policy Act which
has a renewable portfolio standard as you know that requires 40
percent renewables by 2025, 60 percent by 2040, and 100 percent
by 2050.
Unfortunately, what we have seen from the government has been
totally in the other direction. Look at the New Fortress project in
San Juan or conversion of those two big units to burn so-called
natural methane gas.
87

Look at the renegotiation of the EcoEléctrica contracts under the
unfavorable terms. And although there is talk of supposedly
renegotiating some of the existing contracts, we have not seen any
of that. And the conditions do not seem favorable to the people of
Puerto Rico.
On the contrary, what we saw both in the draft IRP and during
the hearing is that customer sided generation is the least cost al-
ternative of all energy supply arrangements in Puerto Rico.
So, even the economics of the technological viability is there. And
that should be coupled with energy efficiency and conservation and
demand response programs in order to take Puerto Rico really to
the 21st century using resources that are locally available. And as
I mentioned, proven to be financially both admittedly in the IRP
and technically viable.
Mr. GALLEGO. OK. Thank you.
Ms. SANTIAGO. Thank you.
Mr. GALLEGO. I just want to get one more question in. Thank
you. A question for Mr. Ortiz. I hear a lot about solarizing real
energies and durability.
There is a plan for large battery storage or this type of energy
you are going to try to contain because it doesn’t work unless you
actually have large battery storage, working with microgrids in
order for you to basically be able to smooth out the peaks and the
valleys of electricity.
Mr. ORTIZ. You are absolutely right, Congressman Gallego.
Certainly, we are ready with P3 Authority for a request for
proposal.
Mr. GALLEGO. OK. And I ran out of time, but when you are
telling somebody that you have already issued your test proposal
for battery storage to compliment the microgrid—OK, I yield back.
The CHAIRMAN. Thank you. Miss González-Colón, for comments
or questions.
Miss GONZÁLEZ-COLÓN. Thank you, Mr. Chairman. My first
question will be to Mr. Ortiz. Mr. Ortiz, you were talking in your
statement about different amounts of funds. And we were dis-
cussing that prior to this hearing. How much Federal funds has
PREPA received, not just from FEMA but all the Federal entities
to this date?
And if you can provide a letter to the Committee, a detailed
breakdown on how much PREPA receives or expects to receive in
the next 2 years from different Federal agencies, FEMA, HUD, the
Army Corps of Engineers, and the Department of Energy to rebuild
and modernize Puerto Rico’s energy infrastructure.
Mr. ORTIZ. For the fixing of the system, we have over $2.5 billion
already received and reimbursed in many cases for PREPA. We
have completed basically the agreement of the estimates for the
long run, the full modernization of the grid. That would be
disclosed in the next few days probably.
And for about the next 11⁄2 to 2 years, we have a program for
$1.7 billion to be invested mostly on the critical loads, like the hos-
pitals, water systems, shelters, and for some medical centers, the
airport, and such critical facilities. So, that is——
Miss GONZÁLEZ-COLÓN. Yes sir, you have not included in there
the $1.9 billion approved from CDBG-DR.
88

Mr. ORTIZ. Not yet. Well——
Miss GONZÁLEZ-COLÓN. And what has happened that these funds
have not yet been disbursed to the island?
Mr. ORTIZ. The CDBG-DR are basically at the end of the line. It
would be basically after we exhaust the 428 funding. We hope to
start doing something with the 428, the redo of the grid in the
third quarter of this year. We are very close to that moment.
Miss GONZÁLEZ-COLÓN. How explicitly are the Federal funds
going to help the modernization process of PREPA? And how will
the new contract be working with Federal funds?
Mr. ORTIZ. Well, the new contract basically approves an entity
who has been 35 years with Federal funds that will be taking care
of the compliance and the procurement. The way to spend the
Federal funds are in alignment with the IRP, the PREB and it is
going to be considering at this point, but certainly as Edison Avilés
just mentioned that will show a decentralized energy system con-
sisting of about 40 percent renewables by year 2025, being sup-
ported by a cleaner fuel fossil driven equipment, for example, like
natural gas in San Juan and natural gas in the south, in
EcoEléctrica, and Costa Sur.
We will divide the island in eight small islands or eight mini-
grids. And those would basically be able to operate independently.
And assuming we have hurricane strikes, you may lose one or two
of those areas, but the rest of Puerto Rico will be able to continue
working.
A lot of undergrounding of power lines will be happening as well.
Two of the biggest are the east coast, what we call the grid, the
Humacao system that includes the municipalities Humacao,
Naguabo, Las Piedras, and Yabucoa. Normally, that is the door to
all the events we have had in the past 100 years basically. And
also a very strong support, an undergrounding of the important
power lines to the industrial sector along the northeast. There you
have Medtronic, the engines, and all these big companies.
And if we are overlooking it, bringing those types of companies
to Puerto Rico, we certainly have to provide a very reliable power.
Miss GONZÁLEZ-COLÓN. One last question at this time. We are
now in the hurricane season, so it is an obligated question to
make—is Puerto Rico’s electric infrastructure ready to face and
withstand another hurricane or a storm in the next months? Are
you ready?
Mr. ORTIZ. Yes. The answer is yes. We are in a very different
condition. We have five times the inventory we had before Maria.
We have $22 million in inventory. Today, we have $140 million in
inventory. The strengthening of the transmission lines from south
to north certainly is redone for 145 miles per hour.
And certainly the project we have with San Juan 5 and 6 in San
Juan provides a lot of reliability to the metropolitan area. One of
the biggest issues was that 70 percent of the Puerto Rican demand
is in the north. And we lost all the transmission from south to
north. So, having all that generation with natural gas we will
provide additional generation——
The CHAIRMAN. Time is up. Let me now turn to Mr. Tonko. You
were here earlier, sir.
89

Mr. TONKO. Thank you, Mr. Chair, and thank you Ranking
Member Bishop, and all of our witnesses for their expertise today.
Like many, I am hopeful that a compendium of tragedies that had
to fall in Puerto Rico, a recession, to hurricanes, to earthquakes,
and a pandemic, have a silver lining in that the island can emerge
with a clean and resilient electric grid.
We know now that we need clean power for urgent climate
reasons, however, particularly in the case of Puerto Rico, clean
power is also overwhelmingly the cheapest solution. The average
cost of power on the island is currently at an extremely burden-
some 17 cents per kilowatt hour. That is twice the average cost of
power generated from rooftop solar energy in Puerto Rico and
nearly nine times the average cost of wind power.
I commend the goals of Law 17 that drive the island to renew-
able power. I am now particularly interested in seeing how they
will be practically implemented. Of course, the trick in imple-
menting these renewable sources is always front-end cost. They
tend to be somewhat expensive to build and then payback over the
long term.
That is where the silver lining comes in. There is already a need
to spend substantial sums of money on new electricity construction.
I think it is clear that in order for PREPA to live up to its mission
of delivering reliable, low cost electricity to Puerto Ricans that
money must go toward constructing renewables.
So, Mr. Ortiz, Puerto Rico is expecting around $1.9 billion of
community development block grants disaster relief funds for the
electric grid reconstruction. Those funds represent a great oppor-
tunity to help low- and moderate-income families finance
community-based energy projects such as rooftop solar.
These funds are also an opportunity to promote community
energy resiliency projects. Does PREPA currently have a plan for
how those funds will be used? And is PREPA committed to use
these funds for those much-needed purposes?
Mr. ORTIZ. Absolutely. And I certainly agree with you. The $1.9
billion will certainly supply what is needed for the poor and mid-
income families that need to have their own detached solar system.
I certainly vouch for that. The solar system cannot be only for
wealthy families in Puerto Rico.
We have to be very careful. When we talk about sun for every-
body, it is not really that way. I think the $1.9 billion—I really
would focus on the use of those for 1,800 megawatts of solar power
that will be needed by 2025, certainly the best use we can make
for the CDBG-DR funding.
Mr. TONKO. Thank you. Thank you very much. And I would like
to turn to a different issue now regarding some of the challenges
of ensuring that a public-private partnership serves people in the
way it is intended.
I am particularly worried about the implications of future
natural disasters which are projected to become both more common
and more severe, particularly in the Caribbean as the climate
warms.
Mr. Fontanés, can LUMA terminate the agreement in an
extended force majeure event? And if so, wouldn’t an extended
90

force majeure event such as after a hurricane be a time when grid
work would be most needed?
Mr. FONTANÉS. Thank you for your question. I think what you
may be referring to is the standard force majeure clause in the con-
tract. I think as in a typical contract there are force majeure provi-
sions to account for delays in services or operations, but that is
definitely not intended to address for the response to a hurricane.
This is what the LUMA team excels at. These are the companies
that are called in to work in disasters not only in the United States
but all over the globe. They have attended disasters in California
for the fires. They have attended hurricanes in Texas and in
Florida. They have attended the wildfires in Australia. This is
really one of their major strengths.
I think one of the things that they are doing now during the
transition period is working together with PREPA, so that even
though they have not commenced operations officially and are still
in transition, they can assist PREPA in the event that we get
struck by a hurricane during this season.
I think that is definitely a misconstruction of a typical contract
clause that is included in the P3 contract, but it is definitely not
meant to be used as an excuse not to respond to the hurricane.
That is actually what they are here to do as part of being the T&D
operators. They are emergency responders.
And they are going to be out there. They are already working on
plans to help PREPA, and that is what they do. That is one of the
criteria that we selected them upon.
And I think if you look at the operation committee report that
is available on our website, you can see what they proposed, their
plans, and what they intend to do once they are here.
Mr. TONKO. Thank you. I had a question, Mr. Chair, on
decarbonization for Ms. Santiago, but I have run out of time. But
I will get that to the Committee.
The CHAIRMAN. We have been called to do a vote.
Mr. TONKO. I yield back.
The CHAIRMAN. Thank you, sir. My turn is up in the sequence.
And Ms. Haaland, I think we are in the same group. Somebody
available for the Chair? If not, then we are going to call a recess.
And we will return after completion of at least the first vote or the
second vote.
So, with that, we will recess until the votes are done. And I
apologize to the witnesses. Thank you.
[Recess.]
Mr. TONKO [presiding]. The Chair recognizes Ms. Velázquez for
questions for 5 minutes, please.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman and Ranking Member
for holding this important hearing. My first question will be
addressed to Mr. Ortiz.
Mr. Ortiz, I have introduced legislation entitled, the Puerto Rico
Recovery Accuracy and Disclosures Act, which requires all consult-
ants and advisors to PROMESA to publicly disclose their relation-
ships and conflicts in order to increase transparency.
In fact, I have documents in my power that demonstrate that
consultants to the Board are also consultants to SoftBank which
91

also has an interest in New Fortress Energy. Moreover, SoftBank
also happens to be a client of the consulting group, McKinsey.
Mr. Chairman, I would like to submit these documents to the
record.
Mr. TONKO. Without objection.
Ms. VELÁZQUEZ. Mr. Ortiz, do you believe that this arrangement
is appropriate between McKinsey, Fortress Energy, and SoftBank?
Mr. ORTIZ. I cannot judge something I haven’t really seen. We
can check that very closely. Knowing that we have been——
Ms. VELÁZQUEZ. I ask you, sir, if you think that this
arrangement is appropriate.
Mr. ORTIZ. Knowing that we have been——
Ms. VELÁZQUEZ. Mr. Ortiz, would you please answer my
question? Do you think this arrangement is appropriate?
Mr. TONKO. Mr. Ortiz, you may be muted. Can you unmute,
please, and answer the question?
Mr. ORTIZ. I’m unmuted. Do you hear me?
Mr. TONKO. Yes.
Ms. VELÁZQUEZ. Now we can hear you.
Mr. ORTIZ. OK.
Mr. TONKO. Did you hear the question?
Mr. ORTIZ. Yes, I did.
Ms. VELÁZQUEZ. So, my question is, do you think that
arrangement is appropriate?
Mr. ORTIZ. My answer, again, responsibly is I don’t know what
arrangement you are talking about. I haven’t seen that before. I
cannot give you an opinion on something that I haven’t seen.
Ms. VELÁZQUEZ. Sir, you haven’t seen the documents that——
Mr. ORTIZ. I cannot give you an opinion on something I haven’t
seen. It would be irresponsible for my side.
Ms. VELÁZQUEZ. Mr. Chairman, I would ask that the documents
be sent to Mr. Ortiz, and Mr. Ortiz answer the question in writing
to the Committee.
Mr. ORTIZ. Perfect.
Mr. TONKO. OK. The gentleman will provide an answer in
writing.
So granted.
Ms. VELÁZQUEZ. Mr. Ortiz, did PREPA do any due diligence to
ensure that consultants with access to the procurement documents
did not have conflict of interest?
Mr. ORTIZ. Yes. That is a normal procedure.
Ms. VELÁZQUEZ. However, we have a relationship between
McKinsey, Fortress, and SoftBank. And you are telling me that
that doesn’t impact the procurement process.
I can tell you that I have been fighting to get my legislation
passed. It passed the House. We are waiting for the Senate which
passed the Committee. Because the people of Puerto Rico are cyn-
ical. They are tired of the lack of transparency when it comes to
issues that are important and that are going to impact their lives.
So, we have to make sure that the public trust, the New Fortress
Energy contract is beneficial for the people of Puerto Rico when
there is a lack of transparency and a prior conflict of interest
during the procurement process.
92

Mr. Avilés, can you explain why the Puerto Rico Energy Bureau
failed to submit the New Fortress Energy contract for review by
the Federal Energy Regulatory Commission?
Mr. AVILÉS-DELIZ. The Energy Bureau is the local regulator. And
we don’t have to submit the contract to the FERC.
Ms. VELÁZQUEZ. So, the Federal Energy Regulatory Commission
didn’t send a show cause document asking New Fortress why the
contract was not submitted for FERC approval? You are not aware
of that?
Mr. AVILÉS-DELIZ. Yes. We are aware that FERC is right now
evaluating why New Fortress didn’t submit to them some docu-
ment for the permitting, but FERC is not the regulator. And all we
did was to comply with the applicable laws and regulations in the
evaluation of the documents submitted by PREPA when they
submitted the contract.
Ms. VELÁZQUEZ. Mr. Fontanés, will LUMA Energy—oh, my time
is up, but there were some technology issues and so some time
was——
Mr. TONKO. Ask your final question, Representative.
Ms. VELÁZQUEZ. Yes. Mr. Fontanés, will LUMA Energy be
required to assume the pension payments covering pre-existing
health conditions and any other benefits that those PREPA
employees it hires had?
Mr. FONTANÉS. Thank you, Congresswoman, for the question.
LUMA Energy is coming as an operator of the system so they will
assume the obligations that PREPA has as an operator of the
system. Under Act 120, all acquired rights that the employees have
under PREPA are transferred to LUMA once they have moved
through.
So, any acquired rights that they have under the law on the reg-
ulation or under the collective bargaining agreement moves with
them to LUMA. If they choose to stay with a PREPA pension plan,
then LUMA has an obligation to fund the PREPA pension plan. If
they choose to join the LUMA pension plan, then they will be of-
fered what the LUMA pension plan offers to them once they join.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman. I yield back.
Mr. TONKO. The gentlelady yields back. The Chair now
recognizes Representative Gosar for 5 minutes, please.
Dr. GOSAR. I thank the Chairman. I yield my time to Ms. Colón.
Mr. TONKO. OK. The gentlelady is recognized for 5 minutes.
Miss GONZÁLEZ-COLÓN. Thank you, Mr. Chairman. Thank you,
Representative Gosar for yielding. One of the questions I have is
going to be to Mr. José Ortiz again. And it is regarding the process
for contracts and RSP in PREPA.
In terms of the contracts that are being discussed here today, did
the Financial Oversight and Management Board and the Puerto
Rico Energy Bureau review the RSP process?
Mr. ORTIZ. Yes, Congresswoman. Not only did the PREB and the
Fiscal Oversight Board, but also in many cases the Title III for the
EcoEléctrica contract and also the court of appeals and the admin-
istrative judge as well. So, it has been reviewed for all possible
entities or bodies to rule over them.
Miss GONZÁLEZ-COLÓN. So, the contract that we are talking
about was challenged in the courts. It was challenged by who?
93

Mr. ORTIZ. It was challenged by Puma, which was basically the
second bidder. He went to the administrative judge. It didn’t pro-
ceed. They then went to a court of appeals. The court of appeals
granted to PREPA again their position.
So, it was done in a proper way. This has been reviewed not only
there, but also public. And actually at the end of the day, Puma
came to our offices to say we tried to do the best, but anyway we
failed this one. We messed up.
But to be honest, at the end of the day, we have the best of both
worlds in that facility. Right now, you are able to burn natural gas
which is a lot cleaner. You make it comply with the EPA standards
right now.
And also you have Puma as a supplier for diesel if needed. So,
you have the best of both worlds in terms of reliability and
resiliency, in terms of a shortage of any of those fuels.
Miss GONZÁLEZ-COLÓN. The question will now be in terms of the
FERC. There are many talks and letters from members of this
Committee regarding FERC and a requirement to show cause of
why it was not approved or requested at that approval.
What is the due diligence for PREPA of making the new
contract? Do you need to have a FERC authorization? And what
were the processes you made with FERC regarding the new con-
tract?
Mr. ORTIZ. Yes. In 2018 and in 2019, we met with the FERC
officials. And, basically, they made the representation to us, to
PREPA, to our board members as well which visited the FERC
officials that this is a small project that will not basically be under
jurisdiction of FERC.
The same representation was made to New Fortress Energy. And
the same representation was made to the Coast Guard. So, all
those meetings were very consistent in that no jurisdiction was
needed here. And these discussions have been back to 2012 when
I was the chairman of the board.
At that time, I met with John Wellinghoff, the FERC executive
director in 2012. He came to Puerto Rico and we met. And we
talked about the project. He did not at any point discuss anything
about jurisdiction. I remember at that time he said you just have
to check the buffer zone to preserve for any potential problem or
whatever. But that is it. That is all you have to take care of.
So, this is a project that has been discussed around for more
than 8 years with different administrations in FERC. And up to
this point, it was good. The representation that no FERC permit
was needed was presented to me and to my board.
And it is good today as well if you foresee all the different
awards that FERC has been granted without any jurisdiction basi-
cally. One example I can tell you from the island is Costa Sur.
In Costa Sur, we have over a mile pipeline connected to
EcoEléctrica. FERC didn’t require taking any jurisdiction there. We
are talking a mile pipeline. Here we are talking about a 75-foot
pipeline, very close to the dock.
So, it doesn’t make sense. If one was not needed, the other even
less. It makes perfect sense, the representation from FERC officials
with what is being discussed today.
Miss GONZÁLEZ-COLÓN. Thank you, Mr. Chairman.
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Mr. TONKO. The gentlelady yields back. The Chair now
recognizes Representative Sablan for 5 minutes of questions.
Mr. SABLAN. Mr. Chairman, did you just call me out?
Mr. TONKO. Yes, I did, sir, for 5 minutes of questioning.
Mr. SABLAN. OK. Does anyone need time? I really have no
questions.
Mr. TONKO. We have Mr. Soto here who might take 5 minutes
for questioning if you prefer.
Mr. SOTO. Sure. Thank you.
Mr. TONKO. OK. The Chair recognizes the gentleman for 5
minutes.
Mr. SOTO. I thank the gentleman from the Northern Mariana
Islands for that courtesy. Even during these difficult times, we
have a tremendous opportunity to bring Puerto Rico’s energy indus-
try into the 21st century. And I want to reiterate some guiding
principles that are important for the Committee: (1) we need power
to be resilient and reliable; (2) we need it to be affordable; and (3)
we need to make every effort to boost renewable energy where
feasible.
First, I want to talk a little bit about resiliency and reliability.
Hurricane Maria exposed the vulnerable state of Puerto Rico’s
energy system. We took the rare step of amending the Stafford Act
for Puerto Rico to be able to rebuild the grid better.
Hurricane Dorian reminded us how precarious a position Puerto
Rico still is in. It is not a question of if another hurricane will hit,
but when. That is why it is critical that we use Federal disaster
relief funds to focus in part on rebuilding a more resilient and
reliable system that can withstand another Category 4 or Category
5 hurricane.
We also need it to be affordable. Puerto Rico is in an over decade
long recession, was hit by Hurricane Maria and Hurricane Irma, is
facing terrible budget cuts by the PROMESA Fiscal Board, endured
a wave of earthquakes, and now faces a coronavirus pandemic.
The people of Puerto Rico must have affordable energy in order
to survive and to bring the island back to prosperity. And, finally,
we need to adopt more renewable and cleaner fuels. Right now, we
see 40 percent petroleum, 39 percent natural gas, 18 percent coal,
and 2.3 percent renewables.
First and foremost, it is clear that petroleum and coal are dirty
and expensive and have to go as soon as possible. Puerto Rico law
now requires the visionary standard of 100 percent renewable
energy by 2050. These Federal funds can and should also be used
to meet this renewable goal.
We must start by boosting individual rooftop solar and battery
systems, particularly in La Cordillera Central, like what the
Committee saw in Toro Negro during our trip as well as other
rural and low population areas. We also must convert other power
generation to a combination of both renewable and natural gas.
My question to several of you is—and I will call on you individ-
ually—can Puerto Rico get rid of oil and coal by 2030? And if so,
what is an achievable mix of renewables and natural gas that we
could achieve by 2030 and why?
I am going to start with you, Mr. Ortiz.
95

Mr. ORTIZ. Yes. Well, the renewable technology is getting better
and better year by year. I doubt we can go, for example, 100
percent renewable by 2030, but certainly——
Mr. SOTO. But that is not what I am asking. I am asking if we
could get rid of oil and coal and convert to both renewables and
natural gas by 2030?
Mr. ORTIZ. Yes, absolutely. That is an absolute yes.
Mr. SOTO. OK. Thank you.
Mr. ORTIZ. We are moving to natural gas to replace all the liquid
oils—absolutely.
Mr. SOTO. And Ms. Santiago, do you think we could get rid of oil
and coal by 2030? And if so, what achievable mix can we get
between renewables and natural gas by 2030?
Ms. SANTIAGO. Yes. I think that we heard expert after expert at
the Puerto Rico Energy Bureau hearings this past February talking
about the steps that we need to really transform the Puerto Rico
electric grid.
Those steps start with energy efficiency programs, energy
demand response programs, and certainly, yes, rooftop solar,
renewables, coupled with battery energy storage systems and other
alternatives to centralization of fossil fuels.
Mr. SOTO. My time has expired.
Mr. TONKO. The gentleman has 30 seconds more because of the
delay of the clock.
Mr. SOTO. Please continue, Ms. Santiago.
Ms. SANTIAGO. All right. So, we can absolutely make huge gains
starting with those programs. And I expect that we can eliminate
the burning of fossil fuels very rapidly.
I would not say definitely in 2030, but certainly what we saw
and what the experts said, and even the Siemens Industry which
is the PREPA contractor agreed, that renewable with the com-
plimentary battery energy storage systems and other programs
that I mentioned can do the job even as to the critical facilities like
hospitals.
Mr. SOTO. Thank you. I yield.
Mr. TONKO. The gentleman yields back. The Chair now recog-
nizes Representative Graves for 5 minutes for questioning.
Mr. GRAVES. Thank you, Mr. Chairman. Mr. Chairman, I have
a quick question for Mr. Ortiz. First of all, I do want to follow up
on the questions that the gentlewoman from Puerto Rico brought
about the extraordinary investment.
I, too, am interested in learning more about the billions of dollars
that have been invested and have been borrowed by PREPA for in-
vestment into the energy system there, yet the system still lacks
performance.
But I had another question. I know that a number of utilities
went to Puerto Rico to provide assistance in restoring the system.
And I know that a number of those utilities have provided invoices
or billing to PREPA. And I know that FEMA has actually provided
the reimbursement to PREPA for that work that was done by the
utilities.
However, the utilities in many cases have not been reimbursed,
but only been reimbursed a fraction of what was owed. Mr. Ortiz,
could you explain sort of the disposition of those reimbursements
96

and when PREPA plans on fulfilling their financial commitments
that FEMA has already provided to them?
Mr. ORTIZ. Actually, yes, you are absolutely right. We had some
struggles at the beginning paying those companies. It was resolved
already finally. PREPA took like a year and a half in designing cost
codes to be able to pay them, to reimburse them. That was resolved
already. I hope in the next couple of months that everybody will
be paid.
Mr. GRAVES. I just want to make sure I heard you. Your estimate
is that in the next couple of months you think that everyone is
actually paid.
Mr. ORTIZ. Yes. Everything should be solved. Yes.
Mr. GRAVES. All right. Mr. Chairman, I yield my remaining time
to Ms. González.
Mr. TONKO. The remaining time is spent to the gentlelady from
Puerto Rico.
Miss GONZÁLEZ-COLÓN. Thank you, Mr. Chairman and thank
you, Representative Graves for yielding and actually for visiting
the island after Hurricane Maria and Irma and helping us out.
My question will be the same as before the time expired. I was
asking Mr. Ortiz about deferred diligence prior to selecting the
contract.
And after your answer, my next question should be, if you have
moved forward with the connection of the new company. Did FERC
tell you at that time that you needed any other provision or submit
an application or have an authorization—you have been moving
forward even having that or you stopped that kind of a contract?
Mr. ORTIZ. Well, certainly, the contract, the permitting belongs
to the contract. So, that is their responsibility. I would have to
keep burning diesel which is much more expensive. It is much
more damaging to the environment until they get the permit. So,
we are not going to be penalized. The people of Puerto Rico would
be penalized basically. But that is what is going to happen. It is
their responsibility to get the contract—sorry, to get the permit.
Miss GONZÁLEZ-COLÓN. Question, was there any other Federal
regulator that was concerned or expressed any reservation about
that San Juan Harbor project before or during the process it was
developed or built——
Mr. ORTIZ. No. No.
Miss GONZÁLEZ-COLÓN. No.
Mr. ORTIZ. The answer is no. The other one that is basically in
a co-responsibility there is the Coast Guard. And they met with
FERC. And they argued that they were represented that no FERC
jurisdictional permit is necessary. So, that is why I don’t under-
stand their last moment request.
Miss GONZÁLEZ-COLÓN. Quick question, does that mean
contracting could provision for user pay provisions that you must
use in PREPA?
Mr. ORTIZ. No, we don’t have any take or pay clause. We will just
be paying for whatever we use. If at some point diesel becomes
cheaper, we can turn to diesel. But at the end of the day, we need
to comply with the EPA emissions.
97

But it is very important not only for the price purposes but to
comply with the non-attainment sum in EPA for many years in the
area of San Juan to get natural gas there.
Miss GONZÁLEZ-COLÓN. Question, what will be the net saving for
the government and for the people of Puerto Rico just for giving
this can of transitional conversion?
Mr. ORTIZ. Well, we can talk about one cent per kilowatt hour,
but that translates—basically in a family that consumes $150 a
month, they will be saving like $12 at best.
Miss GONZÁLEZ-COLÓN. Can you repeat that number again?
Mr. ORTIZ. If a family consumes $150—I am talking about
dollars—now that family will be paying $138 rather than $150
using natural gas.
Miss GONZÁLEZ-COLÓN. Thank you, my time expired, Mr.
Chairman. Thank you, Ms. Haaland.
Ms. HAALAND [presiding]. Thank you. The Chair recognizes Mr.
Lowenthal for 5 minutes.
Dr. LOWENTHAL. Thank you, Chair. And first I want to apologize
for running back because I know other Members have done this
also running back and forth and voting and especially one who is
voting remotely, it is getting to be quite difficult trying to stay on
top of both the hearing and what is going on in the Floor.
My question may have already been asked to some extent, but
I am going to go back—and if it is worth saying it once, it is worth
saying it more than once.
This is for Mr. Ortiz at the Electric Power Authority. The work-
ers are really critical to the utility’s success. But their ability to
excel has been limited somewhat by these outdated procedures that
are not really consistent with industry best practices at this
moment.
So, the questions that I have, a few of them—how will LUMA
actually improve working conditions? Have they had experience
working with unions—they are a consortium—in some of their
other operations?
And how will that LUMA contract affect the existing union, the
electrical industry and irrigation workers union, and does LUMA
support unionization? Do they allow for unionization?
Mr. ORTIZ. Yes. A part of LUMA is Quanta. Quanta is basically
the biggest utility company with the biggest number of unionized
workers, so they know how to work with unions. And the benefit
I will say—and this is what I have noticed so far—is that they de-
vote a lot of time to training other people, mostly on the safety
issues. And secondary, since they have workers worldwide basi-
cally, they can provide a lot of best practices, not only from the
mainland, but also from the world to our employees. PREPA is a
very difficult terrain. It is a tropical environment as well. So, it has
all the challenges.
But let me tell you, the people of Puerto Rico are excellent. I
think some additional training with all these new potential ways
of seeing the things that are happening somewhere else, good
practices, will be a plus for all these employees.
Dr. LOWENTHAL. I have another question though.
Mr. ORTIZ. OK.
98

Dr. LOWENTHAL. And thank you for that—about the pension
system. My understanding is it is woefully underfunded. And I
would like to know just how underfunded it is and what are you
going to do to ensure pensions—will PREPA now make or LUMA
make greater contributions and will that add to the cost of elec-
tricity? How do you propose dealing with this shortfall in the
pension system?
Mr. ORTIZ. Yes. Good question. The shortfall—let me tell you
that needs $5.5 billion. They have assets for $1.2 billion. So, they
are in the hole $4.3 billion. Bringing LUMA will stop the bleeding
basically. And we can cut from there—and the LUMA worker can
decide to keep putting their monies in the pension plans. So, we
are trying to stop the bleeding here.
Now, PREPA has to deal with the $4.3 billion. And, certainly, it
will have to be PREPA’s responsibility to find that money.
Obviously, the retirees do not have the way to do it. We are looking
for ways to reduce the tariff so that we can plug in some money
to support the pension fund.
There is no other way unless there is a tax, something—the tax
system of Puerto Rico to provide money to that pension fund, but
certainly the pension fund is in a very difficult situation.
Basically, what LUMA makes is not fixing it. They are just stop-
ping the bleeding so that we can deal with it in arrears, the $4.3
billion. That is the way I foresee this.
Dr. LOWENTHAL. I have just a little bit of time left. I chair the
Natural Resources Subcommittee on Energy and Mineral
Resources. And we have held a number of hearings on the North
Atlantic on offshore wind. Have there been any attempts to begin
to deal with offshore winds as an alternative for renewable energy?
Mr. ORTIZ. No. There hasn’t, but certainly I visited the wind
farm close to the north of Montauk. You have a very nice wind
farm there. And I know New York is trying to do something bigger
offshore——
Dr. LOWENTHAL. And Massachusetts.
Mr. ORTIZ. And they are talking about 9 cents per kilowatt hour,
which is very competitive for Puerto Rico. Puerto Rico in the south
is very shallow and it is very windy.
So, I foresee something being explored in the near future. But
those are the conditions I discussed already with the New York
Power Authority and with the Long Island Power Authority.
Dr. LOWENTHAL. Well, thank you for that. And I yield back,
Madam Chair.
Ms. HAALAND. Thank you, Mr. Lowenthal. The Chair recognizes
Mrs. Radewagen for 5 minutes.
Mrs. RADEWAGEN. Thank you very much. Can you hear me?
Ms. HAALAND. We can hear you.
Mrs. RADEWAGEN. I want to thank the Chairman and Ranking
Member for holding this hearing. I welcome the panel. At this time
I yield all my time to Congresswoman González-Colón. Thank you,
madam Chair, I yield back.
Miss GONZÁLEZ-COLÓN. Thank you, my friend, Madam
Radewagen. I know you are in America Samoa at this time, so I
thank you for yielding. And I will just take my turn at this time
99

to enforce what Representative Lowenthal just mentioned about
the opportunities in offshore energy.
And in that sense, I just want to highlight bipartisan legislation
I introduced that could help Puerto Rico’s energy transformation.
It was passed during the last Congress.
Again, it was recommended by this Committee unanimously. All
territories are original sponsors of this bill, in a bipartisan way.
And I am referring to H.R. 1014, the Offshore Wind for Territories
Act. The bill will amend Federal law to study the potential for an
authorized offshore wind energy development in the exclusive eco-
nomic zone adjacent to the five U.S. territories.
I mean, you may have that in the eastern part of the United
States, but territories are not authorized by Congress. So, it could
establish a dedicative fund for coral reef conservation and a direct
portion of the offshore wind revenues back into the local
communities.
Again, this Committee reported this unanimously last year. And
the bill was passed under suspension. If enacted, this bill will cre-
ate not just jobs, but hours of energy needs and the prices in the
territories. And for me, very important in our reliance on imported
foreign petroleum products while boosting revenue sources and
helping protect our coral reefs.
So, that is something that will promote the study of it. It is not
that we are going to be doing it, although we visited the windmills
in the south part of the island recently with the delegation of the
Department of Energy.
Now, I am going back to Mr. Ortiz. There are several issues that
have been part of the questionings today regarding not just the
private contracts but whether PREPA is in a good position to face
new developments in the south, like the earthquakes or the
hurricanes.
And I was asking prior to this turn about the situation with the
FERC. My question will be—let’s assume and this is a bad omen,
but anyway—what should be the impact for PREPA and for people
of Puerto Rico if FERC orders the facility to shut down? What is
going to be the immediate impact for PREPA?
Mr. ORTIZ. Well, immediately, Congresswoman, we will have to
rely more on the south generation, the same area that has been
shaken in the last 6 months. We will be passing all the responsi-
bility to provide energy to the 70 percent of the Puerto Ricans from
the south basically because the main plant is in San Juan.
And we are not allowed to use these 100 percent because that
provides limitations from the EPA due to the emissions with diesel.
So, we will have to go back to provide energy to the north from the
south. And that was the biggest problem after Maria.
When we lost the transmission from the south to north, we basi-
cally lost power for like 70 percent of the population for close to 5
months until we restored the central area of the island. So, we will
be in a weaker position. We will be using in a limited way the San
Juan 5 and 6. And we will be limiting the reliability of the system
very seriously.
Miss GONZÁLEZ-COLÓN. And that means that if we need to go
back to Costa Sur in the south part of the island that we will not
have neither 500 or 800 megawatts that are needed in reserve just
100

to manage the capacity of the demand of electricity on the island.
Am I right?
Mr. ORTIZ. You are correct.
Miss GONZÁLEZ-COLÓN. At this time, how much megawatts will
you still have in reserve to meet the demands of the energy on the
island?
Mr. ORTIZ. Right now, we are at 3,200 megawatts. The demand
is close to 2,800. Basically, on average, we are around those
numbers.
Miss GONZÁLEZ-COLÓN. Thank you. I yield back.
Ms. HAALAND. Thank you, Ms. González-Colón. The Chair now
recognizes Mr. Cox for 5 minutes.
Mr. COX. Thank you so much, Madam Chair. Thank you to our
witnesses for being here today. My question has more to do with
some of the previous disasters that have unfortunately befallen
Puerto Rico.
And as Ms. González-Colón noted earlier, and Mr. Tonko as well,
we are right upon a new hurricane season. And there are certainly
going to be future natural disasters.
My question is really for Mr. Ortiz, if he will indulge me. There
is quite a bit of concern about the FEMA payments or no payments
that have been made to contractors who stepped in during the
aftermath of Hurricanes Irma and Maria. And I would really like
to know what has PREPA and the agency done with submitting
and getting these contractors paid? And if they haven’t, has FEMA
shared with you any of the reasons that these contractors haven’t
been paid, why they are awaiting payments. And what has PREPA
done to submit and to advocate for these reimbursements?
Mr. ORTIZ. Yes. Most of the contractors that are still not paid or
not fully paid are from the Edison Electrical Institute, the ones
brought by that institution. That will be resolved in the next few
days because what was missing was a cost code from FEMA in
order to pay them. It is something in their system that was re-
solved recently. We were basically fighting with that issue for a
year and a half. That is resolved. And as I said to a previous
Congressman, I hope everybody will be paid in full within the next
2 months.
Mr. COX. OK. Well, great. Thank you so much. And if we could
impress upon you about how necessary that is. And if need be,
could you provide the Committee with detailed information on
these project worksheets so that in fact we could follow up with you
if necessary?
Mr. ORTIZ. Gladly.
Mr. COX. Thank you so much. And, certainly, the question to go
out to both of you is—Mr. Ortiz and Mr. Rossi—have you seen or
can you imagine any lack of willingness for other contractors to
conduct emergency response work when future natural disasters
impact the island because of the situation that we found ourselves
in with subsequent Hurricanes Irma and Maria?
If contractors aren’t going to get paid, they are certainly going
to be less likely to be able to step up when they are needed.
Mr. ORTIZ. That is a very important point. And let me tell you
we have communication with them. They know what we are wait-
ing for, and they know we have moved forward with their
101

payments and all that. I foresee a good relationship with them
keeping the good bond down.
And let me tell you, we actually participated in the mutual aid
training for all utilities back in October in New York. And our
team was there with the other teams. So, we keep a good commu-
nication. And I foresee all of them willing to come on and help
Puerto Rico if needed and the same way in the other direction.
Mr. COX. Well, thanks so much, Mr. Ortiz. And I don’t know if
Mr. Rossi would like to chime in as well.
Mr. ROSSI. I would. I think that PREPA would find a way to con-
vince contractors to come in. I think the general problem we have
is not just with contractors in emergencies. It is in general just a
lack of trust and confidence in PREPA’s ability to execute, makes
everything more costly for PREPA and thus for consumers.
I think that is what my statement had to do with. And we need
a world class regulation along with world class LUMA and a world
class investment in renewable energy markets that means some-
thing to homes.
And I think that is the biggest challenge we face. It is just a
Puerto Rico risk, the PREPA risk would be very costly if we don’t
do something where congressional oversight, PREB, CDBG-DR
come together to fix that Puerto Rico risk that won’t be fixed for
many years, and that is my greatest concern.
Mr. COX. Great. Thank you so much. And the Committee
certainly stands ready, willing, and able to help you in any way
possible. And I yield. Thank you.
Ms. HAALAND. Thank you, Mr. Cox. And the Chair will recog-
nize—I will recognize myself for 5 minutes. And I will start with
Mr. Ortiz and Mr. Avilés.
Why is PREPA binding public funds and long-term natural gas
projects which is not a renewable energy source when the
Integrated Resource Plan has not been approved by the Puerto Rico
Energy Bureau and Act 17–2019 requires the integration of 100
percent renewables by 2050?
Mr. ORTIZ. If I may start—do you hear me?
Ms. HAALAND. Yes, we can hear you.
Mr. ORTIZ. OK. Thank you. Yes. Well, let me tell you why we
grow in the renewables and we are growing very fast really.
Nothing much has been done in the past many years, and today
we have 18,000 homeowners with detached rooftop solar good for
200 megawatts—but the perfect partner in this dance of growing
into renewables is a stable cheap system with batteries. As I said
before, we have three projects of batteries—battery farms in the
east of Puerto Rico and two in the north in the metropolitan area
with 480 megawatts.
But the thing here is that you cannot grow responsibly on renew-
ables unless you have a very stable system that would catch up all
the voids inherent to the renewable generation today. If you look
at the graph of the consumption in Puerto Rico, it has peaks.
And once you reach 8:30, 9 p.m. every night, you have a big drop
of renewable because you exhausted your batteries at that point.
So, you need something to catch up. And if you are talking about
bringing industrials or manufacturing to the island, certainly you
need a standardization of the voltage.
102

The short-term projects we have with natural gas, because let me
remind you that the natural gas, for example, in San Juan is a 5-
year project that you can extend in periods of 5 years all depending
on the need of injection of additional power due to the condition of
the system.
It all depends on how fast and how good the renewables behave.
Certainly, you need to fill the voids of the variability of the
renewables in the system. And that is why the natural gas is so
important.
Ms. HAALAND. Thank you. OK. Let me ask—is Mr. Avilés still
available? Mr. Avilés, did you want to respond in some way?
Mr. AVILÉS-DELIZ. Yes. I would like to add that in order to
achieve the renewable goals established in Act 17, we need some
kind of transition fuel. And I can say that gas at this moment is
much better than the system oil and efficiency petroleum gas. That
is why at some point we have to invest in gas in order to achieve
the renewable goals clearly established in Act 17. That is the
answer.
Ms. HAALAND. Thank you so much. I don’t have a whole lot of
time left—both gentlemen if you can answer jointly again. The
Federal coordinator for the reconstruction of Puerto Rico, Peter
Brown, recently expressed that nuclear energy is an option to
diversify Puerto Rico’s energy sources.
PREPA’s Integrated Resource Plan does not integrate nuclear
energy as an option. Will PREPA maintain this position in compli-
ance with Act 17–2019, which requires reaching a minimum of 40
percent renewable energy integration by 2025, 60 percent by 2040,
and 100 percent by 2050?
Mr. ORTIZ. If I may, about the nuclear generation, it is not a
technical problem. It is really a public policy problem. I don’t fore-
see any community in the world saying that they are for the
nuclear power. We could have the most advanced technology, very
safe, and all that. But with the myriad of events happening in the
past 4 years in the world, I don’t foresee that being pushed by any
public official. You can certainly say that this is technically ade-
quate, but it is very tough to sell to any community.
Ms. HAALAND. Thank you. Mr. Avilés, I am over time now. Do
you have anything to add just for a few seconds?
Mr. AVILÉS-DELIZ. Just like Mr. Ortiz already said, it is not a
technical issue. This is a policy issue. Right now, Act 17 clearly
states what the goals are. And nuclear energy is not there. But if
our legislature decides otherwise, we, PREB, have to follow it. That
is what I have to say about that.
Ms. HAALAND. Thank you all so much. Thank you for your time.
I thank the witnesses for their valuable testimony, and the
Members for their questions. The members of the Committee may
have some additional questions for the witnesses. And we will ask
you to respond to these in writing.
Under Committee Rule 3(o), members of the Committee must
submit witness questions within 3 business days following this
hearing. And the hearing record will be open for 10 business days
for these responses.
If there is no further business——
Miss GONZÁLEZ-COLÓN. Madam Chair.
103

Ms. HAALAND. Yes.
Miss GONZÁLEZ-COLÓN. Just to add something, Ms. Velázquez
made a question to Mr. Ortiz referring to documents that were sub-
mitted for the record. I am just asking the Committee to submit
those documents to Mr. Ortiz as well as the Ranking Member so
we can examine the documents, because there was no direct
reference of what it was.
Ms. HAALAND. Without objection, so ordered.
This Committee stands adjourned.
[Whereupon, at 5:32 p.m., the Committee was adjourned.]

[ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]

PREPARED STATEMENT OF THE HON. ROB BISHOP, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF UTAH

Since Hurricanes Irma and Maria devastated the island 3 years ago, the Puerto
Rico Electric Power Authority (PREPA) has struggled greatly with maintaining a
power grid with any semblance of reliability.
Even before those two historically devastating hurricanes blew through the island,
PREPA was a utility that could barely manage to keep its fragile grid maintained.
Decades of mismanagement of PREPA’s assets left the grid in a state of disrepair,
standing no match for the storms that eventually left the island in darkness 3 years
ago.
Fast forward to today, and PREPA still faces a momentous uphill climb toward
strengthening their infrastructure. Recent earthquakes in the beginning of the year
and now the effects of the COVID-19 pandemic have further increased the stress
on PREPA’s infrastructure needs.
Under the PROMESA law that this Committee passed, PREPA has the tools it
needs to restructure its crushing $9 billion debt, but that process still continues to
advance at a snail’s pace through the courts. So, today we’re here to discuss the
next steps PREPA has taken to address their endless tasks of rebuilding their grid
more resilient and more reliable for the citizens of the island that depend on it.
The recent news of PREPA striking a deal with LUMA to semi-privatize the T&D
side of operations, but not the power generation side of the grid, gives some of us
here in Congress hope that actual strides are being taken by leaders on the island
toward modernizing their power grid.
I am hopeful that more substantial progress to strengthen the power grid is forth-
coming in the near future, as increased Federal funding granted by Congress has
provided a lifeline to PREPA. However, I must caution folks not to squander this
opportunity to correct decades of mismanagement and poor decision making at the
utility by foolishly engaging in rash boondoggles that leave the grid under-prepared
to face future crippling disasters, whether they’re of the natural or financial kind.
It is my opinion, I assume the same goes for any rational being, that PREPA
needs to continue to pursue conversion of their power generation assets off of burn-
ing inefficient Venezuelan bunker fuel and onto clean and efficient liquified natural
gas. This isn’t to say there may be a place for expanding renewables within the gen-
eration side of the grid, but let’s let markets work and what’s best for Puerto Rico’s
near- and long-term recovery guide the way.
I look forward to hearing from the witnesses today on these important issues on
how PREPA may continue to make the necessary strides forward to providing the
clean, efficient, and cost saving energy the people of Puerto Rico have been starved
of for years now.
I also want to thank the Resident Commissioner for her continued leadership on
these matters. She works tirelessly for her constituents and it is a pleasure to have
her guidance and wisdom here on this Committee.
104

[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE
COMMITTEE’S OFFICIAL FILES]

— Testimony of Tom Sanzillo, Director of Finance, Institute for
Energy Economics and Financial Analysis (IEEFA), dated
August 4, 2020.
— El Nuevo Dı́a Article titled, ‘‘LUMA seeks to train thousands
of line guards,’’ dated July 21, 2020.
— Utility Dive Article titled, ‘‘PREPA CEO sees bright future for
embattled utility, but funding, grid mod challenges remain,’’
dated July 20, 2020.
— Quanta Talking Points re Union Obligations under PRLRA
and NLRA.

Submissions for the Record by Rep. Velázquez
— U.S. District Court of Puerto Rico, Case: 17-03283-LTS, Doc#
8010, re: FOMB and PREPA, dated July 15, 2019.
— U.S. Bankruptcy Court, Northern District of California, San
Francisco Division, Case 19-30088, Doc# 5924, re: PG&E Corp.
and Pacific Gas and Electric Company, dated March 10, 2020.
— Merger Release—SoftBank Group Completes Acquisition of
Fortress Investment Group, dated December 27, 2017.
— U.S. Bankruptcy Court, Southern District of Texas, Houston
Division, Case 18-35672, Doc# 2120, re: Westmoreland Coal
Company, dated July 3, 2019.
Submissions for the Record by Rep. Bishop
— Letter from Wayne Stensby, LUMA Energy President and
CEO, to Chair Grijalva and Rep. Bishop, dated July 22, 2020.

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