From the CPI
Hiring a law firm that charges up to $ 1,245 per hour. The outsourcing of foreign companies such as Enllumena, Colorado, which has billed up to $ 1.3 million in a single month to make plans for the transformation of energy system without having gone through a competitive process. This is the first six bills that LUMA, the company that will manage the transmission and distribution network since June, has already sent to the Electricity Authority (AEE).
The public corporation does not have the capacity to review bills in a transparent manner, said Robert Poe, a member of the EEA Governing Board, at a meeting of this body on December 16, 2020. His critique it arises because so far the Authority for Public-Private Partnerships (AAPP), which oversees the contract with LUMA, has not allowed it to analyze all of the documents to make sure the expenses are justified.
Similar statements were made by the consumer representative before the Governing Board, the engineer Tomàs Torres. He complained that, in addition to its fixed monthly fee of $ 5 million, LUMA charges an average of $ 7.8 million each month in reimbursable expenses, not including the original record of hours worked, purchase receipts and other necessary information. for evaluation.
The hiring of the Canadian-American consortium LUMA is the outcome of a privatization process that began during the administration of former governor Ricardo Rosselló, after Hurricane Maria destroyed the power grid and then the history of administrative failure of the broken public corporation. LUMA chief executive Wayne Stensby and AP executive director Fermín Fontanes have told the Center for Investigative Journalism (CPI) that this public-private partnership will achieve savings in the management of the electricity system and will result in businesses with local companies, because they also benefit from economic activity related to transformation and recovery. But in the first six months of boot, this has not been the reality, as evidenced in the bills.
Of the twenty companies that have invoiced the most to LUMA in this period, only one is from Puerto Rico, the insurance broker Vidal & Rodríguez, according to an analysis made by the CPI.
In September, when LUMA billed the largest amount of reimbursable expenses (more than $ 5 million), local companies were hired primarily for services that resulted in low turnover compared to foreign ones. For example, the highest bills from local businesses were those from insurer Triple-S, with $ 26,000, and those from human resources consultancy BMA Group, with $ 21,538.
“At this early stage, LUMA is coming to Puerto Rico to lift its operation. That’s why you’re seeing U.S. companies working with them,” Fontanes justified. He alleged that when the transition is complete and the APP begins administering the network in June, it would be when local businesses will be hired. “Luma is not going to take the money and he is going to do it all,” he stated.
In addition to the low participation so far of local companies, there are the high costs of the services of consultants and lawyers. Francisco Cerezo, an executive at the multinational firm DLA Piper, which has given legal and administrative representation to LUMA, billed last September $ 47,475 for 45 hours of service: $ 1,055 per hour. Hariett Lipkin, a partner in the same company, billed $ 9,043 for 7.3 hours of work (less than a workday), earning between $ 1,200 and $ 1,245 an hour. This fare “looks gigantic but is normal,” as that is “what this type of buffet charges,” Fontanes added.
However, that figure is far more than what, for example, the partners of Proskauer Rose ($ 789 an hour), the U.S. law firm hired by the Fiscal Control Board to lead in Puerto Bankruptcy cases, earn. Rico.
Still no proof of savings
In the breakdowns of the reimbursable costs and expenses of the first six months of the company’s services, Enllumena LLC appears as the subcontractor that has invoiced the most to LUMA. This professional engineering services company is based in Denver, Colorado. Registered to do business in Puerto Rico in August 2020, Enllumena has billed $ 4,700,000 between July and December 2020 to make infrastructure, technology and process plans, vegetation management, customer service, and transition network usage.
“So far there is no accountability for LUMA’s savings,” said Cathy Kunkel, an analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), who since 2015 has studied and published reports on bankruptcy and the electrical system of the AEE. “One issue of concern is whether LUMA will be heavily dependent on short-term contractors, on companies that have no institutional knowledge of Puerto Rico.”
The company’s entry comes as the EEA seeks a way out of a nearly $ 18 billion accumulated debt on bonds, pensions, fuel purchases and accounts payable, among others, and the restructuring process. it is in a kind of indefinite limbo.
The CPI asked Fontanes why there was no open competitive process before the award of LUMA service contracts 一 an issue that came to light at the EEA Governing Board meeting in December一. “They [LUMA] they are bringing in people who they understand are the best, “Fontanes said.” It’s the recipe they sold us on how they were going to do it … We have to rely on their expertise, “he noted.
LUMA’s invoices have a fixed part and a variable part, which includes subcontracted service and goods companies. In this, there are items of unique technology products with recognition in the market, such as the application of human resource management Workday ($ 985,428 billed so far), used by large companies or even public universities. There are also services from New York-based administrative consulting firm Alvarez & Marsal Corporate Performance Improvement ($ 1.4 million billed so far). American Relocation Connections of Virginia, which provides removal services for LUMA executives and employees, has a turnover of $ 792,581.
There are expenses charged by the same companies that make up the LUMA consortium, such as the Canadian ATCO and the Texan Quanta, for transfers of executives, tickets and hotels, among others.
Robert Poe, a member of the EEA Governing Board since Roussillon appointed him in 2018, argued that there is a bureaucracy created by AAPP consultants working with bills, which “has made it virtually impossible for us to see the variable billing, ”he indicated at the meeting. “Which is crazy because laws 120 and 17 require us to audit things to meet our financial goals. Then we received outrageous requests from AAPP consultants to ask permission two days in advance. We can’t take pictures, we can’t make copies, “he said.
He also mentioned that LUMA has been requesting contracts for the purchase of printers and customer service applications to be billed as EEA expenses and signed by its CEO, Efrán Parets. Poe indicated that he opposes such expenses that do not follow the purchasing process that the EEA does have to comply with, so they will apply for a waiver from the Fiscal Control Board. Poe indicated that this action is essential to avoid a claim or “bayonet wound” from the Fiscal Control Board, which since 2018 has been demanding open procurement processes from the public corporation.
The House of Representatives and the Senate of Puerto Rico presented resolutions in early January to investigate the consortium, and Governor Pedro Pierluisi Urrutia, created a government committee to review this contract with the goal of amending it if necessary. The first meeting will be on February 4 and this will establish the work plan, said a spokeswoman for the Fortress.
Pierluisi met on January 27 with Angel Figueroa Jaramillo, president of the Union of Electricity and Irrigation Workers (UTIER) and his legal representative, lawyer Rolando Emmanuelli, who have reiterated their request that it be canceled. the agreement.
Luma argued in a statement that the contract is final, binding and enforceable for the parties, following its ratification by the EEA Governing Board and the approval of the Fiscal Control Board, the Energy Negotiator. of Puerto Rico (regulator of the energy system) and the former governor of Puerto Rico, Wanda Vázquez.
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This note is published in Metro thanks to an alliance with the Center for Investigative Journalism. You can access the original version HERE