GET THE FACTS: LUMA’S LATEST
We believe informed customers are empowered customers, and the information below is designed to provide the facts about our work and the electric grid.
About 18 percent of residential customers’ monthly electricity bills supports LUMA’s operation and management expenses, the rest of LUMA’s budget is funded through a combination of Federal and local funds and is defined in LUMA’s Operating and Maintenance Agreement (OMA) with the Puerto Rico Public-Private Partnerships Authority (P3A).
Major grid reconstruction projects are funded primarily through Federal grants awarded by FEMA and the U.S. Department of Energy.
No. The funding LUMA has received from PREPA does not cover all of the costs needed to operate Puerto Rico’s electric system. The budget approved by the Puerto Rico Electric Board (PREB) requires more funding than what is provided by PREPA. Here are the facts:
This funding is essential to ensure that we are providing the people of Puerto Rico with the electric system they need and deserve.
This is incorrect. LUMA reports all outage expenses to the P3A and will continue to do so. Under the Operating and Maintenance Agreement (OMA), LUMA is not required to budget for major outage expenses. Instead, the agreement specifies that the electric grid owner, PREPA, is responsible for maintaining a dedicated account to cover these expenses, with a required minimum balance of $30 million.
Effective October 14, 2025, we have reversed our decision to make updates to the after-hours event response criteria for On Call Crew activations. There will be no change in how we have traditionally operated when it comes to after-hours calls.
While the issue of underfunding remains, we made this determination with the hope and expectation that in the next ninety days we will be able to collaborate with the Puerto Rican government to identify a tangible solution to the many challenges the Island’s energy system faces, including the chronic underfunding of system operations. We remain committed the people of Puerto Rico and we look forward to a long-term partnership with the Government of Puerto Rico.
It is important to note that the funds for emergency response and outage restoration come directly from customer bills. The funds go directly to PREPA. LUMA cannot access or use those funds without PREPA’s approval and from July 2024 to July 2025, PREPA has underfunded system operations by 70%.
In July 2025, the Puerto Rico Public-Private Partnership Authority (P3A) wrongfully accused LUMA of the deficiencies in the island’s electrical grid. The issues highlighted have been addressed by LUMA on various occasions.
The P3A has also incorrectly characterized the alleged disputes as technical in nature. LUMA disagrees and believes these issues should be resolved through mediation, which is why we presented the matter before the Federal Court. Instead, the P3A has shown more interest in meeting a politically motivated timeline rather than seeking a real resolution through the proper channels as required in the OMA.
LUMA is committed to full transparency of the facts and has published all the letters addressing these matters on its website, which can be found here.
LUMA took over transmission and distribution (T&D) system operations in 2021 after decades of neglect and mismanagement by PREPA. Despite the fact that PREPA has not allocated sufficient funds for capital improvements, LUMA has committed to stabilizing Puerto Rico’s long-neglected electrical grid, and we put plans in place to make significant improvements, including:
LUMA is a Puerto Rican company, and the large majority of our employees call Puerto Rico home. We live and work here and have shared interests with all Puerto Ricans. We have always stated our mission is to transform the electrical transmission and distribution system on the island so that we can all enjoy reliable service.
We remain hopeful that we will be able to collaborate with he Government of Puerto Rico to identify tangible solutions to the many challenges faced by the Island’s energy system.
We are primarily concerned with PREPA’s continued delays in the releasing of previously allocated funds. This has hindered our efforts to make the necessary improvements to the electric grid and will result in higher costs to Puerto Ricans in the long run.
PREPA, which is dealing with a 10-year, $10-billion bankruptcy, has only provided funds to cover 30% of the requirements to stabilize the grid. This is unsustainable and needs to be addressed to operate and maintain the Puerto Rico Transmission and Distribution system.
In addition, the budget needed for unplanned outages, for which PREPA is required to have a running balance of $30 million to cover emergencies like hurricanes, is $200 million in deficit. PREPA’s reluctance to provide adequate funding has created critical liquidity restraints that delay our work on all fronts.
LUMA remains committed to stabilizing Puerto Rico’s long neglected electrical system. We are confident that we have the right people with the required expertise to solve the system’s complex challenges due to decades of mismanagement and neglect under PREPA. Any effort to stall LUMA’s role would adversely impact the progress in restoring the energy grid and would be detrimental – as well as costly – to the people of Puerto Rico.
Puerto Rico’s Department of Consumer Affairs (DACO) filed a frivolous lawsuit against LUMA in July 2025, attempting to challenge a waiver in our contract that indemnifies LUMA from liability for damages to customers’ appliances resulting from power outages. These liability waivers are standard for electric utilities across the United States and the world. Another important consideration is that customers across Puerto Rico continue to experience voltage fluctuations due to PREPA’s decades of neglecting the electrical system. Power Surges are sudden rises in voltage that last for a short period of time – these surges are higher than the average current in your electrical system and can be damaging to electronics and appliances in your home. We strongly recommend that customers use surge protectors to guard against these power interruptions.
DACO’s lawsuit is misguided and financially irresponsible. While we understand our customers’ frustration with this issue, we contend that DACO should be transparent and let the people of Puerto Rico know that their action will lead to increased costs for electrical service.
PREPA, The Puerto Rico Electric Power Authority (PREPA) is a government-owned utility which owns the energy infrastructure on the island. This includes transmission lines, power plants, and substations. They managed the entire electric system from 1941 until 2021 and were responsible for the generation, transmission, and distribution of electricity in Puerto Rico. After the system declared bankruptcy, LUMA was awarded a contract to operate the transmission and distribution system. PREPA retained oversight of grid modernization, legacy debt and pensions, and long-term generation planning.
LUMA Energy took over electric transmission and distribution operations in Puerto Rico in 2021. The company serves as an agent to PREPA to manage the electric grid infrastructure, billing and customer service, grid repair and vegetation control, and dispatching electricity, to name a few.
P3A, The Puerto Rico Public-Private Partnerships Authority, is a government entity established in 2009 by Puerto Rico’s Public-Private Partnership Act (Act 29-2009) to promote, evaluate, and oversee public-private partnerships across various sectors, including energy. P3A led the competitive process that resulted in LUMA Energy’s 2021 concession to manage transmission and distribution, and it continues to monitor LUMA’s performance, budgets, compliance, and labor practices under the contract. P3A also plays a role in the generation side by managing concession agreements—such as the contract with Genera PR for power plant operations—and allocating certain funds among the entities responsible for generation, transmission, and distribution.
While Genera PR is the main provider of electrical generation, there are several companies supplying electrical generation.
PREB, The Puerto Rico Energy Bureau is an independent and specialized public entity created by Act 57-2014 to regulate and supervise the electrical industry, to oversee adjudicative cases and disputes and to enforce the public energy policy of the Government of Puerto Rico. The PREB works as a collegial forum that consists of one Chairman, Edison Avilés-Deliz, P.E., Esq., and four Associated Commissioners.
It is estimated that PREPA’s electricity grid is nearly 40 years older than the average grid in the United States and is degrading faster than it can be repaired. We have continually flagged the need for PREPA to address the power grid’s financial liquidity issues to stabilize the grid and reduce the possibility of outages. While LUMA has been working every day to make improvements and restore energy during outages with the resources available, the grid is in serious need of greater and continued investment from PREPA.
We remain hopeful that we will be able to collaborate with the Government of Puerto Rico to identify tangible solutions to the many challenges facing Puerto Rico’s energy system.
As part of LUMA’s commitment to Puerto Rico, we will always work to respond as quickly as possible to any emergency, including hurricanes. We count on experienced and trained professionals, a large inventory of supplies, and coordination with other agencies in the event of a major storm. LUMA’s emergency fund to ensure rapid response to major events, such as hurricanes and earthquakes, is required to maintain a $30 million balance. Yet it is currently $200 million in deficit due to PREPA’s failure to replenish the funds following previous storms. In late July 2025, the PREB approved $15 million in emergency reserves to be shared across LUMA, Genera, and PREPA for 2025 – drastically short of what is needed and leaving Puerto Rico dangerously unprepared for future emergencies. There is an urgent need for a fully funded emergency reserve to invest in Puerto Rico’s resilience and readiness for future disasters.
Since LUMA began operations in 2021, we have not increased rates. Any rate increases that customers have experienced are mainly tied to the purchase of fuel and energy, which make up about 75% of customer bills. LUMA cannot modify rates or bill charges. Only the Puerto Rico Energy Bureau (PREB) determines what goes into customers’ monthly bills.
The PREB requires a rate review every three years to ensure the electric system has the necessary funds to operate reliably and safely. The last rate review in Puerto Rico took place in 2017, and before that in 1989—meaning that for decades, rates were not updated to reflect the system’s actual needs.
LUMA has proposed a rate adjustment to finance critical investments aimed at reducing outages, improving resilience to weather events, and strengthening the system’s response capacity.
While the PREB conducts its rate review, it has established a provisional rate aimed at addressing financial challenges due to rising fuel costs and disruptions in the natural gas supply.
As of September 2025, and based on the PREB’s decision, customers have two additional fees in their electric bill – one to help fund pensions for former PREPA employees (1.9 cents per kWh) and a 1.4 cents per kWh provisional rate increase.
LUMA will not benefit financially from the provisional rate increase. We operate a system that inherited the bankruptcy of the former electric utility, PREPA, which holds $10 billion in debt and is unable to access capital markets. Therefore, every cent comes solely from the regulated rate and federal funding, and all of it is reinvested directly back into Puerto Rico and, most importantly, back into our customers.
Customer payments are deposited directly into PREPA’s accounts to later be distributed to the various entities responsible for the generation, transmission operation and maintenance of the electric grid. All the funds LUMA receives are reinvested in the generation, transmission and distribution system. From October – December 2025, customers will have an 8% increase in their electric bill, based on a fuel cost adjustment approved by the PREB to pay for fuel used by generators like Genera PR.
This adjustment, approved by the PREB, is solely the result of the increase in fuel costs in the global energy market. As part of the regulatory process, these factors are reviewed every three months to accurately reflect market conditions.
This adjustment is not associated with LUMA as the system operator. As established by the PREB, LUMA is required to include this cost in customer bills. It is important to note that LUMA does not control or benefit from the fuel cost adjustment, as it is directly related to the actual costs of energy generation in the market.
We anticipate numerous benefits for the grid, including strengthening system reliability by:
This investment will also enhance resiliency against storms by:
It will increase emergency preparedness and response efforts and reduce LUMA’s response time to service interruptions by up to 20%, by:
Additionally, this will improve customer experience and service by: