As part of a commitment to balance systemwide improvements and affordability, LUMA is proposing two investment options for the island’s transmission and distribution system with every penny associated with the rate change being invested back into Puerto Rico & the electric system

Proposed investment will result in reduced outages and millions of customer interruption minutes prevented

Without these critical investments, LUMA forecasts that customers could experience a 15.7% increase in outages over the next three years because of the extremely fragile state of the grid due to decades of mismanagement and underfunding

San Juan, Puerto Rico, July 3, 2025 – As part of a strong commitment to improve critical areas of reliability, grid resiliency, emergency preparedness and response, and customer service, LUMA has submitted two comprehensive investment plans at the request of the Puerto Rico Energy Bureau (PREB). The strategic investment in the island’s transmission and distribution (T&D) system, if approved, would represent the largest investment for the energy system in decades and is designed to address the negative effects of decades of underinvestment and operational neglect from the prior operator. The referenced “optimal” and “constrained” investment plans would address the urgent need to invest in Puerto Rico’s energy future, and also represent one of the first proposed rate changes by LUMA since 2021 and the first for Puerto Rico since 2017.

“Delivering on our commitment to providing Puerto Rico’s 1.5 million electric customers with the more reliable, more resilient and customer-focused energy service they expect and deserve requires significant investment as no utility, no matter where in the world they operate, can achieve a stable and reliable electric system without sustained investments in critical infrastructure. To be clear, LUMA does not financially benefit from these investment plans – every penny goes to what is most important and our highest priority – our customers and Puerto Rico,” said Juan Saca, LUMA President and Chief Executive Officer.

Impacts of Islandwide Investment

As part of its commitment to transparency, LUMA reaffirmed the fact that it does not financially benefit from the proposed rate case, and that every penny of the additional investment for the T&D system will be spent on strengthening Puerto Rico’s energy future. In fact, each proposed investment level, whether the optimal or constrained level, would provide much-needed funds to improve daily operations, while also addressing key areas of importance for customers, and ensuring the maximum impact of federal funding.

“The dire effects of the long history of neglect are ongoing and did not end in 2021 when LUMA took over operation of the system. Even while other North American utilities have steadily increased investments to address the challenges facing their electric systems, investment in Puerto Rico’s electric grid has remained flat for nearly a decade, which, combined with the prior operator’s unresolved 10-year, $10 billion bankruptcy, makes it impossible to take all the actions necessary to rebuild the island’s energy system and improve service for customers. Respectfully, it is now up to the PREB, not LUMA, to ensure that the necessary funding is available for the strategic, responsible investments in Puerto Rico that customers care most about,” Saca stated.

Proposed Investment Plan: Two Budgetary Options

At the request of the PREB, LUMA submitted two investment plan options related solely to T&D system operations under the current Operating Services Agreement in its filing for approval – an “Optimal Budget” and a “Constrained Budget.”

The Optimal Budget was designed in response to the PREB’s request to submit an investment option that fully encompasses the total T&D system needs required to dramatically improve reliability and resiliency and help achieve the PREB’s reliability performance targets within 5 years. The Optimal Budget represents the funding level needed to make all necessary improvements across the T&D system, without sacrificing some improvements for others, and to proactively maintain the system, reduce outages, increase and improve emergency preparedness and response, and improve overall customer service.

In comparison, the Constrained Budget focuses on select T&D improvements implemented over a longer period of time in order to reduce the impact on customer rates. Under the Constrained Budget, reliability performance targets would need to be revised to reflect the impact of limited funds on LUMA’s ability to make lasting improvements to the grid. The PREB will conduct a thorough review of the two budgetary options and will ultimately decide on any rate change.

Optimal Budget: A Bold Investment by Puerto Rico, for Puerto Rico

The Optimal Budget represents approximately $3.45 billion in new investments for Puerto Rico’s T&D system from 2025-2028 that will help LUMA fund critical service improvements. In total, the Optimal Budget would have a significant and positive impact on the performance of the energy system including: (1) reducing the duration of outages experienced by customers by 14%; (2) reducing outage frequency by 12%; and (3) preventing 240 million customer interruption minutes by the end of 2028. Failure to approve this investment would increase the frequency and duration of outages by 15.7% over the next three years, and hinder LUMA’s efforts to rebuild the failing grid. Among the key actions outlined in the Optimal Budget include:

Strengthening system reliability by:

• Clearing 4,000 miles of vegetation from powerlines each year to reduce outages,
• Integrating new line extensions to connect new customers’ load and increase capacity, and
• Installing 26,000+ additional distribution automation devices, as well as other new technology like intelligent reclosers and fault indicators.

Enhancing resiliency against storms by:

• Deploying substation infrastructure, including transformers and circuit breakers, to support emergency and disaster response activities,
• Installing 11,100+ utility poles that can better withstand hurricane-class winds, and
• Reconstructing lines and circuits and performing circuit voltage conversions.

Increasing emergency preparedness and response efforts and reducing LUMA’s response time to service interruptions by up to 20%, by:

• Hiring 549 additional field workers,
• Purchasing 450 new fleet vehicles, and
• Upgrading IT systems to improve first responder and emergency response communication.

Improving customer experience and service by:

• Supporting new technology initiatives, including the development of more accurate restoration time estimates and cybersecurity programs,
• Expanding customer resources, including a new Customer Connections Program and additional self-service options, and
• Upgrading to a cloud-based customer billing application to enhance security and reduce data storage expenses.

Constrained Budget: A Baseline Investment

The Constrained Budget is a more targeted plan that would represent approximately $2.30 billion in new investments for Puerto Rico’s T&D system from 2025-2028. This level of investment would fund the most critical service improvements that will reduce outage duration by 9%, reduce outage frequency by 8%, and prevent 186 million customer interruption minutes by the end of 2028. However, while the Constrained Budget would prevent the grid from degrading further, LUMA would be unable to adhere to the accelerated pace needed to repair, restore, and rebuild the electric system, and greater investments would still be needed. Furthermore, the Constrained Budget would require the PREB to revise the system’s reliability performance targets to reflect the reduced investment figure and its impact on customers’ electric service.

As part of the filing, LUMA’s operational analysis also make clear that if both investment plan options are denied, it is forecasted that, even with FEMA funding, grid reliability will worsen, and the average customer could experience close to seven outages per year with an average duration as high as 20 hours without power, almost three times the duration of the second worst utility in the U.S.

Proposed Customer Rate Impact: Less Than 63 Cents a Day

To fund the proposed T&D system improvements, LUMA’s proposed plan would increase the average monthly residential bill by $19.16, or less than 63 cents a day. Rate changes would come into effect starting in September or October 2025, if approved by the PREB.

“These investment plans are not about LUMA: this is about investing in a better energy future for Puerto Ricans and Puerto Rico. To be clear, LUMA, nor our parent companies, profit from these investments. Every cent from customer rates gets invested back into Puerto Rico’s energy system. That’s why we have proposed a fiscally responsible plan that provides the PREB with options that contribute to the ideal energy future we must build together. We believe that this level of investment, along with the critical investments by FEMA, will help end the era of frustration that has plagued Puerto Rico for far too long, and will reverse a historical legacy of underfunding and financial and operational neglect,” said Saca.

Non-LUMA Budget Requests

The PREB has also required that LUMA file requests for funding on behalf of GeneraPR for its generation operations and PREPA as part of this filing.

Building on a Record of Progress

Critical investments to strengthen the grid are needed immediately to build on LUMA’s record of systemwide improvement and modernization progress made to date, which includes:

• Installing over 10,360 grid automation devices on critical infrastructure to minimize the size and scope of outages, preventing more than 312,000,000 customer interruption minutes,
• Replacing more than 30,400 utility poles to strengthen the backbone of the transmission and distribution system,
• Starting or completing 77 substation upgrade or reconstruction projects to improve service reliability and resiliency,
• Clearing hazardous vegetation from over 6,340 miles of powerlines to improve grid reliability,
• Installing over 178,000 streetlights to make communities safer and more energy efficient, and
• Helping to connect more than 119,000 rooftop solar customers to provide clean renewable energy to the grid.

Prioritizing Customer Assistance

As critical as this investment plan is, LUMA understands the impact changes in rates can have on customers and remains committed to affordability and supporting those who may be concerned about paying their electric bills. To date, LUMA has supported more than $158 million in critical financial assistance for customers in need, and its team of experts is ready to work with customers to find a solution that best fits their budget. Payment plans, government assistance programs and subsidized rates are available to eligible customers, and LUMA has already enrolled over 27,000 customers in payment plans. Customers can learn more about available financial assistance resources by visiting lumapr.com, calling 1-844-888-LUMA (5862) or visiting any of LUMA’s customer service centers.

About LUMA

LUMA is a Puerto Rican company that, since June 1, 2021, operates and manages the electric power transmission and distribution system in Puerto Rico. LUMA is a company driven by a mission to transform the electrical transmission and distribution system to provide all Puerto Ricans with the reliable, resilient, cleaner, and affordable electrical service they deserve. As a customer-centric company, LUMA’s entire workforce of over 4,500 employees is focused on safely delivering an exceptional customer service experience to its 1.5 million customers.