LO QUE SABEMOS DEL CONTRATO DE LUMA – (Aprobado por la JRF) John Mudd

LO QUE SABEMOS DEL CONTRATO DE LUMA

by muddlaw

Esto es un brevísimo resumen de lo más sobresaliente del Contrato de LUMA. NO ES un análisis del mismo.

La AEE va a dejar de existir. Se van a crear GenCo, para se la dueña de los contratos de generación y las plantas y GridCo, que va a ser la dueña de la distribución y transmisión.

Los empleados de GridCo van a ser entrevistados y se contratarán algunos, pero no hay obligación de contratar ni la mayoría ni sustancialmente la mayoría de los empleados.

Aunque Luma Energy, LLC y Luma Energy Sevco, LLC estarán encargadas de la trasmisión y distribución, habrá un contrato con GenCo que puede incluir lo siguiente:

1. Administrative
2. Human Resources
3. Recruiting
4. Labor Relations

iii. Payroll and Benefits Administration

2. Regulatory and Public Affairs
3. File, execute and prosecute applications with Governmental

Authorities for the acquisition, construction, ownership and

operation of power generation facilities

1. Provide or cause to be provided services for governmental and

public affairs, including, but not limited to press releases,

community events, contacts with county, state and federal

officials, and communications with landowners

3. Finance and Accounting
4. Internal Audit and Tax
5. Risk Management (including financial risk management and

enterprise risk management)

1. Treasury and Controller
2. Insurance Renewals and Claims
3. Loss Control Inspections
4. Vendor payments and Contract Administration
5. Insurance
6. Information Technology
7. Communications
8. Hardware/Software/Licensing Support
9. Cyber-Security
10. Legal
11. Bookkeeping
12. Environmental
13. Permitting and Reporting
14. Mitigation
15. Compliance
16. Procurement and Supply Chain
17. Outage Support
18. Fleet Vehicle Services
19. Capital Improvements Analysis and Determination
20. Real Estate
21. Bidding/ Selling Property
22. Lease Management
23. Portfolio Optimization
24. Facilities
25. Facilities and Property Administration/ Management/

Maintenance

1. Food / Mail Services
2. Physical Security

Todo eso lo paga GenCo a Luma Energy, LLC y Luma Energy Sevco, LLC y se determinará cuando se haga el contrato. Al estar probablemente envueltas en todo esto, Luma Energy, LLC y Luma Energy Sevco, LLC estarán a cargo no solamente de la transmisión y distribución, si no que tendrán mucha influencia en la generación. Este contrato será por tres años, que es el tiempo que se entiende tardará en vender la transmisión o retirar las plantas existentes o ambas. La pregunta inarticulada es si retiras plantas, quien va a construir las próximas y quien las va a pagar.

El contrato especifica que no se podrá cobrar como gasto lo siguiente:

1. Wages, salaries, bonuses, employer contributions to pension and employee medical plans,

any mandatory employment related insurance and taxes, vacation, sick leaves and other mandatory leaves with pay, overtime compensation and associated benefits and other post-employment benefits incurred in connection with the following roles (or any substantially similar role or position): (i) Chief Executive Officer, (ii) Chief Financial Officer, (iii) Head of Human Resources, (iv) Head of Capital Programs, (v) Head of Information Technology and (vi) Head of Customer Service.

2. Establishment and maintenance of a ManagementCo Board of Directors to provide strategy

and oversight.

3. Costs incurred with any third party advisors hired by ManagementCo for the purposes of

fulfilling ManagementCo’s responsibilities set forth in this Agreement.

4. Any costs relating to the Puerto Rico Lineworkers College.
5. Administration of ManagementCo, including bookkeeping, contract administration,

filings, financial / operational audits, etc.

Se desprende que el resto de la empleomanía será un gasto pago por GridCo, la dueña de la transmisión y distribución y saldrá de la tarifa que pagamos.  De hecho, en el contrato, pág.. 198 y 211 del PDF, se ve PREB rate order filing y esto quiere decir que ya esta planeado el aumento de tarifa.

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WANDA STRIKES BACK

”All politics are local.” Thomas “Tip” O’Neill

For several weeks now, the Board has admonished the  Commonwealth stating that some of the laws it has approved violate  PROMESA in some way. It also informs the Commonwealth that these laws are not in effect. Although the Commonwealth knows that pursuant to PROMESA and Judge Swain’s decision of April 15, 2020 on Law 29, the Board must go to the Federal District Court in order to invalidate any law, on June 12, 2020, it filed not one but SIX complaints against the agency. In essence, the six complaints argue that the  Board’s actions are  “unreasonable from a public policy standpoint” but if not checked, “the  people of Puerto Rico will be disenfranchised because their local elected Government will be stripped of its policy making powers.” Although they are six complaints having to do with six different local laws, the legal argument is the same; the Commonwealth explained in compliance with PROMESA section 204 why these laws did not “substantially inconsistent with the fiscal plan.” Obviously, the Board did not agree.

What will happen now? After the proper briefing, the Court will likely dismiss these cases, probably sometime after August 9. In the law 29 case, decided on April 15, 2020, Judge Swain discussed the process for the certifications by the Commonwealth of laws that are not inconsistent with the Fiscal Plan. She decided that the Board’s decision was reviewable but that the standard of review is to be the deferential “arbitrary and capricious” standard used to review federal agencies’ interpretation of its own laws. PROMESA does not define what evidence is sufficient for the Board to be convinced that a particular law is not “substantially inconsistent with the Fiscal Plan” and she will give great deference to the Board’s interpretation. Since I was not privy to the evidence the Commonwealth presented to the Board, I cannot comment on it, but it seems likely Swain will side with the Board. Moreover, we must remember that in the Aurelius SCOTUS decision, Judge Breyer stated at page 17 “[i]n short, the Board possesses considerable power—in­cluding the authority to substitute its own judgment for the considered judgment of the Governor and other elected offi­cials.” Since that is precisely what the Board is  doing here, likelihood of success for the Commonwealth is not high. If so, why file not one but six complaints? I will explain.

I have the highest regard for Peter Friedman, the  Commonwealth’s attorney, who successfully opposed the appointment of Mr. Zamot as CEO of PREPA. He, as all attorneys, however, is bound by his client’s desires and as long as the proper warnings are issued, it is totally ethical to continue with a case that is not likely to succeed. The Governor’s motivations, however, are quite different. She has been a petty and supercilious politician all of her career in the Government. She, as all PR politicians, believe that the voter wants them to oppose the Board and since in the past she had been quoted as cooperating, this is, in her view, a necessary change. Also, the challenged laws are populistic in nature and she wants to be able to claim she tried her utmost to have them put into effect, but “the evil Board” prevented her. Since Judge Swain is not likely to decide the issues before August 9, the day of the PNP primaries, she can claim the high ground against Pedro Pierluisi who, irrespective of what he says, is viewed as pro-Board and is (or was) related to one of its members. Also, if she were to win the PNP nomination, even if Judge Swain dismisses the complaints before the November election, she will appeal and still claim the high ground.

The sad part of this is that the Puertorrican taxpayer will pay the Commonwealth and the Board’s lawyers in these SIX CASES, money better put to use in other, more important endeavors. But that is the way the Puertorrican politicians operate.

That is why we are in Bankruptcy.

Let’s see what happens.