A union for the Puerto Rico Electric Power Authority filed a legal challenge on Tuesday to block the authority’s planned privatization but observers say it has little chance of success.
The Union of Electric Industry and Irrigation Workers (UTIER for its Spanish initials) filed the adversary proceeding in the authority’s bankruptcy proceedings in the United States District Court for Puerto Rico. Adversary proceedings are like law suits within the Puerto Rico debt bankruptcies. UTIER President Ángel Figueroa Jaramillo and four others connected to UTIER also filed the suit.
In June the Puerto Rico Public-Private Partnership Authority announced a deal for LUMA Energy to take over PREPA’s transmission and distribution system. From then to July 1 of this year LUMA is supposed to lay the groundwork for the actual take over.
The Puerto Rico Oversight Board and the local government favor the LUMA privatization and plan for it as part of the restructuring of the authority’s $9 billion of debt.
Last summer Puerto Rico’s Energy Bureau rejected a challenge to the take over. In response UTIER filed an appeal with Puerto Rico’s Court of Appeals. That court rejected the appeal in the fall.
Compared to the Energy Bureau case, Puerto Rico Attorney John Mudd said the new case “is different because it is more encompassing. Very little chance of success. The complaint reads as if several heads got together and thought of any possible way to invalidate the contract and then wrote a complaint.
“I see no standing of UTIER and no violation of Puerto Rico contract law,” Mudd said. “This is the next to last thing the union can do. After that, there is only a strike.”
UTIER is the biggest union at PREPA. The El Nuevo Día news website reported a different PREPA union is supporting privatization.
In UTIER’s suit the union said the agreement with LUMA threatens the collective bargaining agreement and the pension system. The union listed 11 claims for relief.
In these claims the union said the LUMA operations and maintenance agreement violates Puerto Rico Acts 120-2018; 17-2019; 29-2009; 83-1941; the Puerto Rico Oversight, Management, and Economic Stability Act; and the federal Employee Retirement Security Act.
The union argues the privatization contract “prejudices” the union and is thus illegal in Puerto Rico law.
The union said the new deal also interferes with PREPA’s collective bargaining agreement with UTIER, and thus is “tortuous interference.”
The privatization is unconstitutional under the clauses of the U.S. constitution governing contracts and the supremacy of federal laws over state laws, the union said.
The union said PREPA owes $603 million to the authority’s pension system and this payment should be considered a current expense. UTIER asks the judge to order PREPA to pay this immediately.
Several legislators in Puerto Rico’s House and Senate are trying to amend the contract with LUMA. In late March LUMA rejected any amendments.
On Wednesday the Puerto Rico Oversight Board said it was reviewing the legal challenge and for the time being would not have any further comment.
